THE SOUTH FINANCIAL GROUP

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

Between

THE SOUTH FINANCIAL GROUP, INC.

and

CHRISTOPHER T. HOLMES

This Supplemental Executive Retirement Agreement (this "Agreement") is made and
entered into effective as of this 8th day of May, 2006 (the "Effective Date"),
by and between Christopher T. Holmes, an individual (the "Executive"), and The
South Financial Group, Inc., a South Carolina corporation and financial
institution holding company headquartered in Greenville, South Carolina (the
"Company").

INTRODUCTION

The Company wishes to provide the Executive with supplemental retirement
benefits and thereby encourage the Executive to continue providing services to
the Company. The Company will pay the benefits from its general assets.

The Agreement is intended to be a top-hat plan (i.e., an unfunded deferred
compensation plan maintained for a member of a select group of management or
highly compensated employees) pursuant to Section 201(2), 301(a)(3), and
401(a)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA").

This Agreement is intended to comply with the requirements of Section 409A of
the Internal Revenue Code and the regulations and other guidance issued
thereunder, as in effect from time to time. To the extent a provision of the
Agreement is contrary to or fails to address the requirements of Code Section
409A, the Agreement shall be construed and administered as necessary to comply
with such requirements until the Agreement is appropriately amended to comply
with such requirements.

AGREEMENT

The Executive and the Company agree as follows:

Article 1

Definitions

Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:

1.1          "Affiliated Company" means any company controlled by, controlling
or under common control with the Company.

1.2          "Benefit Basis" means the average of the highest three fiscal years
of annual Compensation earned by the Executive during the ten fiscal years of
the Executive's employment prior to the Termination of Employment, or for such
lesser number of fiscal years that the

 

Holmes SERP Agreement.doc

 

 

Executive was employed by the Company prior to the Termination of Employment,
including the year in which Termination of Employment occurs.

1.3           "Board" means the Board of Directors of The South Financial Group,
Inc.

1.4          "Cause" means (i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the Company or
any Affiliated Company (other than any such failure resulting from incapacity
due to physical or mental illness or following the Executive's Involuntary
Termination), after a written demand for substantial performance is delivered to
the Executive by the Chief Executive Officer that specifically identifies the
manner in which the Chief Executive Officer of the Company believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in illegal conduct or gross misconduct, in
each case, that is materially and demonstrably injurious to the Company. For
purposes of this definition, no act, or failure to act, on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board, or upon instructions of the Chief Executive Officer or
senior officer, or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board (excluding the Executive, if the Executive is a member of the
Board) at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in clause (i) or (ii) of this definition, and
specifying the particulars thereof in detail.

1.5           "Change in Control" means:

(i)           when any Person or Persons acting as a "group" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the "Exchange Act" and within the meaning of
Code Section 409A and applicable regulations thereunder) acquires directly or
indirectly, securities of the Company representing an aggregate of more than 50%
of the combined voting power of the Company's then outstanding voting securities
other than an acquisition by:

(A)          any employee plan established by the Company;

(B)         the Company or any of its affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act);

(C)         an underwriter temporarily holding securities pursuant to an
offering of such securities;

 

2

 

 

 

(D)         a corporation owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their ownership of the Company;
or

(E)          except as provided in clause (iii) below, merger or consolidation
of the Company with any other corporation which is duly approved by the
stockholders of the Company; or

(ii)          when a majority of the board of directors of the Company is
replaced during any 12-month period and such new appointments are not approved
by a majority of the members of the current board prior to the date of
appointment or election; or

(iii)        The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation other than (A) a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit plan
of any Company, at least a majority of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner (as
defined in clause (i) above), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company) representing a majority of the
combined voting power of the Company's then outstanding voting securities; or
(C) a plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company's
assets.

1.6           "Code" means the Internal Revenue Code of 1986, as amended.

1.7          "Company" means The South Financial Group, Inc. and shall include
the Company and any and all of its subsidiaries where the context so applies;
provided, however, for purposes of application of the "Change in Control"
definition and related provisions, Company shall mean and be limited to The
South Financial Group, Inc.

1.8          "Compensation" means the Executive's annual base salary and annual
bonus under the Company's Management Incentive Compensation Plan, or any
comparable bonus under any predecessor or successor plan, including any bonus or
portion thereof that has been earned but deferred (and annualized for any fiscal
year consisting of less than 12 full months or during which the Executive was
employed for less than 12 full months) for the relevant fiscal year. If the
Termination of Employment occurs prior to the end of the fiscal year, the bonus
amount for such fiscal year shall be equal to the highest of the bonuses earned
by the Executive in the prior three fiscal years (or for such lesser number of
fiscal years prior to the Termination of Employment for which the Executive was
eligible to earn such a bonus, and annualized in the case of any bonus earned
for a partial fiscal year).

 

3

 

 

 

1.9          "Disability" means any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months which results in, (i) the
Executive being unable to engage in any substantial gainful activity or (ii) the
Executive receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the Company. In
addition, the Executive will be deemed disabled if determined to be totally
disabled by the Social Security Administration, or if determined to be disabled
in accordance with a disability insurance program provided the definition of
disability applied under such disability insurance program complies with the
requirements of the preceding sentence.

1.10       "Early Retirement Age" means the date that the Executive has attained
age 55 and completed seven Years of Service.

1.11       "Early Retirement Date" means the date that is the later of the Early
Retirement Age or the Termination of Employment, but is before the Normal
Retirement Date.

1.12       "Early Termination" means the Termination of Employment before Early
Retirement Age for reasons other than (i) death, (ii) Disability, (iii) by the
Company for Cause, (iv) by the Company without Cause during the two year period
following a Change in Control, or (v) Involuntary Termination.

1.13       "Early Termination Date" means the month, day and year in which Early
Termination occurs.

1.14        "Effective Date" means March 3, 2006.

1.15        "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

1.16       "Involuntary Termination" means a Termination of Employment by the
Executive following a Change in Control which, in the sole judgment of the
Executive, is due to (i) a change of the Executive's responsibilities, position
(including the Executive's office, title, reporting relationships or working
conditions), authority or duties (including changes resulting from the
assignment to the Executive of any duties inconsistent with his positions,
duties or responsibilities as in effect immediately prior to the Change in
Control); or (ii) a reduction in the Executive's annual base salary or annual
bonus opportunity under the Company's Management Incentive Compensation Plan, or
any comparable bonus under any predecessor or successor plan, including any
bonus or portion thereof that has been earned but deferred, or benefits; or
(iii) a forced relocation of the Executive outside the Greenville, South
Carolina metropolitan area; or (iv) a significant increase in the Executive'
travel requirements (collectively "Status Changes"); provided, however,
Executive must elect to terminate Executive's employment within two (2) years of
the Status Change on which Executive bases Executive's employment termination.

1.17        "Normal Retirement Age" means Executive's 65th birthday.

1.18       "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Employment.

 

4

 

 

 

1.19       "Person" means any individual, corporation, bank, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
other entity.

1.20       "Rate" means the Moody's Aa corporate bond rate as reported by the
Society of Actuaries as of the Effective Date and updated on each December 31st
thereafter.

1.21       "Termination of Employment" means the termination of the Executive's
employment with the Company and all of its subsidiaries or affiliates that are
considered a single employer within the meaning of Code Sections 414(b) and
414(c). If the Executive is employed by such a subsidiary or affiliate, the
Executive will be deemed to incur a Termination of Employment if the subsidiary
or affiliate ceases to be such a subsidiary or an affiliate, as the case may be,
and the Executive does not immediately thereafter become an employee of the
Company or another such subsidiary or affiliate. Temporary absences from
employment while the Executive is on military leave, sick leave, or other bona
fide leave of absence will not be considered a Termination of Employment if the
period of such leave does not exceed six months, or if longer, so long as the
Executive's right to reemployment with the Company is provided either by statute
or by contract. However, if the period of leave exceeds six months and the
Executive's right to reemployment is not provided either by statute or by
contract, a Termination of Employment is deemed to occur on the first day
immediately following such six-month period.

1.22       "Vesting Percentage" is the percentage of the accrual balance in
which the Executive is vested as determined in accordance with Schedule A.

1.23       "Vesting Start Date" shall be December 31, 2005.

1.24       "Year of Service" means a twelve-month continuous period of
employment or a portion of such period, including periods of authorized
vacation, authorized leave of absence and short-term disability leave, with the
Company or any of its affiliates or their predecessors or successors rounded up
to the nearest whole number commencing on the Vesting Start Date.

Article 2

Lifetime Benefits

2.1          Normal Retirement Benefit. Upon Termination of Employment (i) on or
after Normal Retirement Age for reasons other than death, or (ii) upon
Termination of Employment without Cause within two years following a Change in
Control or (iii) upon Executive's Involuntary Termination, the Company shall pay
to the Executive the benefit described in this Section 2.1 in lieu of any other
benefit under this Agreement.

Amount of Benefit. The annual benefit under this Section 2.1 is an amount equal
to Forty percent (40%) of the Benefit Basis, provided that in the event that the
Executive has completed five Years of Service, the annual benefit under this
Section 2.1 is an amount equal to Sixty percent (60%) of the Benefit Basis.2.1.1

2.1.2      Payment of Benefit. The Company shall pay the benefit to the
Executive as follows:

 

5

 

 

 

(a)          payment in a lump sum on the first day of the seventh month
following the Executive's Normal Retirement Date or, if earlier, on the first
day of the seventh month following the Executive's Termination of Employment
without Cause within two years following a Change in Control or following the
Executive's Involuntary Termination, as the case may be; or

(b)          at the Executive's election (on the Election Form attached as
Exhibit A) made no later than thirty (30) days after the Effective Date (and
with respect to services to be performed after the election), payment in either
60, 120, or 180 equal monthly installments (such installments to be considered a
"single" payment for purposes of Code Section 409A), as selected by the
Executive, which installments may commence no earlier than the first day of the
seventh month following the Executive's Termination of Employment.

The Executive may make a subsequent election to further delay a payment or to
change the form of a payment among the methods described above, provided (i) the
election does not take effect until at least twelve (12) months after the date
the election is made, (ii) the payment is deferred for a period of at least five
(5) years from the date such payment would otherwise have been made, and (iii)
the election is made at least twelve (12) months prior to the date any such
payment was scheduled to begin.

Notwithstanding the preceding, no election may be made by the Executive that
will extend payment of the Executive's benefit more than fifteen (15) years past
the date on which the Executive's benefit would otherwise have commenced under
Section 2.1.2(a) following Executive's Normal Retirement Date.

For purposes of this Section 2.1, a lump sum payment shall be equal to the
present value of the aggregate annual benefits that would have been payable to
the Executive had such benefits been paid to Executive in equal monthly
installments over the 180-month period immediately following the Executive's
Termination of Employment, assuming a discount rate equal to the Rate. Payments
in monthly installments shall be determined based on the present value of the
aggregate annual benefits that would have been payable to Executive had such
benefits been paid to Executive in equal monthly installments over the 180-month
period immediately following Executive's Termination of Employment. An interest
rate equal to the Rate will be applied to determine the actuarial equivalent of
the equal monthly installment payments under this Section 2.1.

2.2          Early Retirement Benefit. Upon Termination of Employment on or
after Early Retirement Age but before Normal Retirement Age for reasons other
than (i) death, (ii) Disability, (iii) by the Company without Cause within two
years following a Change in Control or (iv) upon Executive's Involuntary
Termination, the Company shall pay to the Executive the benefit described in
this Section 2.2 in lieu of any other benefits under this Agreement.

2.2.1      Amount of Benefit. The annual benefit under this Section 2.2 is an
amount equal to the greater of (i) the product of (A) the sum of (x) thirty
percent (30%) and (y) three percent (3%) for each Year of Service completed by
the Executive after the Early Retirement Age and (B) the Benefit Basis or (ii)
the benefit under Section 2.3 ; provided

 

6

 

 

that in no event shall the amount payable under this Section 2.2.1 be greater
than the benefit set forth in Section 2.1.1.

2.2.2      Payment of Benefit. The Company shall pay the benefit to the
Executive as follows:

(a)          payment in a lump sum on the first day of the seventh month
following the Executive's Termination of Employment in an amount equal to the
present value of the aggregate annual benefits that would have been payable to
the Executive had such benefits been paid to Executive in equal monthly
installments over the 180-month period immediately following the Executive's
Normal Retirement Age, and assuming a discount rate equal to the Rate; or

(b)          at the Executive's election (on the Election Form attached as
Exhibit A) made no later than thirty (30) days after the Effective Date (and
with respect to services to be performed after the election), payment in either
60, 120, or 180 equal monthly installments (such installments to be considered a
"single" payment for purposes of Code Section 409A), as selected by the
Executive, which installments may commence no earlier than the first day of the
seventh month following the Executive's Termination of Employment.

The Executive may make a subsequent election to delay a payment or to change the
form of a payment among the methods described above, provided (i) the election
does not take effect until at least twelve (12) months after the date the
election is made, (ii) the payment is deferred for a period of at least five (5)
years from the date such payment would otherwise have been made, and (iii) the
election is made at least 12 months prior to the date any such payment was
scheduled to begin.

Notwithstanding the preceding, no election may be made by the Executive that
will extend payment of the Executive's benefit more than fifteen (15) years past
the date on which the Executive's benefit would otherwise have commenced under
Section 2.2.2(a).

For purposes of this Section 2.2, any lump sum payment shall be calculated as
provided in Section 2.2.2(a). Payments in monthly installments shall be
determined based on the actuarial equivalent of the lump sum determined under
Section 2.2.2(a). An interest rate equal to the Rate will be applied to
determine the actuarial equivalent of the equal monthly installment payments
under this Section 2.2.2.

The optional forms of benefit payments under Section 2.2.2(b) shall be available
to Executive only upon the Executive's Termination of Employment on or after
Early Retirement Age but before Normal Retirement Age for reasons other than
death; Disability; termination by the Company without Cause within two years
following a Change in Control; or upon Executive's Involuntary Termination.

2.3          Early Termination Benefit. Upon Early Termination, the Company
shall pay to the Executive the benefit described in this Section 2.3 in lieu of
any other benefit under this Agreement.

 

7

 

 

 

2.3.1      Amount of Benefit. The benefit under this Section 2.3 is the Early
Termination Annual Benefit set forth in Schedule A for the year ending
immediately prior to the Early Termination Date.

Payment of Benefit. The Company shall pay the annual benefit to the Executive in
12 equal monthly installments payable on the first day of each month commencing
with the first month following the Normal Retirement Age2.3.2; provided,
however, that in no event may such benefit commence earlier than the first day
of the seventh month following the Executive's Termination of Employment if the
Executive is then a "specified employee" of the Company within the meaning of
Treasury Regulations Section 1.409A-1(i). The annual benefit shall be paid to
the Executive for 180 months.

2.4          Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 2.4 in lieu of any other benefit
under this Agreement.

2.4.1      Amount of Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, but after Early Retirement Age, the
benefit under this Section 2.4 shall be the annual benefit set forth in Section
2.2.1. If the Executive terminates employment due to Disability prior to Early
Retirement Age, the benefit under this Section 2.4 is the Disability Annual
Benefit set forth in Schedule A for the year ending immediately prior to the
Early Termination Date.

2.4.2      Payment of Benefit. The Company shall pay the annual benefit amount
to the Executive in 12 equal monthly installments payable on the first day of
each month commencing with the month following the Termination of Employment.
The annual benefit shall be paid to the Executive for 180 months.

Article 3

Death Benefits

3.1          Death During Active Service. If the Executive dies while in the
active service of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in this Section 3.1. This benefit shall be
paid in lieu of the Lifetime Benefits of Article 2.

3.1.1      Amount of Benefit. The annual benefit under this Section 3.1 is equal
to the Disability Annual Benefit described in Section 2.4.1.

3.1.2      Payment of Benefit. The Company shall pay the annual benefit to the
Executive's beneficiary in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Executive's death. The
annual benefit shall be paid to the Executive's beneficiary for 180 months.

3.2          Death During Benefit Period. If the Executive dies after the
benefit payments have commenced under this Agreement but before receiving all
such payments, the Company shall pay the remaining benefits to the Executive's
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.

 

8

 

 

 

3.3          Death After Termination of Employment But Before Benefit Payments
Commence. If the Executive is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay to the Executive's beneficiary the benefit payments that the Executive was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Executive's death.

Article 4

Beneficiaries

4.1          Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's estate.

4.2          Facility of Payment. If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incapacitated person or incapable person. The Company may require proof
of incapacity, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.

Article 5

General Limitations

5.1          Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Company shall not pay any benefit under this
Agreement if the Company terminates the Executive's employment for Cause.

5.2          Suicide. The Company shall not pay any benefit under this Agreement
if the Executive commits suicide within two years after the date of this
Agreement.

Article 6

Claims and Review Procedures

6.1          Claims Procedure. The Company shall notify any person or entity
that makes a claim against the Agreement (the "Claimant") in writing, within 90
days of Claimant's written application for benefits, of his or her eligibility
or noneligibility for benefits under the Agreement. If the Company determines
that the Claimant is not eligible for benefits or full benefits, the notice
shall set forth (1) the specific reasons for such denial, (2) a specific
reference to the provisions of the Agreement on which the denial is based, (3) a
description of any additional information or material necessary for the Claimant
to perfect his or her claim, and a description of why it is needed, and (4) an
explanation of the Agreement's claims review

 

9

 

 

procedure and other appropriate information as to the steps to be taken if the
Claimant wishes to have the claim reviewed. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company shall notify the Claimant of the special circumstances and the date by
which a decision is expected to be made, and may extend the time for up to an
additional 90 days.

6.2          Review Procedure. If the Claimant is determined by the Company not
to be eligible for benefits, or if the Claimant believes that he or she is
entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within 60 days after receipt of the notice issued by the
Company. Said petition shall state the specific reasons which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within 60 days after receipt by the Company of the petition, the Company shall
afford the Claimant (and counsel, if any) an opportunity to present his or her
position to the Company verbally or in writing. Claimant (or counsel) shall have
the opportunity to submit written comments, documents, records, and other
information relating to the claim for benefits, and shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the Claimant's claim. The review
shall take into account all comments, documents, records, and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.
The Company shall notify the Claimant of its decision in writing within the
60-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the Claimant and the specific provisions
of the Agreement on which the decision is based. If, because of the need for a
hearing, the 60-day period is not sufficient, the decision may be deferred for
up to another 60 days at the election of the Company, but notice of this
deferral shall be given to the Claimant.

6.3          Special Procedures Applicable to Disability Benefits. If a claim
for benefits under the Agreement is contingent on a determination by the Company
(or its designee) that the Executive suffers from a Disability, the Claimant
shall receive a written response to the initial claim from the Company within 45
days, rather than 90 days. If special circumstances require an extension, the
Company shall notify the Claimant within the 45-day processing period that
additional time is needed. If the Company requests additional information so it
can process the claim, the Claimant will have at least 45 days in which to
provide the information. Otherwise, the initial extension cannot exceed 30 days.
If circumstances require further extension, the Company will again notify the
Claimant, this time before the end of the initial 30-day extension. The notice
will state the date a decision can be expected. In no event will a decision be
postponed beyond an additional 30 days after the end of the first 30-day
extension. The Claimant may request a review of the Company's decision regarding
the Disability claim within 180 days, rather than 60 days. The review must be
conducted by a fiduciary different from the fiduciary who originally denied the
claim, the fiduciary also cannot be subordinate to the fiduciary who originally
denied the claim. If the original denial of the claim was based on a medical
judgment, the reviewing fiduciary must consult with an appropriate health care
professional who was not consulted on the original claim and who is not
subordinate to someone who was The review must identify the medical or
vocational experts consulted on the original claim. The Claimant may request, in
writing, a list of those medical or vocational experts. The

 

10

 

 

Claimant will receive notice of the reviewing fiduciary's final decision
regarding the Disability claim within 45 days, rather than 60 days, of the
request for review.

Article 7

Amendments and Termination

7.1          Amendment. This Agreement may not be amended or modified other than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

7.2          Termination. Notwithstanding the preceding Section 7.1, the Company
shall have the right to terminate this Agreement and to accelerate the payment
of benefits under the Agreement in accordance with Code Section 409A and related
treasury regulations and other guidance issued under Section 409A as follows:

(i)           if all plans or arrangements of a similar type that cover or
benefit employees are terminated; or

(ii)          within 30 days before or 12 months after a Change in Control; or

(iii)          upon the Company's bankruptcy or dissolution.

Article 8

Miscellaneous

8.1          Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.

8.2          No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.

8.3          Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

8.4          Successors. This Agreement is personal to the Executive, and,
without the prior written consent of the Company, shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Subject to the
following sentences of this Section 8.4, this Agreement shall not be assignable
by the Company without the prior written consent of the Executive. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. "Company" means the Company as
hereinbefore defined

 

11

 

 

and any successor to its business and/or assets as aforesaid that assumes and
agrees to perform this Agreement by operation of law or otherwise.

8.5          Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

8.6          Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of South Carolina, without regard to
principles of conflicts of laws.

8.7          Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors.

8.8          Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein. From and after the Effective Date, this Agreement
shall supersede any other agreement between the parties with respect to the
subject matter hereof .

8.9          Administration and Recordkeeping Authority. Except as otherwise
specifically provided herein, the Company shall have the sole responsibility for
and the sole control of the operation, administration, and recordkeeping of this
Agreement and shall have the power and authority to take all action and to make
all decisions and interpretations that may be necessary or appropriate in order
to administer and operate the Agreement, including, without limiting the
generality of the foregoing, the power, duty, and responsibility to:

 

(i)

Resolve and determine all disputes or questions arising under the Agreement,
including the power to determine the rights of the Participant and beneficiaries
and their respective benefits, and to remedy any ambiguities, inconsistencies,
or omissions in the Agreement;

 

(ii)

Adopt such rules of procedure and regulations as in its opinion may be necessary
for the proper and efficient administration of the Agreement and as are
consistent with the Agreement;

 

(iii)

Implement the Agreement in accordance with its terms;

 

(iv)

Establish and revise the method of accounting for the Agreement; and

 

(v)

Maintain a record of benefit payments.

8.10       Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

 

12

 

 

 

8.11       Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

8.12       Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

8.13       Delay of Payment. The Company may delay payment of a benefit
hereunder upon such events and conditions as the IRS may permit in generally
applicable published regulatory or other guidance under Code Section 409A,
including, without limitation, payments that the Company reasonably anticipates
will be subject to the application of Code Section 162(m), or will violate
Federal securities laws or other applicable law, or will violate a loan covenant
or similar contractual requirement; provided that any such delayed payment will
be made at the earliest date at which the Company reasonably anticipates that
the making of the payment would not cause such a violation.

8.14       Acceleration of Payment. Payment of a benefit hereunder may be
accelerated if the Company determines such payment to a person other than the
Executive is necessary to fulfill the terms of a domestic relations order (as
defined in Code Section 414(p)(1)(B)). To the extent permitted under Code
Section 409A and applicable treasury regulations and applicable published
regulatory or other guidance, the Company may authorize payment of any portion
of an Executive's benefit (i) to pay FICA tax imposed on any amounts under this
Agreement and/or (ii) at any time that the Agreement fails to meet the
requirements of Code Section 409A with respect to the Executive, the amount
required to be included in income for the Executive as a result of such failure,
and (iii) to otherwise comply with the requirements of Code Section 409A.

IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have
signed this Agreement.

EXECUTIVE:

COMPANY:

 

THE SOUTH FINANCIAL GROUP, INC.

  /s/ Christopher T. Holmes                              
Christopher T. Holmes

By:  /s/ Mary A. Jeffrey                     

 

Title: Executive Vice President

 

 

 

 

13

 

 

 

BENEFICIARY DESIGNATION

THE SOUTH FINANCIAL GROUP

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

CHRISTOPHER T. HOLMES

I DESIGNATE THE FOLLOWING AS BENEFICIARY OF ANY DEATH BENEFITS UNDER THIS
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT:

Primary:                                          
                                          
                                                             

                                          
                                          
                                                                           

Contingent:                                          
                                          
                                                       

                                          
                                          
                                                                           

NOTE:

To name a trust as beneficiary, please provide the name of the trustee(s) and
the exact name and date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.

Signature:                                                                      

Date:                                           
                                  

 

Accepted by the Company this ____ day of ____________, 200__.

By:                                           
                                    

Title:                                           
                                  

 

14

 

 

 

SCHEDULE A CALCULATIONS

 

THE SOUTH FINANCIAL GROUP

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

 

To determine the Executive's Early Termination Benefit or Disability Retirement
Benefit for the year of the Termination of Employment, the following
calculations shall be made:

 

1.

Project the Benefit Basis as of Normal Retirement Age by increasing the Benefit
Basis as of the Executive's date of Termination of Employment by 5% per year,
compounded annually, until Normal Retirement Age (the "Projected Retirement
Benefit Basis").

 

2.

Multiply the Projected Retirement Benefit Basis by the applicable percentage set
forth in 2.1.1 (the product, "Annual Projected Retirement Benefit").

 

3.

Calculate the discounted value at Normal Retirement Age of the aggregate Annual
Projected Retirement Benefit that would have been paid to the Executive in equal
monthly installments over the 180-month period immediately following the Normal
Retirement Date, by using the Rate, compounded monthly (such discounted value,
the "Lump Sum Projected Retirement Benefit").

 

4.

Calculate the aggregate amount that has accrued through the end of the year
ending immediately prior to the date of the Executive's Termination of
Employment by accruing each month from the Effective Date through Normal
Retirement Age, with interest on such amounts calculated monthly at the Rate, in
order to accumulate to the Lump Sum Projected Retirement Benefit as of the
Normal Retirement Date (the "Accrual Balance").

In the case of Early Termination Benefit:

 

5.

Multiply the Accrual Balance by 10% per Year of Service, subject to a maximum of
100% (the "Vested Accrual Balance").

 

6.

Increase the Vested Accrual Balance by the Rate, compounded monthly, to the
Normal Retirement Age (the "Inflated Vested Accrual Balance").

 

7.

Calculate a fixed annuity which is payable in 180 equal monthly installments,
crediting interest on the unpaid balance of the Inflated Vested Accrual Balance
at the Rate, compounded monthly.

In the case of Disability Retirement Benefit:

 

8.

The Disability Annual Benefit amount is determined by calculating a fixed
annuity which is payable in 180 equal monthly installments, crediting interest
on the unpaid balance of the Accrual Balance at the Rate, compounded monthly.

 

15