AGREEMENT AND PLAN OF MERGER BY AND AMONG HUMANA INC., HUM VM, INC. AND KMG AMERICA CORPORATION Dated as of September 7, 2007

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

HUMANA INC.,

HUM VM, INC.

AND

KMG AMERICA CORPORATION

Dated as of September 7, 2007

TABLE OF CONTENTS

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ANNEXES AND EXHIBITS

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AGREEMENT AND PLAN OF MERGER

                    This Agreement and Plan of Merger, is made as of September 7, 2007, by and among (i) Humana Inc., a Delaware corporation (“Parent”); (ii) Hum VM, Inc., a Virginia corporation and wholly-owned subsidiary of Parent (“Merger Subsidiary”); and (iii) KMG America Corporation, a Virginia corporation (the “Company”). Parent, Merger Subsidiary, and the Company are sometimes referred to in this Agreement individually as a “Party” and collectively as the “Parties.”

RECITALS

                    WHEREAS, the respective Boards of Directors of Parent and the Company have determined that it is in the best interests of Parent and the Company, respectively, and their respective stockholders that Parent acquire the businesses and operations of the Company through a merger (the “Merger”) of Merger Subsidiary with and into the Company, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Virginia Stock Corporation Act, as amended (the “VSCA”);

                    WHEREAS, the Board of Directors of the Company (the “Company Board”) has approved this Agreement, the Merger and the other transactions contemplated by this Agreement and determined that this Agreement and the Merger are in the best interest of the Company and its shareholders;

                    WHEREAS, the Boards of Directors of Parent and Merger Subsidiary have approved this Agreement, the Merger and the other transactions contemplated by this Agreement and determined that this Agreement and the Merger are in their respective best interest and the best interest of their respective stockholders; and

                    WHEREAS, Parent, Merger Subsidiary and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger, and also to prescribe various conditions to the consummation of the Merger.

                    NOW THEREFORE, in consideration of the mutual agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I
DEFINITIONS

          Section 1.1 Acquisition Proposal.

                    “Acquisition Proposal” shall have the meaning given in Section 7.4(a) hereof.

          Section 1.2 Affiliate.

                    “Affiliate” shall mean another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

          Section 1.3 Agreement.

                    “Agreement” shall mean this Agreement and Plan of Merger, together with the Annexes, Exhibits and Schedules attached hereto, as amended from time to time in accordance with the terms hereof.

          Section 1.4 Articles of Merger.

                    “Articles of Merger” shall have the meaning given in Section 2.3 hereof.

          Section 1.5 Business Day.

                    “Business Day” means any day other than a day on which the office of the VSCC is closed.

          Section 1.6 Certificates.

                    “Certificates” shall have the meaning given in Section 4.2 hereof.

          Section 1.7 Change in Company Recommendation

                    “Change in Company Recommendation” shall have the meaning given in Section 7.2(d) hereof.

          Section 1.8 Closing; Closing Date.

                    “Closing” shall mean the closing held pursuant to Section 2.2 hereof, and “Closing Date” shall mean the date on which the Closing occurs, pursuant to Section 2.2 .

          Section 1.9 Closing Condition Satisfaction Date.

                    “Closing Condition Satisfaction Date” shall have the meaning given in Section 2.2(a) hereof.

          Section 1.10 Code.

                    “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

          Section 1.11 Company.

                    “Company” shall mean KMG America Corporation, a Virginia corporation.

          Section 1.12 Company Benefit Plans.

                    “Company Benefit Plans” shall have the meaning given in Section 6.11(a) hereof.

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          Section 1.13 Company Board.

                    “Company Board” shall mean the Board of Directors of the Company.

          Section 1.14 Company Common Stock.

                    “Company Common Stock” shall mean the common stock, par value $0.01 per share, of the Company.

          Section 1.15 Company Disclosure Letter.

                    “Company Disclosure Letter” shall mean the letter dated the date of this Agreement and delivered to Parent and Merger Subsidiary concurrently with the execution and delivery of this Agreement, which sets forth certain exceptions to the representations and warranties of the Company and other disclosures requested of the Company in this Agreement.

          Section 1.16 Company Intellectual Property.

                    “Company Intellectual Property” shall have the meaning given in Section 6.18(a) hereof.

          Section 1.17 Company Pension Plan.

                    “Company Pension Plan” shall have the meaning given in Section 6.11(a) hereof.

          Section 1.18 Company Recommendation.

                    “Company Recommendation” shall have the meaning given in Section 7.2(d) hereof.

          Section 1.19 Company’s Representatives.

                    “Company’s Representatives” shall have the meaning given in Section 7.1(e) hereof.

          Section 1.20 Company SEC Reports.

                    “Company SEC Reports” shall mean the Annual Report on Form 10-K of the Company for its fiscal years ended December 31, 2005 and 2006, and all documents filed by the Company with the SEC pursuant to Sections 13(a) and 13(c) of the Exchange Act, any definitive proxy statements filed pursuant to Section 14 of the Exchange Act, and any report filed pursuant to Section 15(d) of the Exchange Act, in each case following the filing of such Annual Reports on Form 10-K and prior to the date hereof.

          Section 1.21 Company Stock Option.

                    “Company Stock Option” shall mean each option that represents the right to acquire Shares granted under a Stock Plan.

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          Section 1.22 Confidentiality Agreement.

                    “Confidentiality Agreement” shall mean the letter agreement, dated as of May 19, 2007, between the Company and Parent.

          Section 1.23 Constituent Corporations.

                    “Constituent Corporations” shall have the meaning given in Section 2.1 hereof.

          Section 1.24 Contracts.

                    “Contracts” shall mean any contract, agreement, subcontract, indenture, note, bonds (including surety bond), loan, instrument, lease, mortgage, franchise, license, assignment, purchase order, sale order, understanding, commitment, whether written or oral, that is legally binding.

          Section 1.25 Current Employees.

                    “Current Employees” shall have the meaning given in Section 6.10(a) hereof.

          Section 1.26 D&O Tail Insurance.

                    “D&O Tail Insurance” shall have the meaning given in Section 7.7(b) hereof.

          Section 1.27 E&O Insurance

                    “E&O Insurance” shall have the meaning given in Section 7.7(c) hereof.

          Section 1.28 Effective Time.

                    “Effective Time” shall have the meaning given in Section 2.3 hereof.

          Section 1.29 Environmental Laws.

                    “Environmental Laws” shall mean any Law relating to pollution or protection of human health (excluding OSHA or equivalent state or local authorities) or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including Laws relating to environmental releases or threatened environmental releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

          Section 1.30 Environmental Permits.

                    “Environmental Permits” shall have the meaning given in Section 6.13(c) hereof.

          Section 1.31 ERISA.

                    “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

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          Section 1.32 ERISA Affiliate.

                    “ERISA Affiliate” shall mean any corporation, trade or business, or other entity which, together with the Company or any of its Subsidiaries, is treated (or within the preceding six years was treated), as a single employer under Section 414 of the Code or Section 4001 of ERISA or part of the same “controlled group” as the Company or any of its Subsidiaries for purposes of Section 302(d)(8)(c) of ERISA.

          Section 1.33 Exchange Act.

                    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.

          Section 1.34 GAAP.

                    “GAAP” shall mean generally accepted accounting principles as in effect in the United States of America at the time of the preparation of the subject financial statement.

          Section 1.35 Governmental Authority.

                    “Governmental Authority” shall mean any federal, state, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the South Carolina Department of Insurance, in each case whether of the United States, any of its possessions or territories, or of any foreign nation.

          Section 1.36 Hazardous Materials.

                    “Hazardous Materials” shall mean: (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is friable, urea formaldehyde foam insulation, and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls (“PCBs”) above regulated levels and radon gas (except as may be naturally occurring); and (ii) any chemicals, materials or substances which are now defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” or words of similar import, under any Environmental Law.

          Section 1.37 HSR Act.

                    “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

          Section 1.38 Indemnified Parties.

                    “Indemnified Parties” shall have the meaning given in Section 7.7(a) hereof.

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          Section 1.39 IRS.

                    “IRS” shall mean the Internal Revenue Service.

          Section 1.40 Kanawha.

                    “Kanawha” shall mean Kanawha Insurance Company, a South Carolina corporation.

          Section 1.41 Kanawha Insurance Contracts.

                    “Kanawha Insurance Contracts” shall have the meaning given in Section 6.22(b) .

          Section 1.42 Kanawha Reinsurance Agreements .

                    “Kanawha Reinsurance Agreements” shall have the meaning given in Section 6.24 hereof.

          Section 1.43 Kanawha SAP Statements .

                    “Kanawha SAP Statements” shall have the meaning given in Section 6.21(a) hereof.

          Section 1.44 Keefe.

                    “Keefe” shall mean Keefe, Bruyette & Woods, Inc., financial advisor to the Company.

          Section 1.45 Knowledge of the Company.

                    “Knowledge of the Company” shall mean the actual knowledge, after commercially reasonable due inquiry, of those officers of the Company identified in Section 1.45 of the Company Disclosure Letter.

          Section 1.46 Law.

                    “Law” shall mean any law, statute, rule, regulation, ordinance, agency instruction and other guidance and sub-regulatory issuance, and other pronouncement having the effect of law of the United States of America, any foreign country or any domestic or foreign state, county, city or other political subdivision of any Governmental Authority.

          Section 1.47 Leased Real Property.

                    “Leased Real Property” shall have the meaning given in Section 6.9(d) hereof.

          Section 1.48 Liens .

                    “Liens” shall mean all liens, charges, pledges, mortgages, security interests and transfer restrictions, or other encumbrances.

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          Section 1.49 Material Adverse Effect.

                    “Material Adverse Effect” shall mean any effect or change that is (or would reasonably be expected to be) materially adverse to the business, assets, condition (financial or otherwise), operating results or operations of the Company and its Subsidiaries, taken as a whole, or to the ability of the Company to consummate timely the transactions contemplated hereby, excluding any adverse change, event, development, or effect arising from or relating to: (i) general business or economic conditions; (ii) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States; (iii) financial, banking, or securities markets; (iv) changes in GAAP or SAP; (v) changes in Laws or other binding directives issued by any Governmental Authority; (vi) the life and health insurance industry; (vii) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby; (viii) the announcement or pendency of the transactions contemplated by this Agreement (including any action or inaction by the Company’s or its Subsidiaries’ employees, brokers, agents, producers, customers or vendors); (ix) any actions taken, or inaction or failure to act, by the Company at the request or direction, following the date of this Agreement, of Parent or Merger Subsidiary; (x) any decrease of the financial strength ratings or ratings outlook for Kanawha as of the date hereof by any of the Ratings Agencies and the consequences of any such ratings or outlook decrease, provided , however , that excepted from this clause (x) shall be any events or circumstances that shall have caused any such ratings or outlook decrease and any consequences of such events or circumstances (other than any such ratings or outlook decrease); and (xi) those matters disclosed in Section 6.7 of the Company Disclosure Letter, other than to the extent that any adverse change, event, development, or effect referred to in each of clauses (i) through (vi) has had or would reasonably be expected to have a disproportionately adverse effect on the Company and its Subsidiaries, taken as a whole, as generally compared to other participants in the industries in which Company and its Subsidiaries conduct business.

          Section 1.50 Material Contract

                    “Material Contract” shall have the meaning given in Section 6.17(a) hereof.

          Section 1.51 Merger.

                    “Merger” shall mean the merger of Merger Subsidiary with and into the Company, to be effective at the Effective Time.

          Section 1.52 Merger Consideration.

                    “Merger Consideration” shall have the meaning given in Section 3.2(a) hereof.

          Section 1.53 Merger Subsidiary.

                    “Merger Subsidiary” shall mean Hum VM, Inc., a Virginia corporation and wholly-owned subsidiary of Parent.

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          Section 1.54 NYSE.

                    “NYSE” shall mean the New York Stock Exchange, Inc.

          Section 1.55 Parent.

                    “Parent” shall mean Humana Inc., a Delaware corporation.

          Section 1.56 Parent’s Representatives .

                    “Parent’s Representatives” shall have the meaning given in Section 7.1(e) hereof.

          Section 1.57 Paying Agent.

                    “Paying Agent” shall mean American Stock Transfer and Trust Company or other Person mutually agreed to by the Parties.

          Section 1.58 Payment Fund.

                    “Payment Fund” shall have the meaning given in Section 4.1 hereof.

          Section 1.59 Permits.

                    “Permits” shall mean permits, licenses and governmental authorizations, certifications, registrations and approvals (excluding Environmental Permits).

          Section 1.60 Permitted Investments.

                    “Permitted Investments” shall have the meaning given in Section 4.1 hereof.

          Section 1.61 Person.

                    “Person” shall mean an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, a Governmental Authority or any other entity or organization.

          Section 1.62 Producer.

                    “Producer” shall have the meaning given in Section 6.23 hereof.

          Section 1.63 Proxy Statement.

                    “Proxy Statement” shall mean the proxy statement of the Company distributed to the shareholders of the Company in connection with the Special Meeting.

          Section 1.64 Ratings Agencies.

                    “Ratings Agencies” shall mean A.M. Best Company and Standard & Poor’s Ratings Group.

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          Section 1.65 Required Company Vote.

                    “Required Company Vote” shall have the meaning given in Section 8.1(a) hereof.

          Section 1.66 Restraints.

                    “Restraints” shall have the meaning given in Section 8.1(b) hereof.

          Section 1.67 SAP.

                    “SAP” shall mean the statutory accounting practices prescribed or permitted by the South Carolina Department of Insurance.

          Section 1.68 Sarbanes-Oxley Act .

                    “Sarbanes-Oxley Act” shall have the meaning given in Section 6.6(b) hereof.

          Section 1.69 SEC.

                    “SEC” shall mean the United States Securities and Exchange Commission.

          Section 1.70 Securities Act.

                    “Securities Act” shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder.

          Section 1.71 Shares.

                    “Shares” shall mean shares of Company Common Stock.

          Section 1.72 Special Meeting.

                    “Special Meeting” shall have the meaning given in Section 7.2(a) hereof.

          Section 1.73 Stock Plans.

                    “Stock Plans” shall mean, collectively, the stock option and stock compensation plans of the Company, including those stock option and stock compensation plans set forth in Section 1.73 of the Company Disclosure Letter.

          Section 1.74 Subsidiary; Subsidiaries.

                    “Subsidiary” of any Person shall mean, on any date, any Person (i) the accounts of which would be consolidated with and into those of the applicable Person in such Person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date or (ii) of which securities or other ownership interests representing more than fifty percent of the equity interests or more than fifty percent of the ordinary voting power or, in the case of a partnership, more than fifty percent of the general partnership interests or more than fifty percent of the profits or losses of which are, as of such date, owned, controlled or

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held by the applicable Person or one or more subsidiaries of such Person (collectively, “Subsidiaries”).

          Section 1.75 Superior Proposal.

                    “Superior Proposal” shall have the meaning given in Section 7.4(c) hereof.

          Section 1.76 Surviving Corporation.

                    “Surviving Corporation” shall have the meaning given in Section 2.1 hereof.

          Section 1.77 Taxes.

                    “Taxes” shall mean any and all taxes, levies, imposts, duties, assessments, charges and withholdings imposed or required to be collected by or paid over to any federal, state, local or foreign Governmental Authority or any political subdivision thereof, including any interest, penalties, fines, assessments or additions to tax imposed in respect of the foregoing, or in respect of any failure to comply with any requirement regarding Tax Returns.

          Section 1.78 Tax Returns.

                    “Tax Returns” shall mean any report, return, information statement, payee statement or other information required to be provided to any federal, state, local or foreign Governmental Authority, or otherwise retained, with respect to Taxes or the Company Benefit Plans.

          Section 1.79 Termination Date.

                    “Termination Date” shall have the meaning given in Section 9.1(b) hereof.

          Section 1.80 Transacted.

                    “Transacted” shall have the meaning given in Section 6.23 hereof.

          Section 1.81 VSCA.

                    “VSCA” shall mean the Virginia Stock Corporation Act, as amended.

          Section 1.82 VSCC.

                    “VSCC” shall mean the State Corporation Commission of the Commonwealth of Virginia.

          Section 1.83 Other Definitional Provisions.

                    (a) The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Whenever the words “include,” “includes,” or

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“including” (or any variation thereof) are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

                    (b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. All references to “dollars” or “$” mean United States dollars. The term “foreign” shall mean non-United States.

ARTICLE II
THE MERGER

          Section 2.1 The Merger.

                    Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the VSCA, Merger Subsidiary shall be merged with and into the Company at the Effective Time. At the Effective Time, the separate corporate existence of Merger Subsidiary shall cease, and the Company shall continue as the surviving corporation and a direct wholly-owned subsidiary of Parent (Merger Subsidiary and the Company are sometimes hereinafter referred to as “Constituent Corporations” and, as the context requires, the Company is sometimes hereinafter referred to as the “Surviving Corporation”) and shall continue under the name “KMG America Corporation.”

          Section 2.2 Closing.

                    (a) Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 9.1 hereof, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m., local time, on the third Business Day following the date (the “Closing Condition Satisfaction Date”) of the satisfaction or waiver of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) (the “Closing Date”), at the offices of Hunton & Williams LLP, 951 East Byrd Street, Richmond, Virginia 23219, unless another date, time or place is agreed to in writing by the Parties.

                    (b) The Parent may, by giving written notice to the Company at least two (2) Business Days prior to the Closing Date, delay the Closing to a date no later than the last Business Day of the month in which the Closing Condition Satisfaction Date occurs (a “Delayed Closing”); provided, however, that if Parent elects that the Closing shall be a Delayed Closing, then, notwithstanding anything to the contrary in this Agreement but subject to Section 8.4 , the conditions to Closing set forth in Section 8.2 (a) and Section 8.2(c) shall be deemed to have been satisfied or (to the extent permitted by applicable Law) waived by Parent on and as of the Delayed Closing. In the event that Parent causes a Delayed Closing as contemplated by this Section 2.2(b) , all references in this Agreement to the Closing shall be deemed to be references to the Delayed Closing and the Closing Date shall be deemed to occur on the date on which the Delayed Closing occurs.

          Section 2.3 Effective Time of the Merger.

                    Subject to the provisions of this Agreement, the Parties hereto shall cause the Merger to be consummated by filing properly executed articles of merger (the “Articles of

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Merger”) with the VSCC, a form of which is attached hereto as Annex III . Unless otherwise agreed to by the Parties, the Merger shall become effective at 12:00:01 a.m. on the first day immediately following the Closing and after such time as a certificate of merger is issued by the VSCC, or at such later date or time as Merger Subsidiary and the Company shall agree and as specified in the Articles of Merger (the “Effective Time”). At no time after the Closing but prior to the Effective Time shall any Party have the authority to abandon the Merger.

          Section 2.4 Effects of the Merger .

                    (a) The Merger shall have the effects set forth herein and in the applicable provisions of the VSCA.

                    (b) The directors and the officers of Merger Subsidiary immediately prior to the Effective Time shall, from and after the Effective Time, be the initial directors and officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s Articles of Incorporation and Bylaws.

                    (c) The Articles of Incorporation of the Company immediately prior to the Effective Time shall be amended by virtue of the Merger to read in its entirety as set forth in Annex I attached hereto, until thereafter duly amended in accordance with the terms thereof and the VSCA.

                    (d) The Bylaws of the Company immediately prior to the Effective Time shall be amended by virtue of the Merger to read in their entirety as set forth in Annex II attached hereto, until thereafter duly amended in accordance with the terms thereof, the Articles of Incorporation of the Company and the VSCA.

          Section 2.5 Adjustments.

                    Subject to Section 7.1 hereof, if, during the period between the date of this Agreement and the Effective Time, any change in the number of outstanding Shares of Company Common Stock shall occur by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of Shares, or stock dividend thereon with a record date during such period (or the occurrence of any similar events), the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to provide to the holders of Company Common Stock and Company Stock Options the same economic effect as contemplated by this Agreement prior to such reclassification, recapitalization, split, combination, exchange, readjustment or dividend.

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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

          Section 3.1 Effect on Capital Stock.

                    At the Effective Time, by virtue of the Merger and without any action on the part of Merger Subsidiary, the Company or the holder of any Shares or the holder of any capital stock of Merger Subsidiary:

                    (a) Capital Stock of Merger Subsidiary . Each share of capital stock of Merger Subsidiary issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation following the Merger, and such shares shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

                    (b) Cancellation of Certain Shares . Each Share of Company Common Stock and all other shares of capital stock of the Company that are owned, directly or indirectly, by the Company or any wholly-owned Subsidiary of the Company (except for Shares owned on behalf of third parties), and each Share of Company Common Stock and all other shares of capital stock of the Company that are owned, directly or indirectly, by Parent, Merger Subsidiary or any other wholly-owned Subsidiary of Parent (except for Shares owned on behalf of third parties), shall automatically be canceled and retired and shall cease to exist and no cash or other consideration shall be delivered or deliverable in exchange therefor.

          Section 3.2 Conversion of Outstanding Shares.

                    At the Effective Time, by virtue of the Merger and without any action on the part of Merger Subsidiary, the Company or the holders of any of the Shares or the holder of any capital stock of Merger Subsidiary:

                    (a) Subject to the other provisions of this Section 3.2 , each Share of Company Common Stock (including the unvested restricted shares that shall vest as of the Effective Time pursuant to Section 3.4 below) issued and outstanding immediately prior to the Effective Time (excluding Shares cancelled pursuant to Section 3.1(b) ) will be converted into the right to receive $6.20 per share in cash, payable to the holder thereof, without any interest thereon (“the Merger Consideration”), upon surrender and exchange of the Certificates.

                    (b) All Shares of Company Common Stock, when converted as provided in Section 3.2(a) , no longer shall be outstanding and shall automatically be canceled and retired and shall cease to exist, and each Certificate previously evidencing such Shares shall thereafter represent only the right to receive the Merger Consideration. The holders of Certificates previously evidencing Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to Company Common Stock except as otherwise provided herein or by Law and, upon the surrender of Certificates in accordance with the provisions of Article IV , such Certificates shall represent only the right to receive an amount equal to the product of (i) the

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number of Shares represented by such Certificate and (ii) the Merger Consideration to be paid in consideration therefor, without any interest thereon.

          Section 3.3 Stock Transfer Books.

                    At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Shares of Company Common Stock (or any other shares of capital stock of the Company) thereafter on the records of the Company. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent, such Certificates shall be canceled and (subject to applicable abandoned property, escheat and similar Laws) exchanged for an amount equal to the product of (i) the number of Shares represented by such Certificate and (ii) the Merger Consideration, without any interest thereon, as provided in Article IV hereof.

          Section 3.4 Company Restricted Shares.

                    As soon as practicable following the date of this Agreement, the Company Board or its compensation committee shall adopt such resolutions or take such other actions (if any) as may be required to provide that each restricted stock award that is outstanding immediately prior to the Effective Time shall be vested and transferable immediately prior to the Effective Time.

          Section 3.5 Company Stock Options and Related Matters.

                    As soon as practicable following the date of this Agreement, the Company Board or its compensation committee shall adopt such resolutions or take such other actions, if any, as may be required to provide that each option that represents the right to acquire Shares granted under a Stock Plan (each, a “Company Stock Option”) (i) shall be exercisable, in whole or in part, on a date that is at least 14 days prior to the Closing Date and thereafter until the Closing Date and (ii) if not exercised prior to the Effective Time, shall be canceled and terminated effective at the Effective Time. The holder of each Company Stock Option that is canceled and terminated in accordance with the preceding sentence shall be entitled to receive an amount in cash equal to the excess, if any, of (i) the Merger Consideration over (ii) the per share exercise price of such Company Stock Option, multiplied by the number of Shares subject to such Company Stock Option as of the Effective Time. Company Stock Options with an exercise price equal to or greater than the Merger Consideration will be canceled without any consideration. Parent shall cause the Surviving Corporation to pay all amounts payable pursuant to this Section 3.5 as soon as possible, but in any event not later than two business days following the Effective Time. Such payments shall be subject to all applicable Taxes, which shall be collected in accordance with any withholding requirements.

ARTICLE IV
PAYMENT FOR SHARES

          Section 4.1 Paying Agent.

                    Prior to the Effective Time, Parent shall deposit or shall cause to be deposited with the Paying Agent in a separate fund established for the benefit of the holders of Shares of Company Common Stock, for payment in accordance with this Article IV , through the Paying

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Agent (the “Payment Fund”), immediately available funds in amounts necessary to make the payments pursuant to Section 3.2(a) and this Article IV to holders of Shares (other than Shares canceled pursuant to Section 3.1(b) ). The Paying Agent shall, pursuant to irrevocable instructions, make the payments provided for in Section 4.2 out of the Payment Fund. The Paying Agent shall invest portions of the Payment Fund as Parent directs in obligations of or guaranteed by the United States of America, in commercial paper obligations at the highest interest rate available and receiving the highest investment grade rating from both Moody’s Investors Services, Inc. and Standard & Poor’s Corporation, or in certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $100,000,000 (collectively, “Permitted Investments”); provided , however , that the maturities of Permitted Investments shall be such as to permit the Paying Agent to make prompt payment to former holders of Shares entitled thereto as contemplated by this Article IV . All earnings on Permitted Investments shall be paid to Parent. If for any reason (including losses) the Payment Fund is inadequate to pay the amounts to which holders of Shares of Company Common Stock shall be entitled under this Article IV , Parent shall promptly restore such amount of the inadequacy to the Payment Fund, and in any event shall be liable for payment thereof. The Payment Fund shall not be used for any purpose except as expressly provided in this Agreement.

          Section 4.2 Payment Procedures.

                    As soon as reasonably practicable after the Effective Time, Parent shall instruct the Paying Agent to mail to each holder of record (other than holders of Shares cancelled pursuant to Section 3.1(b) ) of a Certificate or Certificates which, immediately prior to the Effective Time, evidenced outstanding Shares of Company Common Stock (the “Certificates”), (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent, and which shall be in such form and have such other customary provisions as Parent reasonably may specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of an amount equal to the product of (x) the number of Shares represented by such Certificate and (y) the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent together with such letter of transmittal, duly completed and validly executed in accordance with the instructions (and such other customary documents as may be reasonably required by the Paying Agent), the holder of such Certificate shall be entitled to receive in respect thereof cash in an amount equal to the product of (x) the number of Shares represented by such Certificate and (y) the Merger Consideration, and the Certificate so surrendered shall forthwith be canceled. No interest shall be paid or accrued on the Merger Consideration payable upon the surrender of any Certificate. If payment is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the Person requesting such payment shall have paid any transfer or other taxes required by reason of the payment to a Person other than the registered holder of the surrendered Certificate or shall have established to the satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 4.2 , after the Effective Time each Certificate (other than Certificates representing Shares canceled pursuant to Section 3.1(b) ) shall represent for all purposes only the right to receive an amount equal to the product of (i) the number of

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Shares represented by such Certificate and (ii) the Merger Consideration, without any interest thereon.

          Section 4.3 Termination of Payment Fund; Interest.

                    Any portion of the Payment Fund which remains undistributed to the holders of Company Common Stock for one year after the Effective Time shall be delivered to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws), upon demand, and any holders of Company Common Stock who have not theretofore complied with this Article IV and the instructions set forth in the letter of transmittal mailed to such holder after the Effective Time shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) for payment of the Merger Consideration to which they are entitled. All interest accrued in respect of the Payment Fund shall inure to the benefit of and be paid to the Surviving Corporation.

          Section 4.4 No Liability.

                    Neither Parent nor the Surviving Corporation shall be liable to any holder of Shares of the Company Common Stock for any cash from the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Laws.

          Section 4.5 Withholding Rights.

                    Parent, the Surviving Corporation or the Paying Agent, as appropriate, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Certificates such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld, (i) such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Certificates in respect of which such deduction and withholding was made and (ii) Parent, the Surviving Corporation or the Paying Agent, as appropriate, shall provide to the holders of such Certificates written notice of the amounts so deducted or withheld.

          Section 4.6 Lost, Stolen or Destroyed Certificates.

                    In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will pay in exchange for such lost, stolen, or destroyed Certificate an amount equal to the product of (i) the number of Shares represented by such Certificate and (ii) the Merger Consideration, without any interest thereon pursuant to this Article IV .

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY

                    Parent and Merger Subsidiary, jointly and severally, represent and warrant to the Company as follows:

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          Section 5.1 Organization; Authority.

                    Each of Parent and Merger Subsidiary is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization. Merger Subsidiary was formed solely for the purpose of engaging in the transactions contemplated hereby and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby. Parent has the requisite power and authority to carry on its business as currently conducted.

          Section 5.2 Authority Relative to this Agreement.

                    The execution, delivery and performance of this Agreement and of all of the other documents and instruments required hereby by Parent and Merger Subsidiary are within the corporate power of Parent and Merger Subsidiary. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the respective Boards of Directors of Parent and Merger Subsidiary, and by Parent as the sole shareholder of Merger Subsidiary, and no other corporate or shareholder proceedings on the part of Parent or Merger Subsidiary are necessary to authorize this Agreement or to consummate the transactions contemplated herein. This Agreement has been, and all of the other documents and instruments required hereby have been or will be, duly and validly executed and delivered by Parent or Merger Subsidiary and (assuming the due authorization, execution and delivery hereof and thereof by the Company) this Agreement constitutes, and all of the other documents and instruments required hereby constitute or will constitute, valid and binding agreements of Parent and Merger Subsidiary, enforceable against them in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

          Section 5.3 Consents and Approvals; No Violations.

                    Except for (i) approval of the South Carolina Department of Insurance and any applicable notice, filing or approval requirements of the Laws or insurance regulatory authorities of any other jurisdictions in which Kanawha is licensed to transact insurance business, (ii) any applicable requirements of the Securities Act, the Exchange Act, the HSR Act and any applicable filings under state securities, “Blue Sky” or takeover Laws and (iii) the filing of the Articles of Merger as required by the VSCA, no material filing or registration with, and no material Permit, authorization, consent or approval of, any Governmental Authority is necessary or required in connection with the execution and delivery of this Agreement by Parent or Merger Subsidiary or for the consummation by Parent or Merger Subsidiary of the transactions contemplated by this Agreement. Assuming that all filings, registrations, Permits, authorizations, consents and approvals contemplated by the immediately preceding sentence have been duly made or obtained, neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated hereby by Parent and Merger Subsidiary will (x) conflict with or result in any breach of any provision of the Articles or Certificate of Incorporation or Bylaws of Parent or Merger Subsidiary, (y) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right

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of termination, cancellation, acceleration or material modification) under, or otherwise result in any diminution of any of the rights of Parent or Merger Subsidiary with respect to any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, Contract or other instrument or obligation to which Parent or any of its Subsidiaries is a party or by which it or any of them or any of their properties or assets may be bound, or (z) violate (with or without due notice or lapse of time or both) any Law or any order, writ, injunction, decree, statute, rule or regulation applicable to Parent or any of its Subsidiaries or any of their properties or assets except, in the case of subsections (y) and (z) above, for violations, breaches or defaults that will not prevent or materially delay the consummation of the transactions contemplated hereby.

          Section 5.4 Litigation.

                    There is no action, suit, proceeding or, to the knowledge of Parent, investigation pending or, to the knowledge of Parent, threatened against or relating to Parent or Merger Subsidiary at Law or in equity, or before any Governmental Authority, that seeks restraint, prohibition, material damages or other extraordinary relief in connection with this Agreement or the consummation of the transactions contemplated hereby.

          Section 5.5 Information Supplied.

                    None of the information relating to Parent and its Affiliates supplied in writing by Parent specifically for inclusion in the Proxy Statement and any amendment or supplement thereto will, at the time the Proxy Statement and any amendment or supplement thereto is mailed to Company shareholders and at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

          Section 5.6 Financial Capability.

                    Parent has sufficient available cash, marketable securities and borrowing capacity under its committed credit facilities that are permitted to be used for the Merger to consummate the transactions contemplated hereby.

          Section 5.7 Fees and Expenses of Brokers and Others.

                    Neither Parent nor any of its Affiliates: (i) has had any dealings, negotiations or communications with any broker or other intermediary in connection with the transactions contemplated by this Agreement; (ii) is committed to any liability for any brokers’ or finders’ fees or any similar fees in connection with the transactions contemplated by this Agreement; or (iii) has retained any broker or other intermediary to act on its behalf in connection with the transactions contemplated by this Agreement, except in each case that Parent has engaged Credit Suisse Securities (USA) LLC (“Credit Suisse”) to represent it in connection with such transactions and shall pay all of Credit Suisse’s fees and expenses in connection with such engagement.

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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except as: (i) set forth in the Company Disclosure Letter (with specific reference to the Section or Subsection of this Agreement to which the information stated in such disclosure relates; provided that any fact or condition disclosed in any section of such disclosure letter in such a way as to make its relevance to a representation or representations elsewhere in this Agreement or information called for by another section of such disclosure letter reasonably apparent shall be deemed to be an exception to such representation or representations to be disclosed on such other section of such disclosure letter notwithstanding the omission of a reference or cross reference thereto); or (ii) disclosed in the Company SEC Reports filed on or prior to the date hereof (excluding any disclosures set forth in any risk factor section and in any section relating to forward looking statements, in each case, to the extent that they are cautionary, predictive or forward-looking in nature); provided that, in no event shall any disclosure in any Company SEC Reports qualify or limit the representations and warranties of the Company set forth in Section 6.1 , Section 6.2 , Section 6.3 or Section 6.4 of this Agreement or in the corresponding sections of the Company Disclosure Letter; the Company represents and warrants to Parent and Merger Subsidiary as follows:

          Section 6.1 Organization and Authority of the Company.

                    The Company is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization. The Company has full corporate power to carry on its business as it is now being conducted and to own, operate and hold under lease its assets and properties as, and in the places where, such properties and assets now are owned, operated or held, except where the failure to have such power has not had, or would not reasonably be expected to have, a Material Adverse Effect. The Company is duly qualified as a foreign entity to do business, and is in good standing, in each jurisdiction in which it conducts business where the failure to be so qualified has had, or would reasonably be expected to have, a Material Adverse Effect. The Company has made available to Parent prior to the date hereof (i) complete and correct copies of the Articles of Incorporation and Bylaws of the Company and (ii) the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of the Company’s shareholders, the Company Board and each committee of the Company Board held since December 12, 2004 (or such earlier date as may have been requested by Parent), through the date hereof (except, in each case, minutes related to the transactions contemplated by this Agreement or other alternative strategic transactions considered).

          Section 6.2 Subsidiaries.

                    (a) Section 6.2(a) of the Company Disclosure Letter sets forth a true and complete list of all the Subsidiaries of the Company. Except as set forth in Section 6.2(a) of the Company Disclosure Letter, the Company owns directly or indirectly all of the outstanding shares of capital stock or other equity interest of each of the Company’s Subsidiaries. Except for marketable securities owned in the ordinary course of business and except as set forth in Section 6.2(a) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock, equity or other ownership interest in any other Person.

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                    (b) Each of the Company’s Subsidiaries is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization. Each of the Company’s Subsidiaries has full corporate or other entity power to carry on its business as it is now being conducted and to own, operate and hold under lease its assets and properties as, and in the places where, such properties and assets now are owned, operated or held, except where the failure to have such power has not had, and would not reasonably be expected to have, a Material Adverse Effect. Each such Subsidiary is duly qualified as a foreign entity to do business, and is in good standing, in each jurisdiction in which it conducts business where the failure to be so qualified has had, or would reasonably be expected to have, a Material Adverse Effect. The copies of the organizational documents of each such Subsidiary, in each case as amended to date and made available to Parent’s and Merger Subsidiary’s counsel, are true and complete copies thereof, and no amendments thereto are pending. None of the Company’s Subsidiaries is in default in any material respect in the performance, observation or fulfillment of its obligations under its respective organizational documents. The Company has made available to Parent prior to the date hereof (i) complete and correct copies of a certificate of incorporation and bylaws, or similar formation and governing documents, of each of its Subsidiaries and (ii) the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of its Subsidiaries’ stockholders, boards of directors and each committee of such boards of Directors held since December 12, 2004, through the date hereof (except, in each case, minutes related to the transactions contemplated by this Agreement or other alternative strategic transactions considered).

          Section 6.3 Capitalization.

                    (a) The Company’s authorized equity capitalization consists of 75,000,000 Shares of Company Common Stock, par value $0.01 per share, and 25,000,000 shares of Company preferred stock, no par value per share. As of the close of business on September 6, 2007, 22,216,319 Shares of Company Common Stock and no shares of Company preferred stock were issued and outstanding. Such Shares of Company Common Stock constituted all of the issued and outstanding shares of capital stock of the Company as of such date. All issued and outstanding Shares of Company Common Stock have been duly authorized and validly issued and are fully paid and nonassessable, are not subject to and have not been issued in violation of any preemptive rights and have not been issued in violation of any federal or state securities Laws. Except as set forth in Section 6.3(a) of the Company Disclosure Letter, the Company has not declared or paid any dividend on, or declared or made any distribution with respect to, or authorized or effected any split-up or any other recapitalization of, any of the Shares of Company Common Stock, or directly or indirectly redeemed, purchased or otherwise acquired any of its outstanding capital stock or agreed to take any such action and will not take any such action during the period between the date of this Agreement and the Effective Time. All outstanding Shares of Company Common Stock are duly listed for trading on the NYSE.

                    (b) All of the outstanding shares of capital stock of the Company’s Subsidiaries are validly issued, fully paid and nonassessable. Except as disclosed in Section 6.3(b) of the Company Disclosure Letter, all of the outstanding shares of capital stock, partnership, membership or equity interests of the Company’s Subsidiaries are owned by the Company, directly or indirectly, free and clear of all Liens. Except as set forth in Section 6.3(b)

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of the Company Disclosure Letter, there are no outstanding securities, options, warrants, calls, subscriptions, rights or Contracts to which the Company or any of its Subsidiaries is a party or by which any of them is bound, granting to any third party the right to purchase or acquire any capital stock of or any partnership, membership or equity interests in the Company or any of its Subsidiaries, and there are no put rights or Contracts pursuant to which any of the Company or any of its Subsidiaries is bound to repurchase any shares of its capital stock or partnership, membership or equity interests.

                    (c) Section 6.3(c) of the Company Disclosure Letter contains a true, accurate and complete list of the number of outstanding Company Stock Options, the grant date of each such Company Stock Option, the number of Shares of Company Common Stock that holders of such Company Stock Options are currently entitled to receive upon the exercise of the Company Stock Options, the corresponding exercise price as of the date hereof, the vesting schedule, and the expiration date of such Company Stock Option. Section 6.3(c) of the Company Disclosure Letter contains a true, accurate and complete list of the number of outstanding restricted Shares of Company Stock, the grant date of each such restricted Share, and the vesting schedule for such restricted Shares. Except for the Company Stock Options and restricted Shares set forth in such Section 6.3(c) of the Company Disclosure Letter, there are no outstanding: (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in the Company or any of its Subsidiaries; (ii) options, restricted stock, warrants, deferred compensation arrangements, rights or other agreements or commitments to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue or transfer, any capital stock, voting securities or other ownership interests (or securities convertible into or exchangeable for capital stock or voting securities or other ownership interests) in the Company or any of its Subsidiaries; (iii) obligations of the Company or any of its Subsidiaries to grant, extend or enter into any subscription, warrant, deferred compensation arrangement, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting securities or other ownership interests in the Company or any of its Subsidiaries; or (iv) obligations of the Company or any of its Subsidiaries to make any payment based on the market price or value of any securities of the Company or any of its Subsidiaries. Except as set forth in Section 6.3(c) of the Company Disclosure Letter, there are no (i) outstanding obligations of the Company or any of its Subsidiaries to purchase, redeem or otherwise acquire any outstanding securities of the Company or any of its Subsidiaries or (ii) voting trusts, voting agreements or other agreements or understandings with respect to the voting of capital stock of the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries or, to the Knowledge of the Company, any third Person is a party. None of the Company or any of its Subsidiaries has any obligation or commitment to provide financing to or make any debt or equity investment in any entity other than wholly-owned Subsidiaries of the Company.

          Section 6.4 Authority Relative to this Agreement.

                    The execution, delivery and performance of this Agreement and of all of the other documents and instruments required hereby by the Company are within the corporate power of the Company. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Company Board and no other corporate or shareholder proceedings on the part of the Company are necessary to authorize this

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Agreement or to consummate the transactions contemplated herein (other than, with respect to the Merger, the Required Company Vote). This Agreement has been, and all of the other documents and instruments required hereby have been or will be, duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery hereof and thereof by Parent and/or Merger Subsidiary) this Agreement constitutes, and all of the other documents and instruments required hereby constitute or will constitute, valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar Laws relating to or affecting creditors generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

          Section 6.5 Consents and Approvals; No Violations.

                    Except for (i) approval of the South Carolina Department of Insurance and any applicable notice, filing or approval requirements of the Laws or insurance regulatory authorities of any other jurisdictions in which Kanawha is licensed to transact insurance business, (ii) any applicable requirements of the Securities Act, the Exchange Act, the HSR Act and any applicable filings under state securities, insurance, “Blue Sky” or takeover Laws, (iii) the filing of the Articles of Merger as required by the VSCA, and (iv) those required filings, registrations, consents and approvals listed in Section 6.5 of the Company Disclosure Letter, no material filing or registration with, and no material Permit, authorization, consent or approval of, any Governmental Authority or any other Person is necessary or required in connection with the execution and delivery of this Agreement by the Company or for the consummation by the Company of the transactions contemplated by this Agreement. Assuming that all filings, registrations, Permits, authorizations, consents and approvals contemplated by the immediately preceding sentence have been duly made or obtained, neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated hereby by the Company will (x) conflict with or result in any breach of any provision of the articles or certificates of incorporation, bylaws, trust, partnership or joint venture agreements or other organizational documents of the Company or any of its Subsidiaries, (y) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, acceleration or material modification) under, or otherwise result in any diminution of any of the rights of the Company or any of its Subsidiaries with respect to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, Contract or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound, or (z) violate (with or without due notice or lapse of time or both) any Law or any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries or any of their properties or assets except, in the case of subsections (y) or (z) above, for violations, breaches or defaults that would not, and would not reasonably be expected to, have a Material Adverse Effect.

          Section 6.6 SEC Reports.

                    (a) The Company SEC Reports complied, as of their respective dates of filing, in all material respects with all applicable requirements of the Securities Act and the Exchange

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Act. As of their respective dates, none of the Company SEC Reports, including any financial statements or schedules included therein, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances under which they were made. Each of the balance sheets (including the related notes and schedules) included in the Company SEC Reports fairly presented in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates thereof, and each of the statements of operations and cash flow (including the related notes and schedules) included in the Company SEC Reports fairly presented in all material respects the consolidated results of operations and cash flows of the Company and its Subsidiaries for the respective fiscal periods or as of the respective dates set forth therein, in each case, in accordance with GAAP applied on a consistent basis during the periods presented, except as otherwise noted therein, and subject to normal year-end and audit adjustments in the case of any unaudited interim financial statements. Each of the financial statements (including the related notes and schedules) included in the Company SEC Reports (i) complied as to form with the applicable accounting requirements and rules and regulations of the SEC and (ii) was prepared in accordance with GAAP applied on a consistent basis during the periods presented, except as otherwise noted therein, and subject to normal year end and audit adjustments in the case of any unaudited interim financial statements. Except for the Company, none of the Company or its Subsidiaries is required to file any forms, reports or other documents with the SEC, the NYSE or any other foreign or domestic securities exchange or Governmental Authority with jurisdiction over securities Laws. Since December 12, 2004, the Company has filed, in all material respects, all reports, registration statements and other filings required to be filed by it with the SEC. To the Knowledge of the Company, since December 12, 2004, the Company’s directors, officers and shareholders, have filed, in all material respects, all reports, registration statements and other filings regarding the Company that are required to be filed by them with the SEC.

                    (b) The Chief Financial Officer and Chief Executive Officer of the Company have made all certifications required by the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the Exchange Act and any related rules and regulations promulgated by the SEC with respect to the Company SEC Reports, and the statements contained in such certifications were complete and correct in all material respects at the time they were made. The Company has designed and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) to ensure that information required to be disclosed in the Company SEC Reports is recorded, processed and reported, within the time periods specified in the SEC’s rules and forms, and such disclosure controls and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company has designed and maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of such disclosure controls and procedures prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company Board (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any

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material respect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

                    (c) The financial statements included in the Company SEC Reports fairly reflect (in accordance with GAAP) in all material respects amounts required to be shown as an expense in connection with the grant and/or amendment of any Company Stock Option, and the disclosure of the Company Stock Options in the Company SEC Reports complied, as of their respective dates of filing, in all material respects with all applicable requirements of the Securities Act and the Exchange Act.

                    (d) The Company is in compliance in all material respects, with all current listing and corporate governance requirements of the NYSE.

          Section 6.7 Absence of Certain Changes or Events.

                    Except as disclosed in the Company SEC Reports, the Kanawha SAP Statements or set forth in Section 6.7 of the Company Disclosure Letter and except for changes or effects resulting from this Agreement, the transactions contemplated hereby or the announcement thereof, since the date of the balance sheet referred to in Section 6.16 hereof, the Company and each of its Subsidiaries has conducted its business in the ordinary course consistent with past practice and has not:

                    (a) had any event, circumstance or development that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect;

                    (b) materially increased the compensation payable by it (or for which it or any of its Subsidiaries may have any liability) to any executive officer;

                    (c) instituted, settled or agreed to settle, any material litigation, action, or proceeding before any Governmental Authority;

                    (d) had any material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by the Company or any of its Subsidiaries which is not covered by insurance;

                    (e) except for distributions by a Company Subsidiary to the Company or another Company Subsidiary in accordance with Laws, declared or paid any dividend or made any distribution on its capital stock or redeemed or purchased any shares of its capital stock;

                    (f) reclassified, combined, split, subdivided or redeemed or otherwise repurchased any of its capital stock (including its Company Common Stock), or created, authorized, issued, sold, delivered, pledged or encumbered any of its capital stock (including its Company Common Stock), whether authorized but unissued or held in treasury, or other securities convertible into or exchangeable for its capital stock (including its Company Common Stock), or granted or otherwise issued any options, warrants or other rights with respect thereto;

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                    (g) acquired or agreed to acquire by merging or consolidating with, or by purchasing any portion of the capital stock, equity interests or assets of, or by any other manner, any business or any corporation, partnership, limited liability company, association or other business organization or division thereof (other than purchases of marketable securities in the ordinary course of business consistent with past practice);

                    (h) made any material change to any accounting principle, method or practice, including any actuarial practices or methodologies, or any material change to any methods of reporting income, deductions or other items for Tax purposes, except, in each case, for such changes required by changes in SEC guidelines, GAAP or SAP; or

                    (i) materially amended any of the Company Benefit Plans.

          Section 6.8 Litigation.

                    Except as set forth in Section 6.8 of the Company Disclosure Letter, there is no action, suit, proceeding or, to the Knowledge of the Company, investigation pending or, to the Knowledge of the Company, threatened through written contact by counsel to the plaintiff or claimant against the Company or any of its Subsidiaries at Law or in equity or before any Governmental Authority that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect or that seeks restraint, prohibition, material damages or other extraordinary relief in connection with this Agreement or the consummation of the transactions contemplated hereby. There are no unsatisfied judgments or outstanding orders, injunctions, decrees, stipulations or awards by any Governmental Authority against the Company or any of its Subsidiaries that are material.

          Section 6.9 Title to and Sufficiency of Assets; Liens; Leases.

                    (a) Except as set forth in Sec