Exhibit 10.16

Amendment #2 to

The South Financial Group 2004 Long-Term Incentive Plan

This Amendment #2 (this “Amendment”) to The South Financial Group 2004 Long-Term
Incentive Plan (the “Plan”) is made by The South Financial Group, Inc., to be
effective as of the date hereof, subject to receipt of any necessary shareholder
approval. Capitalized terms not otherwise defined in this Amendment have the
meanings assigned to them in the Plan.

The name of the Plan is hereby changed. The new name of the Plan is “TSFG Long
Term Incentive Plan.”

Except as amended by this Amendment, the Plan is ratified and affirmed in its
entirety.

IN WITNESS WHEREOF, this Amendment is entered into as of August 16, 2006.

 

The South Financial Group, Inc. By:   /s/    WILLIAM S. HUMMERS III        
Name:   William S. Hummers, III Title:   Executive Vice President

 

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Amendment #1 to

The South Financial Group 2004 Long-Term Incentive Plan

This Amendment #1 (this “Amendment”) to The South Financial Group 2004 Long-Term
Incentive Plan (the “Plan”) is made by The South Financial Group, Inc., to be
effective as of the date hereof, subject to receipt of any necessary shareholder
approval. Capitalized terms not otherwise defined in this Amendment have the
meanings assigned to them in the Plan.

The last sentence of Section 3(a) shall be amended to read as follows: No more
than 1,200,000 shares of Restricted Stock may be issued during the term of the
Plan.

The last sentence of Section 8(b)(i) shall be amended to read as follows: No
more than 250,000 shares of Common Stock may be subject to Qualified Performance
Based Awards granted to any Eligible Individual in any fiscal year of the
Company.

Except as amended by this Amendment, the Plan is ratified and affirmed in its
entirety.

IN WITNESS WHEREOF, this Amendment is entered into as of February 18, 2004.

 

The South Financial Group, Inc. By:   /s/    WILLIAM S. HUMMERS III        
Name:   William S. Hummers, III Title:   Executive Vice President

 

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THE SOUTH FINANCIAL GROUP, INC. 2004 LONG-TERM INCENTIVE PLAN

SECTION 1. Purpose; Definitions

The purpose of the Plan is to give the Company a competitive advantage in
attracting, retaining and motivating officers, employees, directors and/or
consultants and to provide the Company and its Subsidiaries and Affiliates with
a stock plan providing incentives directly linked to the profitability of the
Company’s businesses and increases in Company shareholder value.

Certain terms used herein have definitions given to them in the first place in
which they are used. In addition, for purposes of the Plan, the following terms
are defined as set forth below:

(a) “Affiliate” means a corporation or other entity controlled by, controlling
or under common control with the Company.

(b) “Award” means a Stock Appreciation Right, Stock Option, Restricted Stock,
Performance Unit, or other stock-based award granted pursuant to the terms of
the Plan.

(c) “Award Agreement” means any written agreement, contract or other instrument
or document evidencing the grant of an Award.

(d) “Award Cycle” means a period of consecutive fiscal years or portions thereof
designated by the Committee over which Performance Units are to be earned.

(e) “Board” means the Board of Directors of the Company.

(f) “Cause” means, unless otherwise provided by the Committee in an Award
Agreement, (i) “Cause” as defined in any Individual Agreement to which the
Participant is a party, or (ii) if there is no such Individual Agreement or if
it does not define Cause: (A) conviction of the Participant for committing a
felony under federal law or the law of the state in which such action occurred,
(B) dishonesty in the course of fulfilling the Participant’s employment duties,
(C) willful and deliberate failure on the part of the Participant to perform his
or her employment duties in any material respect, or (D) prior to a Change in
Control, such other events as shall be determined by the Committee. The
Committee shall, unless otherwise provided in an Individual Agreement with the
Participant have the sole discretion to determine whether “Cause” exists, and
its determination shall be final.

(g) “Change in Control” and “Change in Control Price” have the meanings set
forth in Sections 11(b) and (c), respectively.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.

(i) “Commission” means the Securities and Exchange Commission or any successor
agency.

(j) “Committee” means the Committee referred to in Section 2.

(k) “Common Stock” means common stock, par value $1.00 per share, of the
Company.

(l) “Company” means The South Financial Group, Inc., a South Carolina
corporation.

(m) “Covered Employee” means a Participant designated prior to the grant of
Restricted Stock or Performance Units by the Committee who is or may be a
“covered employee” within the meaning of Section 162(m)(3) of the Code in the
year in which Restricted Stock or Performance Units are expected to be taxable
to such Participant.

(n) “Disability” means, unless otherwise provided by the Committee,
(i) “Disability” as defined in any Individual Agreement to which the Participant
is a party, or (ii) if there is no such Individual Agreement or it does not
define “Disability,” permanent and total disability as determined under the
Company’s Long Term Disability Plan applicable to the Participant.

 

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(o) “Early Retirement” means retirement from active employment with the Company,
a Subsidiary or Affiliate pursuant to the early retirement provisions of the
applicable pension plan of such employer.

(p) “Effective Date” shall have the meaning set forth in Section 16.

(q) “Eligible Individuals” mean directors, officers, employees and consultants
of the Company or any of its Subsidiaries or Affiliates, and prospective
employees and consultants who have accepted offers of employment or consultancy
from the Company or its Subsidiaries or Affiliates, who are or will be
responsible for or contribute to the management, growth or profitability of the
business of the Company, or its Subsidiaries or Affiliates.

(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.

(s) “Fair Market Value” means, except as otherwise provided by the Committee, as
of any given date, the average of the highest and lowest per-share sales prices
for a share of Common Stock during normal business hours on the NASDAQ or such
other national securities market or exchange as may at the time be the principal
market for the Common Stock, or if the shares were not traded on such national
securities market or exchange on such date, then on the next preceding date on
which such shares of Common Stock were traded, all as reported by such source as
the Committee may select.

(t) “Incentive Stock Option” means any Stock Option designated as, and qualified
as, an “incentive stock option” within the meaning of Section 422 of the Code.

(u) “Individual Agreement” means an employment, consulting or similar written
agreement between a Participant and the Company or one of its Subsidiaries or
Affiliates.

(v) “Involuntary Termination” means a Termination of Employment by reason of an
Involuntary Termination as defined in an Individual Agreement to which the
Participant is a party that is then in effect. If a Participant is not party to
an Individual Agreement, or if it does not define “Involuntary Termination,” no
Termination of Employment of that Participant shall be considered to be an
Involuntary Termination.

(w) “NonQualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

(x) “Normal Retirement” means retirement from active employment with the
Company, a Subsidiary or Affiliate at or after age 65.

(y) “Option Price” shall have the meaning set forth in Section 5(d).

(z) “Outside Director” means a director who qualifies as an “independent
director” within the meaning of Rule 4200 of the National Association of
Securities Dealers, as an “outside director” within the meaning of
Section 162(m) of the Code, and as a “non-employee director” within the meaning
of Rule 16b-3 promulgated under the Exchange Act.

(aa) “Performance Goals” means the performance goals established by the
Committee in connection with the grant of Restricted Stock or Performance Units.
In the case of Qualified Performance-Based Awards, (i) such goals shall be based
on the attainment of specified levels of one or more of the following measures:
specified levels of the Company’s stock price, market share, sales, asset
quality, non-performing assets, earnings per share, return on equity, costs,
operating income, marketing-spending efficiency, return on operating assets,
return on assets, core non-interest income and/or levels of cost savings and
(ii) such Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations.

(bb) “Performance Units” means an Award granted under Section 8.

(cc) “Plan” means The South Financial Group, Inc. 2004 Long Term Incentive Plan,
as set forth herein and as hereinafter amended from time to time.

 

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(dd) “Qualified Performance-Based Award” means an Award of Restricted Stock or
Performance Units designated as such by the Committee at the time of grant,
based upon a determination that (i) the recipient is or may be a “covered
employee” within the meaning of Section 162(m)(3) of the Code in the year in
which the Company would expect to be able to claim a tax deduction with respect
to such Restricted Stock or Performance Units and (ii) the Committee wishes such
Award to qualify for the Section 162(m) Exemption.2

(ee) “Restricted Stock” means an Award granted under Section 7.

(ff) “Retirement” means Normal or Early Retirement.

(gg) “Rule 16b-3” means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.

(hh) “Section 162(m) Exemption” means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.

(ii) “Stock Appreciation Right” means an Award granted under Section 6.

(jj) “Stock Option” means an Award granted under Section 5.

(kk) “Subsidiary” means any corporation, partnership, joint venture or other
entity during any period in which at least a 50% voting or profits interest is
owned, directly or indirectly, by the Company or any successor to the Company.

(ll) “Termination of Employment” means the termination of the Participant’s
employment with, or performance of services for, the Company and any of its
Subsidiaries or Affiliates. An Participant employed by, or performing services
for, a Subsidiary or an Affiliate shall also 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 Participant does not immediately
thereafter become an employee of, or service-provider for, the Company or
another Subsidiary or Affiliate. Temporary absences from employment because of
illness, vacation or leave of absence and transfers among the Company and its
Subsidiaries and Affiliates shall not be considered Terminations of Employment.

SECTION 2. Administration

(a) The Plan shall be administered by the Compensation Committee or such other
committee of the Board as the Board may from time to time designate (the
“Committee”), which shall be composed of not less than three Outside Directors,
and shall be appointed by and serve at the pleasure of the Board, except with
respect to Awards to non-employee directors, which shall be administered by the
Nominating Committee. All references to the “Committee” with respect to grants
to non-employee directors shall refer to the Nominating Committee.

(b) The Committee shall have plenary authority to grant Awards pursuant to the
terms of the Plan to Participants.

(c) Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

(i) To select the Participants to whom Awards may from time to time be granted;

(ii) To determine whether and to what extent any type of Award is to be granted
hereunder;

(iii) To determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

(iv) To determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the Option Price (subject to Section 5(a)), any
vesting condition, restriction or limitation (which may be related to the
performance of the Participant, the Company or any Subsidiary or Affiliate) and
any vesting acceleration or forfeiture waiver regarding any Award and the shares
of Common Stock relating thereto, based on such factors as the Committee shall
determine;

 

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(v) Subject to the terms of the Plan, including without limitation Section 13,
to modify, amend or adjust the terms and conditions of any Award, at any time or
from time to time, including but not limited to Performance Goals; provided,
however, that the Committee may not adjust upwards the amount payable with
respect to a Qualified Performance-Based Award or waive or alter the Performance
Goals associated therewith in a manner that would violate Section 162(m) of the
Code;

(vi) To determine to what extent and under what circumstances Common Stock and
other amounts payable with respect to an Award shall be deferred; and

(vii) To determine under what circumstances an Award may be settled in cash or
Common Stock under Sections 5(k), 6(b)(ii) and 8(b)(iv).

(d) The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.

(e) The Committee may act only by a majority of its members then in office.
Except to the extent prohibited by applicable law or the applicable rules of a
stock exchange, the Committee may (i) allocate all or any portion of its
responsibilities and powers to any one or more of its members and (ii) delegate
all or any part of its responsibilities and powers to any person or persons
selected by it, provided that no such delegation may be made that would cause
Awards or other transactions under the Plan to cease to be exempt from
Section 16(b) of the Exchange Act or cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption. Any such allocation or delegation may be revoked by
the Committee at any time.

(f) Any determination made by the Committee with respect to any Award shall be
made in the sole discretion of the Committee at the time of the grant of the
Award or, unless in contravention of any express term of the Plan, at any time
thereafter. All decisions made by the Committee or any appropriately delegated
officer pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company, its Affiliates, Subsidiaries, shareholders and
Participants.

(g) Any authority granted to the Committee may also be exercised by the full
Board, except to the extent that the grant or exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption under)
the short-swing profit recovery provisions of Section 16 of the Exchange Act or
cause an Award designated as a Qualified Performance-Based Award not to qualify
for, or to cease to qualify for, the Section 162(m) Exemption. To the extent
that any permitted action taken by the Board conflicts with action taken by the
Committee, the Board action shall control.

SECTION 3. Common Stock Subject to Plan

(a) The maximum number of shares of Common Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be 2,000,000. No
Participant may be granted Stock Options and Stock Appreciation Rights covering
in excess of 100,000 shares of Common Stock in any calendar year. Shares subject
to an Award under the Plan may be authorized and unissued shares or may be
treasury shares. No more than 600,000 shares of Restricted Stock may be issued
during the term of the Plan.

(b) If any Award is forfeited, or if any Stock Option (or Stock Appreciation
Right, if any) terminates, expires or lapses without being exercised, or if any
Stock Appreciation Right is exercised for cash, shares of Common Stock subject
to such Awards shall again be available for distribution in connection with
Awards under the Plan. If the Option Price of any Stock Option or the Strike
Price of any Freestanding Stock Appreciation Right is satisfied by delivering
shares of Common Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Common Stock delivered to the

 

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Participant net of the shares of Common Stock delivered to the Company or
attested to shall be deemed delivered for purposes of determining the maximum
numbers of shares of Common Stock available for delivery under the Plan. To the
extent any shares of Common Stock subject to an Award are not delivered to a
Participant because such shares are used to satisfy an applicable
tax-withholding obligation, such shares shall not be deemed to have been
delivered for purposes of determining the maximum number of shares of Common
Stock available for delivery under the Plan. The maximum number of shares of
Common Stock that may be issued pursuant to Stock Options intended to be
Incentive Stock Options shall be 1,400,000 shares.

(c) In the event of any change in corporate capitalization (including, but not
limited to, a change in the number of shares of Common Stock outstanding), such
as a stock split or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company (including any extraordinary cash or stock dividend), any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company, the Committee or Board may make such substitution or adjustments
in the aggregate number and kind of shares reserved for issuance under the Plan,
and the maximum limitation upon Stock Options and Stock Appreciation Rights and
other Awards to be granted to any Participant, in the number, kind and Option
Price and Strike Price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion (including, without limitation, an amount in cash therefor);
provided, however, that the number of shares subject to any Award shall always
be a whole number. Such adjusted Option Price shall also be used to determine
the amount payable by the Company upon the exercise of any Stock Appreciation
Right associated with any Stock Option.

SECTION 4. Eligibility

Awards may be granted under the Plan to Eligible Individuals.

SECTION 5. Stock Options

(a) Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and NonQualified
Stock Options. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.

(b) The Committee shall have the authority to grant any Participant Incentive
Stock Options, NonQualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided, however, that
grants hereunder are subject to the limits on grants set forth in Section 3.
Incentive Stock Options may be granted only to employees of the Company and its
subsidiaries or parent corporation (within the meaning of Section 424(f) of the
Code). To the extent that any Stock Option is not designated as an Incentive
Stock Option or even if so designated does not qualify as an Incentive Stock
Option on or subsequent to its grant date, it shall constitute a NonQualified
Stock Option.

(c) Stock Options shall be evidenced by Award Agreements, the terms and
provisions of which may differ. An Award Agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
NonQualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee by resolution selects a Participant to receive a grant of a Stock
Option, determines the number of shares of Common Stock to be subject to such
Stock Option to be granted to such Participant and specifies the terms and
provisions of the Stock Option. The Company shall notify a Participant of any
grant of a Stock Option, and a written Award Agreement shall be duly executed
and delivered by the Company to the Participant. Such agreement or agreements
shall become effective upon execution by the Company and the Participant.

 

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(d) Stock Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:

(i) Option Price. The Committee shall determine the option price per share of
Common Stock purchasable under a Stock Option (the “Option Price”). The Option
Price per share of Common Stock subject to a Stock Option shall not be less than
the Fair Market Value of the Common Stock subject to such Stock Option on the
date of grant, other than with respect to Stock Option granted in lieu of
foregone compensation, unless the Committee determines otherwise. Except for
adjustments pursuant to Section 3(c), in no event may any Stock Option granted
under this Plan be amended to decrease the Option Price thereof, cancelled in
conjunction with the grant of any new Stock Option with a lower Option Price, or
otherwise be subject to any action that would be treated, for accounting
purposes, as a “repricing” of such Stock Option, unless such amendment,
cancellation, or action is approved by the Company’s shareholders in accordance
with applicable law and stock exchange rules.

(ii) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Incentive Stock Option shall be exercisable more than 10 years after the
date the Stock Option is granted.

(iii) Exercisability. Except as otherwise provided herein, Stock Options shall
be exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part, based on such factors
as the Committee may determine. In addition, the Committee may at any time
accelerate the exercisability of any Stock Option.

(iv) Method of Exercise. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the option
term by giving written notice of exercise to the Company specifying the number
of shares of Common Stock subject to the Stock Option to be purchased. Such
notice shall be accompanied by payment in full of the Option Price by certified
or bank check or such other instrument as the Company may accept. If approved by
the Committee, payment, in full or in part, may also be made in the form of
unrestricted Common Stock (by delivery of such shares or by attestation) already
owned by the Participant of the same class as the Common Stock subject to the
Stock Option (based on the Fair Market Value of the Common Stock on the date the
Stock Option is exercised); provided, however, that, in the case of an Incentive
Stock Option, the right to make a payment in the form of already owned shares of
Common Stock of the same class as the Common Stock subject to the Stock Option
may be authorized only at the time the Stock Option is granted and provided,
further, that such already owned shares have been held by the Participant for at
least six months at the time of exercise or had been purchased on the open
market. If approved by the Committee, to the extent permitted by applicable law,
payment in full or in part may also be made by delivering a properly executed
exercise notice to the Company, together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds necessary to pay the Option Price, and, if requested, the amount of any
federal, state, local or foreign withholding taxes. To facilitate the foregoing,
the Company may enter into agreements for coordinated procedures with one or
more brokerage firms. No shares of Common Stock shall be delivered until full
payment therefor has been made. Except as otherwise provided in Section 5(m)
below, a Participant shall have all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Participant has given written notice of
exercise, has paid in full for such shares and, if requested by the Company, has
given the representation described in Section 15(a).

(e) Nontransferability of Stock Options. No Stock Option shall be transferable
by the Participant other than (i) by will or by the laws of descent and
distribution or any other testamentary distribution; or (ii) in the case of a
NonQualified Stock Option, unless otherwise determined by the Committee, to such

 

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Participant’s children or family members, whether directly or indirectly or by
means of a trust or partnership or otherwise. For purposes of this Plan, unless
otherwise determined by the Committee, “family member” shall have the meaning
given to such term in General Instructions A.1(a)(5) to Form S-8 under the
Securities Act of 1933 as amended, or any successor thereto. All Stock Options
shall be exercisable, subject to the terms of this Plan, only by the
Participant, the guardian or legal representative of the Participant, or any
person to whom such option is transferred pursuant to this paragraph, it being
understood that the term “holder” and “Participant” include such guardian, legal
representative and other transferee; provided, however, that Termination of
Employment shall continue to refer to the Termination of Employment of the
original Participant.

(f) Termination by Death. Unless otherwise determined by the Committee, if a
Participant incurs a Termination of Employment by reason of death, any Stock
Option held by such Participant may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may determine, until
the expiration of the stated term of such Stock Option, except in the case of an
Incentive Stock Option, which shall be exercisable for (i) a period of one year
from the date of such death or (ii) the expiration of the stated term of the
Incentive Stock Option, whichever period is the shorter.

(g) Termination by Reason of Disability. Unless otherwise determined by the
Committee, if a Participant incurs a Termination of Employment by reason of
Disability, any Stock Option held by such Participant (or the appointed
fiduciary of such Participant) may thereafter be exercised by the Participant
(or the appointed fiduciary of such Participant), to the extent it was
exercisable at the time of termination, or on such accelerated basis as the
Committee may determine, for a period of one year (or such other period as the
Committee may specify in the Award Agreement) from the date of such Termination
of Employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the Participant dies
within such period, any unexercised Stock Option held by such Participant shall,
notwithstanding the expiration of such period, continue to be exercisable to the
extent to which it was exercisable at the time of death until the expiration of
the stated term of such Stock Option. In the event of Termination of Employment
by reason of Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a NonQualified Stock
Option.

(h) Termination by Reason of Retirement. Unless otherwise determined by the
Committee, if a Participant incurs a Termination of Employment by reason of
Retirement, any Stock Option held by such Participant may thereafter be
exercised by the Participant, to the extent it was exercisable at the time of
such Retirement, or on such accelerated basis as the Committee may determine,
for a period of one year (or such other period as the Committee may specify in
the Award Agreement) from the date of such Termination of Employment or until
the expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the Participant dies within such period any
unexercised Stock Option held by such Participant shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it
was exercisable at the time of death for until the expiration of the stated term
of such Stock Option, except in the case of an Incentive Stock Option, which
shall be exercisable for (i) a period of one year from the date of such death or
(ii) the expiration of the stated term of the Incentive Stock Option, whichever
period is the shorter. In the event of Termination of Employment by reason of
Retirement, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a NonQualified Stock Option.

(i) Other Termination. Unless otherwise determined by the Committee: (A) if a
Participant incurs a Termination of Employment for Cause, all Stock Options held
by such Participant shall thereupon terminate; and (B) if a Participant incurs a
Termination of Employment for any reason other than death,

 

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Disability, Retirement or for Cause, any Stock Option held by such Participant,
to extent it was then exercisable at the time of termination, or on such
accelerated basis as the Committee may determine, may be exercised for the
lesser of three months from the date of such Termination of Employment or the
balance of such Stock Option’s term; provided, however, that if the Participant
dies within such three-month period, any unexercised Stock Option held by such
Participant shall, notwithstanding the expiration of such three-month period,
continue to be exercisable to the extent to which it was exercisable at the time
of death until the expiration of the stated term of such Stock Option, except in
the case of an Incentive Stock Option, which shall be exercisable for (i) a
period of one year from the date of such death or (ii) the expiration of the
stated term of the Incentive Stock Option, whichever period is the shorter.

(j) Change of Control Termination. Notwithstanding any other provision of this
Plan to the contrary, in the event a Participant incurs a Termination of
Employment during the 24-month period following a Change in Control other than
(i) by the Company for Cause, (ii) by reason of death, (iii) by reason of
Disability or (iv) by voluntary resignation other than by reason of an
Involuntary Termination, any Stock Option held by such Participant may
thereafter be exercised by the Participant, to the extent it was exercisable at
the time of termination, or on such accelerated basis as the Committee may
determine, for (A) the longer of one year from such date of termination or
(2) such other period as may be provided in the Plan for such Termination of
Employment or as the Committee may provide in the Award Agreement or Individual
Agreement, or (B) until expiration of the stated term of such Stock Option,
whichever period is the shorter. If an Incentive Stock Option is exercised after
the expiration of the post-termination exercise periods that apply for purposes
of Section 422 of the Code, such Stock Option will thereafter be treated as a
NonQualified Stock Option.

(k) Cashing Out of Stock Option. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of
Common Stock for which a Stock Option is being exercised by paying the
Participant an amount, in cash or Common Stock, equal to the excess of the Fair
Market Value of the Common Stock over the Option Price times the number of
shares of Common Stock for which the Option is being exercised on the effective
date of such cash-out.

(l) Change in Control Cash-Out. Notwithstanding any other provision of the Plan,
during the 60-day period from and after a Change in Control (the “Exercise
Period”), if the Committee shall determine at the time of grant or thereafter, a
Participant shall have the right, whether or not the Stock Option is fully
exercisable and in lieu of the payment of the Option Price for the shares of
Common Stock being purchased under the Stock Option and by giving notice to the
Company, to elect (within the Exercise Period) to surrender all or part of the
Stock Option to the Company and to receive cash, within 30 days of such
election, in an amount equal to the amount by which the Change in Control Price
per share of Common Stock on the date of such election shall exceed the Option
Price per share of Common Stock under the Stock Option (the “Spread”) multiplied
by the number of shares of Common Stock granted under the Stock Option as to
which the right granted under this Section 5(l) shall have been exercised.

(m) Deferral of Option Shares. The Committee may from time to time establish
procedures pursuant to which a Participant may elect to defer, until a time or
times later than the exercise of a Stock Option, receipt of all or a portion of
the shares of Common Stock subject to such Stock Option and/or to receive cash
at such later time or times in lieu of such deferred shares, all on such terms
and conditions as the Committee shall determine. If any such deferrals are
permitted, then notwithstanding Section 5(d) above, a Participant who elects
such deferral shall not have any rights as a shareholder with respect to such
deferred shares unless and until shares are actually delivered to the
Participant with respect thereto, except to the extent otherwise determined by
the Committee.

 

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SECTION 6. Stock Appreciation Rights

(a) Grant and Exercise. Stock Appreciation Rights may be granted alone
(“Freestanding Stock Appreciation Rights”) or in conjunction with all or part of
any Stock Option granted under the Plan (“Tandem Stock Appreciation Rights”).

(b) Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined by the Committee, including the following:

(i) Relationship to Related Stock Option. A Stock Appreciation Right issued in
conjunction with a NonQualified Stock Option may be granted either at or after
the time of grant of such Stock Option. A Stock Appreciation Right issued in
conjunction with an Incentive Stock Option may be granted only at the time of
grant of such Stock Option. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Stock Options
to which they relate are exercisable in accordance with the provisions of
Section 5.

(ii) Settlement. Upon the exercise of a Tandem Stock Appreciation Right, a
Participant shall be entitled to receive an amount in cash, shares of Common
Stock or a combination of cash and shares, equal to (A) the excess of the Fair
Market Value of one share of Common Stock over the Option Price per share
specified in the related Stock Option multiplied by (B) the number of shares of
Common Stock in respect of which such Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form of payment.
The Committee may from time to time establish procedures pursuant to which a
Participant may elect to further defer receipt of cash or shares in settlement
of Tandem Stock Appreciation Rights for a specified period or until a specified
event, all on such terms and conditions as the Committee shall determine.

(iii) Nontransferability. Tandem Stock Appreciation Rights shall be transferable
only to the extent that the underlying Stock Option is transferable pursuant to
Section 5(e).

(iv) Method of Exercise. A Tandem Stock Appreciation Right may be exercised by a
Participant by surrendering the applicable portion of the related Stock Option
in accordance with procedures established by the Committee. Upon such exercise
and surrender, the Participant shall be entitled to receive an amount determined
in the manner prescribed by Section 6(b)(ii). Stock Options which have been so
surrendered shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised. Any Tandem Stock Appreciation Right
shall terminate and no longer be exercisable upon the termination or exercise of
the related Stock Option.

(c) Terms and Conditions of Freestanding Stock Appreciation Rights. Freestanding
Stock Appreciation Rights shall be subject to such terms and conditions as shall
be determined by the Committee, including the following:

(i) Term. The Committee shall determine the stated term of each Freestanding
Stock Appreciation Right granted under this Plan.

(ii) Strike Price. Unless provided otherwise by the Committee, the strike price
(the “Strike Price”) per share of Common Stock subject to a Freestanding Stock
Appreciation Right shall be the Fair Market Value of the Common Stock on the
date of grant, except with respect to Freestanding Stock Appreciation Rights
granted in lieu of foregone compensation. Except for adjustments pursuant to
Section 3(c), in no event may any Stock Appreciation Right granted under this
Plan be amended to decrease the Strike Price thereof, cancelled in conjunction
with the grant of any new Stock Appreciation Right with a lower Strike Price, or
otherwise be subject to any action that would be treated, for accounting
purposes, as a “repricing” of such Stock Appreciation Right, unless such
amendment, cancellation, or action is approved by the Company’s shareholders in
accordance with applicable law and stock exchange rules.

(iii) Exercisability. Except as otherwise provided herein, Freestanding Share
Appreciation Rights shall be exercisable at such time or times and subject to
such terms and conditions as shall be

 

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determined by the Committee, and the Committee may at any time accelerate the
exercisability of any Stock Appreciation Right. If the Committee provides that
any Stock Appreciation Right is exercisable only in installments, the Committee
may at any time waive such installment exercise provisions, in whole or in part,
based on such factors as the Committee may determine.

(iv) Settlement. Upon the exercise of a Freestanding Stock Appreciation Right, a
Participant shall be entitled to receive an amount in cash, shares of Common
Stock or a combination of cash and shares, equal to (A) the excess of the Fair
Market Value of one share of Common Stock over the applicable Strike Price
multiplied by (B) the number of shares of Common Stock in respect of which the
Freestanding Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.

(v) Nontransferability. No Freestanding Stock Appreciation Right shall be
transferable by a Participant other than by will or by the laws of descent and
distribution or as otherwise expressly permitted by the Committee, including, if
so permitted, pursuant to a transfer to such Participant’s children or family
members, whether directly or indirectly or by means of a trust or partnership or
otherwise. For purposes of this Plan, unless otherwise determined by the
Committee, “family member” shall have the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933 as amended,
and any successor thereto. All Freestanding Stock Appreciation Rights shall be
exercisable, subject to the terms of this Plan, only by the Participant, the
guardian or legal representative of the Participant, or any person to whom such
Freestanding Stock Appreciation Right is transferred pursuant to this paragraph,
it being understood that the terms “holder” and “Participant” include such
guardian, legal representative and other transferee; provided, however, that the
term “Termination of Employment” shall continue to refer to the Termination of
Employment of the original Participant.

(vi) Termination by Death. Unless otherwise determined by the Committee, if a
Participant incurs a Termination of Employment by reason of death, any
Freestanding Stock Appreciation Right held by such Participant may thereafter be
exercised, to the extent then exercisable, or on such accelerated basis as the
Committee may determine, until the expiration of the stated term of such
Freestanding Stock Appreciation Right.

(vii) Termination by Reason of Disability. Unless otherwise determined by the
Committee, if a Participant incurs a Termination of Employment by reason of
Disability, any Freestanding Stock Appreciation Right held by such Participant
may thereafter be exercised by the Participant, to the extent it was exercisable
at the time of termination, or on such accelerated basis as the Committee may
determine, for a period of one year (or such other period as the Committee may
specify in the Award Agreement) from the date of such Termination of Employment
or until the expiration of the stated term of such Freestanding Stock
Appreciation Right, whichever period is the shorter; provided, however, that if
the Participant dies within such period, any unexercised Freestanding Stock
Appreciation Right held by such Participant shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it
was exercisable at the time of death until the expiration of the stated term of
such Freestanding Stock Appreciation Right.

(viii) Termination by Reason of Retirement. Unless otherwise determined by the
Committee, if a Participant incurs a Termination of Employment by reason of
Retirement, any Freestanding Stock Appreciation Right held by such Participant
may thereafter be exercised by the Participant, to the extent it was exercisable
at the time of such Retirement, or on such accelerated basis as the Committee
may determine, for a period of one year (or such other period as the Committee
may specify in the Award Agreement) from the date of such Termination of
Employment or until the expiration of the stated term of such Freestanding Stock
Appreciation Right, whichever period is the shorter; provided, however, that if
the Participant dies within such period any unexercised Freestanding Stock
Appreciation Right held by such Participant shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it
was exercisable at the time of death until the expiration of the stated term of
such Freestanding Stock Appreciation Right.

 

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(ix) Other Termination. Unless otherwise determined by the Committee: (A) if a
Participant incurs a Termination of Employment for Cause, all Freestanding Stock
Appreciation Rights held by such Participant shall thereupon terminate; and
(B) if a Participant incurs a Termination of Employment for any reason other
than death, Disability, Retirement or for Cause, any Freestanding Stock
Appreciation Right held by such Participant, to extent it was then exercisable
at the time of termination, or on such accelerated basis as the Committee may
determine, may be exercised for the lesser of three months from the date of such
Termination of Employment or the balance of such Freestanding Stock Appreciation
Right’s term; provided, however, that if the Participant dies within such
three-month period, any unexercised Freestanding Stock Appreciation Right held
by such Participant shall, notwithstanding the expiration of such three-month
period, continue to be exercisable to the extent to which it was exercisable at
the time of death until the expiration of the stated term of such Freestanding
Stock Appreciation Right.

(x) Change of Control Termination. Notwithstanding any other provision of this
Plan to the contrary, in the event a Participant incurs a Termination of
Employment during the 24-month period following a Change in Control other than
(i) by the Company for Cause, (ii) by reason of death or (iii) by reason of
Disability or (iv) by voluntary resignation other than by reason of an
Involuntary Termination, any Freestanding Stock Appreciation Right held by such
Participant may thereafter be exercised by the Participant, to the extent it was
exercisable at the time of termination, or on such accelerated basis as the
Committee may determine, for (A) the longer of one year from such date of
termination or (2) such other period as may be provided in the Plan for such
Termination of Employment or as the Committee may provide in the Award
Agreement, or (B) until expiration of the stated term of such Freestanding Stock
Appreciation Right, whichever period is the shorter.

(xi) Change in Control Cash-Out. Notwithstanding any other provision of the
Plan, during the 60-day period from and after a Change in Control (the “Exercise
Period”), if the Committee shall determine at the time of grant or thereafter, a
holder of a Freestanding Stock Appreciation Right shall have the right, whether
or not such Stock Appreciation Right is fully exercisable, to surrender all or
part of such Stock Appreciation Right to the Company and to receive cash, within
30 days of such election, in an amount equal to (A) the amount by which the
Change in Control Price per share of Common Stock on the date of such election
shall exceed the Strike Price under such Stock Appreciation Right multiplied by
(B) the number of shares of Common Stock subject to the Stock Appreciation Right
as to which the right granted under this Section 6(c)(xi) shall have been
exercised.

(xii) Deferral. The Committee may from time to time establish procedures
pursuant to which a Participant may elect to further defer receipt of cash or
shares in settlement of Freestanding Stock Appreciation Rights for a specified
period or until a specified event, subject in each case to the Committee’s
approval and to such terms as are determined by the Committee.

SECTION 7. Restricted Stock

(a) Administration. Shares of Restricted Stock may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine
the Participants to whom and the time or times at which grants of Restricted
Stock will be awarded, the number of shares to be awarded to any Participant,
the conditions for vesting, the time or times within which such Awards may be
subject to forfeiture and any other terms and conditions of the Awards, in
addition to those contained in Section 7(c).

(b) Awards and Certificates. Shares of Restricted Stock shall be evidenced in
such manner as the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any certificate
issued in respect of shares of Restricted Stock shall be registered in the name
of such Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of The
South Financial Group, Inc. 2004 Long Term Incentive

 

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Plan and an Award Agreement. Copies of such Plan and Agreement are on file at
the offices of The South Financial Group, 102 S. Main Street, Greenville, SC
29601.”

The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the Participant shall
have delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Award.

(c) Terms and Conditions. Shares of Restricted Stock shall be subject to the
following terms and conditions:

(i) The Committee may, prior to or at the time of grant, designate an Award of
Restricted Stock as a Qualified Performance-Based Award, in which event it shall
condition the grant or vesting, as applicable, of such Restricted Stock upon the
attainment of Performance Goals. If the Committee does not designate an Award of
Restricted Stock as a Qualified Performance-Based Award, it may also condition
the grant or vesting thereof upon the attainment of Performance Goals.
Regardless of whether an Award of Restricted Stock is a Qualified
Performance-Based Award, the Committee may also condition the grant or vesting
thereof upon the continued service of the Participant. The conditions for grant
or vesting and the other provisions of Restricted Stock Awards (including
without limitation any applicable Performance Goals) need not be the same with
respect to each recipient. The Committee may at any time, in its sole
discretion, accelerate or waive, in whole or in part, any of the foregoing
restrictions; provided, however, that in the case of Restricted Stock that is a
Qualified Performance-Based Award, the applicable Performance Goals have been
satisfied.

(ii) Subject to the provisions of the Plan and the Award Agreement referred to
in Section 7(c)(vi), during the period, if any, set by the Committee, commencing
with the date of such Award for which such Participant’s continued service is
required (the “Restriction Period”), and until the later of (A) the expiration
of the Restriction Period and (B) the date the applicable Performance Goals (if
any) are satisfied, the Participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber shares of Restricted Stock; provided
that, to the extent permitted by applicable law, the foregoing shall not prevent
a Participant from pledging Restricted Stock as security for a loan, the sole
purpose of which is to provide funds to pay the Option Price for Stock Options.

(iii) Except as provided in this paragraph (iii) and Sections 7(c)(i) and
7(c)(ii) and the Award Agreement, the Participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is the subject of the
Restricted Stock, including, if applicable, the right to vote the shares and the
right to receive any cash dividends. If so determined by the Committee in the
applicable Award Agreement and subject to Section 15(e) of the Plan, (A) cash
dividends on the class or series of Common Stock that is the subject of the
Restricted Stock Award shall be automatically deferred and reinvested in
additional Restricted Stock, held subject to the vesting of the underlying
Restricted Stock, or held subject to meeting Performance Goals applicable only
to dividends, and (B) dividends payable in Common Stock shall be paid in the
form of Restricted Stock of the same class as the Common Stock with which such
dividend was paid, held subject to the vesting of the underlying Restricted
Stock, or held subject to meeting Performance Goals applicable only to
dividends.

(iv) Except to the extent otherwise provided in the applicable Award Agreement
or Section 7(c)(i), 7(c)(ii), 7(c)(v) or 11(a)(ii), upon a Participant’s
Termination of Employment for any reason during the Restriction Period or before
the applicable Performance Goals are satisfied, all shares still subject to
restriction shall be forfeited by the Participant; provided, however, that the
Committee shall have the discretion to waive, in whole or in part, any or all
remaining restrictions (other than, in the case of Restricted Stock with respect
to which a Participant is a Covered Employee, satisfaction of the applicable
Performance Goals unless the Participant’s employment is terminated by reason of
death or Disability by the Company without Cause or by the Participant for

 

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“Good Reason” (as defined in any applicable Individual Agreement)) with respect
to any or all of such Participant’s shares of Restricted Stock.

(v) If and when any applicable Performance Goals are satisfied and the
Restriction Period expires without a prior forfeiture of the Restricted Stock,
unlegended certificates for such shares shall be delivered to the Participant
upon surrender of the legended certificates.

(vi) Each Award shall be confirmed by, and be subject to, the terms of an Award
Agreement.

SECTION 8. Performance Units

(a) Administration. Performance Units may be awarded either alone or in addition
to other Awards granted under the Plan. The Committee shall determine the
Participants to whom and the time or times at which Performance Units shall be
awarded, the number of Performance Units to be awarded to any Participant), the
duration of the Award Cycle and any other terms and conditions of the Award, in
addition to those contained in Section 8(b).

(b) Terms and Conditions. Performance Units Awards shall be subject to the
following terms and conditions:

(i) The Committee may, prior to or at the time of the grant, designate
Performance Units as Qualified Performance-Based Awards, in which event it shall
condition the settlement thereof upon the attainment of Performance Goals. If
the Committee does not designate Performance Units as Qualified
Performance-Based Awards, it may also condition the settlement thereof upon the
attainment of Performance Goals. Regardless of whether Performance Units are
Qualified Performance-Based Awards, the Committee may also condition the
settlement thereof upon the continued service of the Participant. The provisions
of such Awards (including without limitation any applicable Performance Goals)
need not be the same with respect to each recipient. Subject to the provisions
of the Plan and the Award Agreement referred to in Section 8(b)(v), Performance
Units may not be sold, assigned, transferred, pledged or otherwise encumbered
during the Award Cycle. No more than 25,000 shares of Common Stock may be
subject to Qualified Performance Based Awards granted to any Eligible Individual
in any fiscal year of the Company.

(ii) Except to the extent otherwise provided in the applicable Award Agreement
or Section 8(b)(ii) or 11(a)(iii), upon a Participant’s Termination of
Employment for any reason during the Award Cycle or before any applicable
Performance Goals are satisfied, all rights to receive cash or stock in
settlement of the Performance Units shall be forfeited by the Participant;
provided, however, that the Committee shall have the discretion to waive, in
whole or in part, any or all remaining payment limitations (other than, in the
case of Performance Units that are Qualified Performance-Based Awards,
satisfaction of the applicable Performance Goals unless the Participant’s
employment is terminated by reason of death or Disability by the Company without
Cause or by the Participant for Good Reason) with respect to any or all of such
Participant’s Performance Units.

(iii) An Participant may elect to further defer receipt of cash or shares in
settlement of Performance Units for a specified period or until a specified
event, subject in each case to the Committee’s approval and to such terms as are
determined by the Committee. Subject to any exceptions adopted by the Committee,
such election must generally be made prior to commencement of the Award Cycle
for the Performance Units in question.

(iv) At the expiration of the Award Cycle, the Committee shall evaluate the
Company’s performance in light of any Performance Goals for such Award, and
shall determine the number of Performance Units granted to the Participant which
have been earned, and the Committee shall then cause to be delivered (A) a
number of shares of Common Stock equal to the number of Performance Units
determined by the Committee to have been earned, or (B) cash equal to the Fair
Market Value of such number of shares of Common Stock to the Participant, as the
Committee shall elect (subject to any deferral pursuant to Section 8(b)(iii)).

 

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(v) Each Award shall be confirmed by, and be subject to, the terms of an Award
Agreement.

SECTION 9. Tax Offset Bonuses

At the time an Award is made hereunder or at any time thereafter, the Committee
may grant to the Participant receiving such Award the right to receive a cash
payment in an amount specified by the Committee, to be paid at such time or
times (if ever) as the Award results in compensation income to the Participant,
for the purpose of assisting the Participant to pay the resulting taxes, all as
determined by the Committee and on such other terms and conditions as the
Committee shall determine.

SECTION 10. Other Stock-Based Awards

Other Awards of Common Stock and other Awards that are valued in whole or in
part by reference to, or are otherwise based upon, Common Stock, including
(without limitation) dividend equivalents and convertible debentures, may be
granted either alone or in conjunction with other Awards granted under the Plan.

SECTION 11. Change in Control Provisions

(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, unless otherwise provided by the Committee in any Award Agreement, in
the event of a Change in Control:

(i) Any Stock Options and Stock Appreciation Rights outstanding as of the date
such Change in Control, and which are not then exercisable and vested, shall
become fully exercisable and vested.

(ii) The restrictions and deferral limitations applicable to any Restricted
Stock shall lapse, and such Restricted Stock shall become free of all
restrictions and become fully vested.

(iii) All Performance Units shall be considered to be earned and payable in
full, and any deferral or other restriction shall lapse and such Performance
Units shall be settled in cash as promptly as is practicable.

(b) Definition of Change in Control. For purposes of the Plan, a “Change in
Control” shall mean the happening of any of the following events:

(i) An acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (1) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (2) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); excluding, however, the following: (1) Any acquisition directly
from the Company, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired
directly from the Company, (2) Any acquisition by the Company, (3) Any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company, or (4) Any
acquisition pursuant to a transaction which complies with clauses (1), (2) and
(3) of subsection (iii) of this Section 11(b); or

(ii) A change in the composition of the Board such that the individuals who, as
of the Effective Date, constitute the Board (such Board shall be hereinafter
referred to as the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of this
Section 11(b), that any individual who becomes a member of the Board subsequent
to the Effective Date, whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso)

 

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shall be considered as though such individual were a member of the Incumbent
Board; but, provided, further, that any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent Board; or

(iii) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (“Corporate
Transaction”); excluding, however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (2) no Person (other than the
Company, any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) will beneficially own,
directly or indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors except to the extent
that such ownership existed prior to the Corporate Transaction, and
(3) individuals who were members of the Incumbent Board will constitute at least
a majority of the members of the board of directors of the corporation resulting
from such Corporate Transaction; or

(iv) The approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.

(c) Change in Control Price. For purposes of the Plan, “Change in Control Price”
means the higher of (i) the highest reported sales price, regular way, of a
share of Common Stock in any transaction reported on the Nasdaq (or such other
national securities market or exchange as may at the time be the principal
market for the Common Stock) during the 60-day period prior to and including the
date of a Change in Control or (ii) if the Change in Control is the result of a
tender or exchange offer or a Corporate Transaction, the highest price per share
of Common Stock paid in such tender or exchange offer or Corporate Transaction;
provided, however, that in the case of Incentive Stock Options and Tandem Stock
Appreciation Rights relating to Incentive Stock Options, the Change in Control
Price shall be in all cases the Fair Market Value of the Common Stock on the
date such Incentive Stock Option or Tandem Stock Appreciation Right is
exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such securities or other noncash consideration shall
be determined in the sole discretion of the Board.

SECTION 12. Forfeiture of Awards

Notwithstanding anything in the Plan to the contrary, the Committee shall have
the authority under the Plan to provide in any Award Agreement that in the event
of serious misconduct by a Participant (including, without limitation, any
misconduct prejudicial to or in conflict with the Company or its Subsidiaries or
Affiliates, or any Termination of Employment for Cause), or any activity of a
Participant in competition with the business of the Company or any Subsidiary or
Affiliate, any outstanding Award granted to such Participant shall be cancelled,
in whole or in part, whether or not vested or deferred. The determination of
whether a Participant has engaged in a serious breach of conduct or any activity
in

 

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competition with the business of the Company or any Subsidiary or Affiliate
shall be determined by the Committee in good faith and in its sole discretion.
This Section 12 shall have no application following a Change in Control.

SECTION 13. Term, Amendment and Termination

The Plan will terminate on the tenth anniversary of the Effective Date. Under
the Plan, Awards outstanding as of such date shall not be affected or impaired
by the termination of the Plan.

The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of a
Participant under a Stock Option or a recipient of a Stock Appreciation Right,
Restricted Stock Award, Performance Unit Award or other Award theretofore
granted without the Participant’s or recipient’s consent, except such an
amendment made to comply with applicable law, stock exchange rules or accounting
rules. In addition, no such amendment shall be made without the approval of the
Company’s shareholders to the extent such approval is required by applicable law
or stock exchange rules.

The Committee may amend the terms of any Stock Option or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall cause a
Qualified Performance-Based Award to cease to qualify for the Section 162(m)
Exemption or impair the rights of any holder without the holder’s consent except
such an amendment made to cause the Plan or Award to comply with applicable law,
stock exchange rules or accounting rules.

Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as well as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules without shareholder approval.

SECTION 14. Unfunded Status of Plan

It is presently intended that the Plan constitute an “unfunded” plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.

SECTION 15. General Provisions

(a) Representation. The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree with the Company
in writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Company shall not be required to issue or deliver any certificate
or certificates for shares of Common Stock under the Plan prior to fulfillment
of all of the following conditions:

(i) Listing or approval for listing upon notice of issuance, of such shares on
NASDAQ, or such other securities exchange as may at the time be the principal
market for the Common Stock;

(ii) Any registration or other qualification of such shares of the Company under
any state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable; and

(iii) Obtaining any other consent, approval, or permit from any state or federal
governmental agency which the Committee shall, in its absolute discretion after
receiving the advice of counsel, determine to be necessary or advisable.

 

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(b) No Limit of Other Arrangements. Nothing contained in the Plan shall prevent
the Company or any Subsidiary or Affiliate from adopting other or additional
compensation arrangements for its employees.

(c) No Contract of Employment. The Plan shall not constitute a contract of
employment, and adoption of the Plan shall not confer upon any employee any
right to continued employment, nor shall it interfere in any way with the right
of the Company or any Subsidiary or Affiliate to terminate the employment of any
employee at any time.

(d) Tax Withholding. No later than the date as of which an amount first becomes
includible in the gross income of the Participant for federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement; provided, that not more than the legally required minimum
withholding may be settled with Common Stock. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and the
Company and its Affiliates shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment otherwise due to the Participant. The
Committee may establish such procedures as it deems appropriate, including
making irrevocable elections, for the settlement of withholding obligations with
Common Stock.

(e) Dividends. Reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Common Stock are available under Section 3 for such reinvestment (taking into
account then outstanding Stock Options and other Awards).

(f) Death Beneficiary. The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant’s death are to be paid or by whom any
rights of the Participant, after the Participant’s death, may be exercised.

(g) Subsidiary Employees. In the case of a grant of an Award to any employee of
a Subsidiary of the Company, the Company may, if the Committee so directs, issue
or transfer the shares of Common Stock, if any, covered by the Award to the
Subsidiary, for such lawful consideration as the Committee may specify, upon the
condition or understanding that the Subsidiary will transfer the shares of
Common Stock to the employee in accordance with the terms of the Award specified
by the Committee pursuant to the provisions of the Plan. All shares of Common
Stock underlying Awards that are forfeited or canceled should revert to the
Company.

(h) Governing Law. The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
South Carolina, without reference to principles of conflict of laws.

(i) Nontransferability. Except as otherwise provided in Section 5(e) or
6(b)(iii) or by the Committee, Awards under the Plan are not transferable except
by will or by laws of descent and distribution.

(j) In the event an Award is granted to Participant who is employed or providing
services outside the United States and who is not compensated from a payroll
maintained in the United States, the Committee may, in its sole discretion,
modify the provisions of the Plan as they pertain to such individual to comply
with applicable foreign law.

SECTION 16. Effective Date of Plan

The Plan shall be effective as of the date (the “Effective Date”), provided that
it is approved by the stockholders of the Company in accordance with all
applicable laws, regulations and stock exchange rules and listing standards.

 

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