The South Financial Group

2005 Executive and Director

Deferred Compensation Plan

 

 

 

 

 

 

 

Amended And Restated Effective December 31, 2008

 

TABLE OF CONTENTS

 

Page

ARTICLE 1.

Definitions

 1

 

ARTICLE 2.

Selection, Enrollment, and Eligibility

 9

 

2.1

Selection by Committee

 9

 

2.2

Enrollment Requirements

 9

 

2.3

Eligibility; Commencement of Participation

                                      9

 

2.4

Termination of Participation and/or Deferrals

                                      9

 

ARTICLE 3

Deferral Commitments/Company Match

Amounts/Vesting/Crediting/Taxes

10

 

3.1

Minimum Deferrals

                                     10

 

3.2

Maximum Deferral

                                     10

 

3.3

Election to Defer; Effect of Election Form

                                     11

 

3.4

Withholding and Crediting of Annual Deferral Amounts

                                     12

 

3.5

Transfer and Crediting of Restricted Stock Awards

                                     12

 

3.6

Annual Company Match Amount

                                     13

 

3.7

Vesting

                                     13

 

3.8

Crediting/Debiting of Account Balances

                                     13

 

3.9

FICA and Other Taxes

                                     16

 

ARTICLE 4

Deduction Limitation

                                                        16

 

4.1

Deduction Limitation on Benefit Payments

                                     16

 

ARTICLE 5

In-Service Distribution; Unforeseeable Emergencies

                      17

 

5.1

In-Service Distribution

                                      17

 

5.2

Other Benefits Take Precedence Over In-Service Distributions

                      17

 

5.3

Withdrawal Payout/Suspensions for Unforeseeable Emergencies

              17

 

ARTICLE 6

Change In Control Benefit

                                                         18

 

6.1

Change in Control Benefit

                                      18

 

6.2

Payment of Retirement Benefit

                                      18

 

ARTICLE 7

Retirement Benefit

                                                        18

 

7.1

Retirement Benefit

                                     18

 

7.2

Payment of Retirement Benefit

                                     18

 

ARTICLE 8

Termination Benefit

                                                        19

 

8.1

Termination Benefit

                                     19

 

8.2

Payment of Termination Benefit

                                     19

 

ARTICLE 9

Disability Benefit

                                                        19

 

9.1

Deferrals

                                     19

 

9.2

Continued Eligibility; Disability Benefit

                                     20

 

ARTICLE 10

Survivor Benefit

                                                        20

 

10.1

Survivor Benefit

                                     20

 

10.2

Payment of Survivor Benefit

                                     21

ARTICLE 11

Beneficiary Designation

                                                        21

 

11.1

Beneficiary

                                     21

 

11.2

Beneficiary Designation; Change; Spousal Consent

                                     21

 

11.3

Acknowledgement

                                     21

 

11.4

No Beneficiary Designation

                                     21

 

11.5

Doubt as to Beneficiary

                                     21

 

11.6

Discharge of Obligations

                                     21

 

ARTICLE 12

Leave of Absence

                                                        21

 

12.1

Paid Leave of Absence

                                     21

 

12.2

Unpaid Leave of Absence

                                     22

 

ARTICLE 13

Termination or Amendment of Plan

                                                        22

 

13.1

Termination

                                     22

 

13.2

Amendment

                                     23

 

13.3

Plan Agreement

                                     23

 

13.4

Effect of Payment

                                     23

 

ARTICLE 14

Administration

                                                        23

 

14.1

Committee Duties

                                     23

 

14.2

Administration Upon Change In Control

                                     23

 

14.3

Agents

                                     24

 

14.4

Binding Effect of Decisions

                                     24

 

14.5

Indemnity of Committee

                                     24

 

14.6

Employer Information

                                     24

 

ARTICLE 15

Other Benefits and Agreements

                                                        24

 

15.1

Coordination with Other Benefits

                                     24

 

ARTICLE 16

Claims Procedures

                                                        24

 

16.1

Presentation of Claim

                                     24

 

16.2

Claims Procedure

                                     24

 

16.3

Review Procedure

                                     25

 

16.4

Special Procedures Applicable to Disability Benefits

                                     25

 

16.5

Legal Action

                                     25

 

ARTICLE 17

Miscellaneous

                                                        26

 

17.1

Status of Plan

                                     26

 

17.2

Unsecured General Creditor

                                     26

 

17.3

Employer's Liability

                                     26

 

17.4

Nonassignability

                                     26

 

17.5

Not a Contract of Employment

                                     26

 

17.6

Furnishing Information

                                     26

 

17.7

Terms

                                     26

 

17.8

Captions

                                     26

 

17.9

Governing Law

                                     27

 

17.10

Notice

                                     27

 

17.11

Successors

                                     27

 

17.12

Spouse's Interest

                                     27

 

 

 

 

2

 

17.13

Validity

                                    27

 

17.14

Incompetent

                                    27

 

17.15

Acceleration of Payment

                                    27

 

17.16

Delay of Payment

                                    27

 

17.17

Compliance With Code Section 409A

                                    28

 

17.18

Mandatory Cash Out of Small Amounts

                                    28

 

17.19

Insurance

                                    28

 

17.20

Legal Fees To Enforce Rights After Change in Control

                                    28

 

 

 

 

3

THE SOUTH FINANCIAL GROUP

2005 EXECUTIVE AND DIRECTOR

DEFERRED COMPENSATION PLAN

 

Amended And Restated Effective December 31, 2008

 

Purpose

The South Financial Group 2005 Executive and Director Deferred Compensation Plan
(“Plan”) is entered into effective as of January 1, 2005 and amended and
restated effective December 31, 2008, in order to provide specified benefits to
a select group of management or highly compensated Employees and Directors who
contribute materially to the continued growth, development and future business
success of The South Financial Group, Inc., a South Carolina corporation
(“Company”), and its subsidiaries, if any, that sponsor this Plan.

The Company also maintains for the benefit of certain Employees and Directors
The South Financial Group Executive and Director Deferred Compensation Plan
originally dated March 3, 2000, (as amended and/or restated, the “Prior Plan”).
In response to the enactment of Code Section 409A, the Prior Plan was frozen as
of December 31, 2004 so that the benefits payable under the Prior Plan are
limited to those benefits, including earnings accrued after December 31, 2004,
that are not subject to Code Section 409A because they were earned and vested as
of December 31, 2004 (i.e., they are “grandfathered” within the meaning of
Treasury Regulations Section 409A-6(a)(3)(ii) and (iv).

Accordingly, one of the purposes of this Plan is to continue to provide benefits
to Participants that would have been payable under the Prior Plan had the Prior
Plan not been frozen, subject to such changes as are required because the
“non-grandfathered” benefits payable under this Plan are subject to Code Section
409A. The benefits provided under this Plan include not only all amounts
deferred on and after January 1, 2005, but also any amounts deferred under the
Prior Plan that were not vested as of December 31, 2004.

This Plan shall be unfunded for tax purposes and for purposes of Title I of
ERISA. This Plan is a “Top Hat” plan within the meaning of Section 201(2),
201(a)(3), and 401(a)(1) of ERISA. As such, this Plan is subject to limited
ERISA reporting and disclosure requirements, and is exempt from all other ERISA
requirements. Distributions required or contemplated by this Plan or actions
required to be taken under this Plan shall not be construed as creating a trust
of any kind of a fiduciary relationship between the Company and any Participant,
any Participant’s designated beneficiary, or any other person.

 

ARTICLE 1

Definitions

For the purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:

1.1

“Account Balance” shall mean, with respect to a Participant, a credit on the
records of the Employer equal to the sum of (i) the Deferral Account balance,
(ii) the Company Match Account balance, and (iii) the Restricted Stock Award
Account balance. The Account Balance, and each other specified account balance,
shall be a bookkeeping entry only and shall be utilized solely as a device for
the measurement and determination of the amounts to be paid to a Participant, or
his or her designated Beneficiary, pursuant to this Plan.

 

 

 

4

1.2

“Annual Bonus” shall mean any compensation, other than Base Annual Salary,
related to services performed by a Participant during a Plan Year, under any
Employer’s Annual Bonus and cash incentive plans, excluding stock options.

1.3

“Annual Company Match Amount” shall mean, for any one Plan Year, the amount
determined in accordance with Section 3.6.

1.4

“Annual Deferral Amount” shall mean that portion of a Participant’s Base Annual
Salary, Annual Bonus, Company Contribution Amount, and Director Fees that a
Participant defers in accordance with Article 3 for any one Plan Year. In the
event of a Participant’s Retirement, death or a Termination of Employment prior
to the end of a Plan Year, such year’s Annual Deferral Amount shall be the
actual amount withheld prior to such event.

1.5

“Annual Installment Method” shall be an annual installment payment (which shall
be deemed to be a “single” payment for purposes of Code Section 409A) over the
number of years selected by the Participant in accordance with this Plan,
calculated as follows: (i) for the first annual installment, the vested Account
Balance of the Participant shall be calculated as of the close of business on or
around the date on which the Participant Retires, as determined by the Committee
in its sole discretion, and (ii) for remaining annual installments, the vested
Account Balance of the Participant shall be calculated on every applicable
anniversary of the date on which the Participant Retires. Each annual
installment shall be calculated by multiplying this balance by a fraction, the
numerator of which is one and the denominator of which is the remaining number
of annual payments due the Participant. By way of example, if the Participant
elects a ten (10) year Annual Installment Method, the first payment shall be
1/10 of the vested Account Balance, calculated as described in this definition.
The following year, the payment shall be 1/9 of the vested Account Balance,
calculated as described in this definition. Subject to Section 3.8, shares of
Stock that shall be distributable from The South Financial Group Stock Funds
shall be distributable in shares of actual Stock in the same manner previously
described. However, the Committee shall round the number of shares down to
distribute whole shares of actual Stock.

1.6

“Base Annual Salary” shall mean the annual cash compensation relating to
services performed during any calendar year, excluding bonuses, commissions,
overtime, fringe benefits, stock options, relocation expenses, incentive
payments, non-monetary awards, director fees and other fees, and automobile and
other allowances paid to a Participant for employment services rendered (whether
or not such allowances are included in the Employee’s gross income). Base Annual
Salary shall be calculated before reduction for compensation voluntarily
deferred or contributed by the Participant pursuant to all qualified or
non-qualified plans of any Employer and shall be calculated to include amounts
not otherwise included in the Participant’s gross income under Code Sections
125, 132(f)(4), 402(e)(3), 402(h), or 403(b) pursuant to plans established by
any Employer; provided, however, that all such amounts will be included in
compensation only to the extent that had there been no such plan, the amount
would have been payable in cash to the Employee.

1.7

“Beneficiary” shall mean one or more persons, trusts, estates or other entities,
designated in accordance with Article 11, that are entitled to receive benefits
under this Plan upon the death of a Participant.

1.8

“Beneficiary Designation Form” shall mean the form established from time to time
by the Committee that a Participant completes, signs and returns to the
Committee to designate one or more Beneficiaries.

1.9

“Board” shall mean the board of directors of the Company.

1.10

“Change in Control” shall mean:

 

 

 

5

 

(a)

Any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner (within
the meaning of Rule 13d 3 promulgated under the Exchange Act) of 50% 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 Paragraph (c) of this Section
1.10; or

 

(b)

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 1.10(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 then comprising the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purposes 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; or

 

(c)

Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (“Corporate Transaction”); in each
case unless, following such Corporate Transaction, (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 beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock (or,
for a non-corporate entity, equivalent securities) and the combined voting power
of the then-outstanding voting securities entitled to vote generally in the
election of directors (or, for a non-corporate entity, equivalent governing
body), as the case may be, of the entity resulting from such Corporate
Transaction (including, without limitation, an entity that, 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 (excluding than any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Corporate Transaction) beneficially owns, directly or indirectly, 50% 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, except to the extent that
such ownership existed prior to the Corporate Transaction, and (3) at least a
majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Corporate
Transaction were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Corporate
Transaction

 

(d)

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

 

 

 

6

Notwithstanding the foregoing, an event shall not constitute a “Change in
Control” for purposes of Article 6 with respect to a Participant unless it
constitutes a “change in control event,” as defined under Section 409A of the
Code.

1.11

“Change in Control Benefit” shall have the meaning set forth in Article 6.

1.12

“Claimant” shall have the meaning set forth in Section 16.1.

1.13

“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time, and the regulations promulgated thereunder.

1.14

“Committee” shall mean the committee described in Article 14.

1.15

“Company” shall mean The South Financial Group, Inc., a South Carolina
corporation and any successor thereto.

1.15A

“Company Contribution Amount” shall mean, for any one Plan Year, the amount
determined in

 

accordance with Section 3.5A.

1.16

“Company Match Account” shall mean (i) that portion of a Participant’s Account
Balance which is represented by the Participant’s aggregate 10% company match
described in Section 3.7 of the Prior Plan, which was transferred to and is
being held under the terms of this Plan, as well as any appreciation (or
depreciation) specifically attributable to such matching amounts accumulated
under the Prior Plan, plus (ii) the sum of the Participant’s Annual Company
Match Amounts, plus (iii) amounts credited or debited in accordance with all the
applicable crediting and debiting provisions of this Plan that relate to the
Participant’s Company Match Account, less (iv) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to the
Participant’s Company Match Account.

1.17

“Deduction Limitation” shall mean the limitation on a benefit that may otherwise
be distributable pursuant to the provisions of this Plan, as set forth in
Article 4.

1.18

“Deferral Account” shall mean (i) the sum of all of a Participant’s Annual
Deferral Amounts, plus (ii) amounts credited in accordance with all the
applicable crediting and debiting provisions of this Plan that relate to the
Participant’s Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to his
or her Deferral Account.

1.19

“Director” shall mean any member of the board of directors of any Employer.

1.20

“Director Fees” shall mean the annual fees paid by any Employer, including
retainer fees and meetings fees, as compensation for serving on the board of
directors.

1.21

“Disability” or “Disabled” shall mean 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
Participant being unable to engage in any substantial gainful activity or (ii)
the Participant 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 Participant 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.

1.22

“Disability Benefit” shall mean the benefit set forth in Article 9.

 

 

 

7

1.23

“Election Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
make an election under the Plan. Notwithstanding anything to the contrary, any
subsequent election that delays a payment or changes a form of payment under the
Plan as a result of the completion of a new Election Form shall comply with the
requirements of Code Section 409A(a)(4)(C).

1.24

“Employee” shall mean a person who is an employee of any Employer.

1.25

“Employer(s)” shall mean the Company and/or any of its subsidiaries (now in
existence or hereafter formed or acquired) that have been selected by the Board
to participate in the Plan and have adopted the Plan as a sponsor.

1.26

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.27

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.

1.28

“In-Service Distribution” shall mean the distribution set forth in Section 5.1.

1.29

“Participant” shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan, (iii) who
signs a Plan Agreement, an Election Form and a Beneficiary Designation Form,
(iv) whose signed Plan Agreement, Election Form and Beneficiary Designation Form
are accepted by the Committee, (v) who commences participation in the Plan, and
(vi) whose Plan Agreement has not terminated. A spouse or former spouse of a
Participant shall not be treated as a Participant in the Plan or have an account
balance under the Plan, even if he or she has an interest in the Participant’s
benefits under the Plan as a result of applicable law or property settlements
resulting from legal separation or divorce.

1.30

“Person” shall mean any individual, corporation, bank, partnership, joint
venture, association, joint stock company, trust, unincorporated corporation or
other entity.

1.31

“Plan” shall mean The South Financial Group 2005 Executive and Director Deferred
Compensation Plan, as amended and restated effective December 31, 2008, which
shall be evidenced by this instrument and by each Plan Agreement, as they may be
amended from time to time.

1.32

“Plan Agreement” shall mean a written agreement, as may be amended from time to
time, which is entered into by and between an Employer and a Participant. Each
Plan Agreement executed by a Participant and the Participant’s Employer shall
provide for the entire benefit to which such Participant is entitled under the
Plan; should there be more than one Plan Agreement, the Plan Agreement bearing
the latest date of acceptance by the Employer shall supersede all previous Plan
Agreements in their entirety and shall govern such entitlement. The terms of any
Plan Agreement may be different for any Participant, and any Plan Agreement may
provide additional benefits not set forth in the Plan or limit the benefits
otherwise provided under the Plan; provided, however, that any such additional
benefits or benefit limitations must be agreed to by both the Employer and the
Participant.

1.33

“Plan Year” shall mean a period beginning on January 1 of each calendar year and
continuing through December 31 of such calendar year.

1.34

“Restricted Stock Award(s)” shall mean any performance share grant award that a
Participant elects to defer with respect to The South Financial Group, Inc. Long
Term Incentive Plan (January 1, 2001); any restricted stock award that a
Participant elects to defer with respect to The South Financial Group, Inc. Long
Term Incentive Plan; or any restricted stock award that a Participant elects to
defer with respect to

 

 

 

8

any other plan or program sponsored by the Company that provides for restricted
stock awards and allows Participants to defer receipt of such restricted stock
awards. Notwithstanding any other provision of this Plan, Restricted Stock
Awards may not be deferred by a Participant after December 31, 2006.

1.35

“Restricted Stock Award Account” shall mean the aggregate value, measured on any
given date, of (i) the number of all shares of Stock deferred into the Plan by a
Participant as a result of all Restricted Stock Awards, including all such
shares of Stock that were deferred into the Prior Plan but which were
transferred to and are being held under the terms of this Plan because such
shares were not vested as of December 31, 2004 under the Code Section 409A
grandfathering rules, plus (ii) the number of additional shares of Stock
credited as a result of the deemed reinvestment of dividends in accordance with
the applicable crediting provisions of The South Financial Group Common Stock
Measurement Fund, less (iii) the number of shares of Stock distributed to the
Participant or his or her Beneficiary pursuant to this Plan, subject in each
case to any adjustments to the number of such shares determined by the Committee
with respect to The South Financial Group Common Stock Measurement Stock Fund
pursuant to Section 3.8. This portion of a Participant’s Account Balance shall
only be distributable in actual shares of Stock.

1.36

“Retirement”, “Retire(s)” or “Retired” shall mean, with respect to an Employee,
separation from service from all Employers within the meaning of Treasury
Regulations Section 1.409A-1(h) (and from all entities that are considered a
single employer with the Employers under Code Sections 414(b) and 414(c)), for
any reason other than a leave of absence, death or Disability on or after the
earlier of the attainment of age sixty-five (65), or age fifty-five (55) with
five (5) Years of Service; and shall mean with respect to a Director who is not
an Employee, severance of his or her directorships with all Employers and
related entities as described in the previous sentence. If a Participant is both
an Employee and a Director, Retirement shall be deemed to be a Retirement as an
Employee under the provisions of this Section 1.36. In other words, Employees
who also serve as Directors are only eligible to participate in plans available
to them as employees of the Company and are not eligible to participate in plans
available to them as Directors.

1.37

“Retirement Benefit” shall mean the benefit set forth in Article 7.

1.38

“Stock” shall mean Company common stock, or any other equity securities of the
Company designated by the Committee.

1.39

“Survivor Benefit” shall mean the benefit set forth in Article 10.

1.40

“Termination Benefit” shall mean the benefit set forth in Article 8.

1.41

“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), provided
that in applying Code Sections 1563(a)(1), (2) and (3) for purposes of
determining a controlled group of corporations under Code Section 414(b), the
language "at least 50 percent" is used instead of "at least 80 percent" each
place it appears, and in applying Treasury Regulation Section 1.414(c)-2 for
purposes of determining trades or businesses (whether or not incorporated) that
are under common control for purposes of Code Section 414(c), "at least 50
percent" is used instead of "at least 80 percent" each place it appears. Whether
a Termination of Employment has occurred is determined based on whether the
facts and circumstances indicate that the employer and Executive reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Executive would perform after such date
(whether as an employee or as an independent contractor) would permanently
decrease to no more than 20 percent of the average level of bona fide services
performed (whether as an employee or an independent contractor) over the
immediately preceding 36-month period (or the full period of services to the
employer if the Executive has been providing services to the employer less than
36 months).

 

 

 

9

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.
Notwithstanding the foregoing, where a leave of absence is due to 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 six
months, where such impairment causes the Executive to be unable to perform the
duties of his or her position of employment or any substantially similar
position of employment, a 29-month period of absence may be substituted for such
six-month period.

1.42

“Unforeseeable Emergency” shall mean unforeseeable emergency, consistent with
Code Section 409A and the treasury regulations thereunder, that would result in
severe financial hardship to the Participant resulting from (i) an illness or
accident of the Participant, or the Participant’s spouse, Beneficiary or
dependent (as defined in Code Section 152(a)), (ii) a loss of the Participant’s
property due to casualty, or (iii) other such similar, extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant. The existence of an Unforeseeable Emergency will be determined
by the Committee on the basis of the relevant facts and circumstances of each
case, including information supplied by the Participant in accordance with
uniform guidelines prescribed from time to time by the Committee; provided, the
Participant will be deemed not to have an Unforeseeable Emergency to the extent
that such hardship is or may be relieved:

 

(i)

Through reimbursement or compensation by insurance or otherwise;

 

(ii)

By liquidation of the Participant’s assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship; or

 

(iii)

By cessation of deferrals under the Plan.

For example, the purchase of a home and the payment of college tuition generally
may not be considered an Unforeseeable Emergency. The imminent foreclosure of or
eviction from the Participant’s primary residence may constitute an
Unforeseeable Emergency. In addition, the need to pay for medical expenses,
including nonrefundable deductibles, as well as for the costs of prescription
drug medication, may constitute an Unforeseeable Emergency. Finally, the need to
pay for the funeral expense of a Participant’s spouse, a Beneficiary, or a
dependent (as defined in Section 152(a), without regard to Section 152(b)(1),
(b)(2), and (d)(1)(B)) may also constitute an Unforeseeable Emergency.

1.43

“Years of Service” shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For purposes of this
definition, a year of employment shall be a 365 day period (or 366 day period in
the case of a leap year) that, for the first year of employment, commences on
the Employee’s date of hiring and that, for any subsequent year, commences on an
anniversary of that hiring date. The Committee shall make a determination as to
whether any partial year of employment shall be counted as a Year of Service.

ARTICLE 2

Selection, Enrollment, and Eligibility

2.1

Selection by Committee. Participation in the Plan shall be limited to a select
group of management or highly compensated Employees (as defined in Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA) and Directors of the Employer, as
determined by the Committee in its sole discretion. From that group, the
Committee shall select, in its sole discretion, Employees and Directors to
participate in the Plan.

 

 

 

10

2.2

Enrollment Requirements. As a condition of participation in the Plan, each
selected Employee or Director shall complete, execute and return to the
Committee a Plan Agreement, an Election Form for each Plan Year, and a
Beneficiary Designation Form for the initial deferral or for any subsequent
change in Beneficiary. Deferral elections and Election Forms shall be provided
as described in Section 3.3. Also, the Committee shall establish from time to
time such other enrollment requirements as it determines in its sole discretion
are necessary, provided such enrollment requirements are consistent with Code
Section 409A and applicable treasury regulations and published regulatory or
other guidance.

2.3

Eligibility; Commencement of Participation. Provided an Employee or Director
selected to participate in the Plan has met all enrollment requirements set
forth in this Plan and required by the Committee, including returning all
required documents to the Committee within the specified time period, that
Employee or Director shall commence participation in the Plan on the first day
of the month following the month in which the Employee completes all enrollment
requirements. If an Employee or Director fails to meet all such requirements
within the period required, in accordance with Sections 2.2 and 3.3, that
Employee or Director shall not be eligible to participate in the Plan until the
first day of the Plan Year following the delivery to and acceptance by the
Committee of the required documents.

2.4

Termination of Participation and/or Deferrals. If the Committee determines in
good faith that a Participant who is an Employee no longer qualifies as a member
of a select group of management or highly compensated employees, as membership
in such group is determined in accordance with Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA and is not also a Director, the Committee shall have the
right, in its sole discretion, to prevent the Participant from making future
deferral elections with respect to future Plan Years.

ARTICLE 3

Deferral Commitments/Company Match Amounts/Vesting/Crediting/Taxes

3.1

Minimum Deferrals.

 

(a)

Annual Deferral Amount. For each Plan Year, a Participant may elect to defer, as
his or her Annual Deferral Amount, Base Annual Salary, Annual Bonus, and/or
Director Fees in the following minimum amounts for each deferral elected:

Deferral

Minimum Amount

Base Annual Salary

$1,000

Annual Bonus

$1,000

Director Fees

$1,000

If an election is made for less than the stated minimum amounts, or if no
election is made, the amount deferred shall be zero.

 

(b)

Restricted Stock Awards. A Participant may elect to defer into the Plan his or
her Restricted Stock Awards in the following minimum number of shares for each
Plan Year:

Deferral

Minimum Amount

Restricted Stock Awards

100 Shares

 

If an election is made for less than the stated minimum number of shares, or if
no election is made, the shares deferred shall be zero. Notwithstanding any
other provision of this Plan, Restricted Stock Awards may not be deferred by a
Participant after December 31, 2006.

 

 

 

11

 

(c)

Short Plan Year. Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, the minimum Annual Deferral
Amount shall be an amount equal to the minimum set forth above, multiplied by a
fraction, the numerator of which is the number of complete months remaining in
the Plan Year and the denominator of which is 12.

3.2

Maximum Deferral.

 

(a)

Annual Deferral Amount. For each Plan Year, a Participant may elect to defer, as
his or her Annual Deferral Amount, Base Annual Salary, Annual Bonus, and/or
Director Fees up to the following maximum percentages for each deferral elected:

Deferral

Maximum Amount

Base Annual Salary

80%

Annual Bonus

100%

Director Fees

100%

 

 

(b)

Restricted Stock Awards. A Participant may elect to defer into the Plan his or
her Restricted Stock Awards up to the following maximum percentage for each Plan
Year:

Deferral

Maximum Amount

Restricted Stock Awards

100%

 

Restricted Stock Awards may also be limited by other terms or conditions set
forth in the Company’s applicable Long Term Incentive Plan or other
Company-sponsored plan or program that allows Participants to defer receipt of
such Restricted Stock Awards. Notwithstanding any other provision of this Plan,
Restricted Stock Awards may not be deferred by a Participant after December 31,
2006.

 

(c)

Short Plan Year. Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, the maximum Annual Deferral
Amount (i) with respect to Base Annual Salary and Director Fees shall be limited
to the amount of compensation not yet earned by the Participant as of the date
the Participant submits a Plan Agreement and Election Form to the Committee for
acceptance, and (ii) with respect to Annual Bonus, shall be limited to those
amounts deemed eligible for deferral, in the sole discretion of the Committee,
provided such discretion is exercised in a manner which is consistent with Code
Section 409A and applicable treasury regulations and other published regulatory
or other guidance.

3.3

Election to Defer; Effect of Election Form.

 

(a)

First Plan Year. In the case of the first Plan Year in which a selected Employee
or Director becomes eligible to participate in the Plan, he or she may make an
irrevocable initial deferral election within thirty (30) days after the date he
or she first becomes eligible to participate under this plan or a similar plan
as determined under Code Section 409A and related treasury regulations, with
respect to compensation paid for services to be rendered subsequent to the
election, along with such other elections as the Committee deems necessary or
desirable under the Plan. For these elections to be valid, the Election Form
must be completed and signed by the Participant, and timely delivered to the
Committee and accepted by the Committee. Except as provided in Section 3.3(c),
for compensation that is earned based upon a specified performance period (for
example, an annual bonus), where a deferral election is made in the first year
of eligibility but after the beginning of the performance period, the election
will be deemed to apply to compensation paid for services

 

 

 

12

performed after the election if the election applies to no more than the total
amount of the compensation for the performance period multiplied by the ratio of
the number of days remaining in the performance period after the election over
the total number of days in the performance period.

 

(b)

Subsequent Plan Years. For each succeeding Plan Year, an irrevocable deferral
election for that Plan Year, and subject to Section 5.1(a) such other elections
as the Committee deems necessary or desirable under the Plan, shall be made by
timely delivering a new Election Form to the Committee, in accordance with its
rules and procedures, before the end of the Plan Year preceding the Plan Year
for which the election is made. If no such Election Form is timely delivered for
a Plan Year, the Annual Deferral Amount shall be zero for that Plan Year.

 

(c)

Deferral Election for Performance-Based Compensation. Notwithstanding the
preceding, in the case of any “performance-based compensation” based on services
performed over a period of at least twelve (12) months as determined by the
Committee in accordance with Code Section 409A and regulations and applicable
guidance thereunder (including Treasury Regulations Section 1.409A-1(e)), an
initial deferral election may be made with respect to such performance-based
compensation no later than the date that is six months before the end of the
performance period, provided that the Participant performs services continuously
from the later of the beginning of the performance period or the date upon which
the performance criteria are established through the date the Participant makes
an initial deferral election hereunder, and provided further that in no event
may an election to defer performance-based compensation be made after such
compensation has become readily ascertainable.

3.4

Withholding and Crediting of Annual Deferral Amounts. For each Plan Year, the
Base Annual Salary portion of the Annual Deferral Amount or deferred Director
Fees shall be withheld from each regularly scheduled Base Annual Salary or
Director Fees payroll in equal amounts, as adjusted from time to time for
increases and decreases in Base Annual Salary or Director Fees. The Annual Bonus
portion of the Annual Deferral Amount shall be withheld at the time the Annual
Bonus would be paid to the Participant, whether or not this occurs during the
Plan Year itself. Annual Deferral Amounts and deferred Director Fees shall be
credited to a Participant’s Deferral Account at the time such amounts would
otherwise have been paid to the Participant, provided however, that all Base
Annual Salary deferrals by Executives into the South Financial Group Common
Stock Measurement Fund will be held in the Plan in a cash Measurement Fund, as
determined by the Committee in its sole discretion, and reallocated into the
South Financial Group Common Stock Measurement Fund on a quarterly basis on the
first business day of the second month of each fiscal quarter.

3.5

Transfer and Crediting of Restricted Stock Awards. For each Plan Year prior to
January 1, 2007, the Restricted Stock Award that a Participant elects to defer
(which deferral must occur on or before December 31, 2006) shall be transferred
and credited to the Plan as of the date provided in the plan or program
providing the Restricted Stock Award. Shares of stock included in the Restricted
Stock Award shall be maintained in The South Financial Group Common Stock
Measurement Fund as provided in Section 3.8(c) of the Plan.

 

 

 

13

3. 5A

Company Contribution Amount.

 

(a)

For each Plan Year, an Employer may credit amounts to a Participant’s Annual
Deferral Amount in accordance with employment or other agreements entered into
between the Participant and the Employer, which amounts shall be part of the
Participant’s Company Contribution Amount for that Plan Year. Such amounts shall
be credited to the Participant’s Annual Deferral Amount for the applicable Plan
Year on the date or dates prescribed by such agreements.

 

(b)

For each Plan Year, an Employer, in its sole discretion, may, but is not
required to, credit any amount it desires to any Participant’s Annual Deferral
Amount under this Plan, which amount shall be part of the Participant’s Company
Contribution Amount for that Plan Year. The amount so credited to a Participant
may be smaller or larger than the amount credited to any other Participant, and
the amount credited to any Participant for a Plan Year may be zero, even though
one or more other Participants receive a Company Contribution Amount for that
Plan Year. The Company Contribution Amount described in this Section 3.5A(b), if
any, shall be credited to the Participant’s Annual Deferral Amount for the
applicable Plan Year on a date or dates to be determined by the Committee.

 

(c)

If not otherwise specified in the Participant’s employment or other agreement
entered into between the Participant and the Employer, the amount (or the method
or formula for determining the amount) of a Participant’s Company Contribution
Amount shall be set forth in writing in one or more documents, which shall be
deemed to be incorporated into this Plan in accordance with Section 1.31, no
later than the date on which such Company Contribution Amount is credited to the
applicable Annual Deferral Amount of the Participant.

3.6

Annual Company Match Amount. For each Plan Year, the Company shall match a
Participant’s Annual Deferral Amount up to a maximum of 10% of such deferrals.
The Annual Company Match Amount shall be credited to a Participant’s Annual
Company Match Account at the same time the Annual Deferral Amounts are made.
Notwithstanding this provision, deferred Directors Fees are not eligible for an
Annual Company Match. In addition, the Company shall match amounts deferred
under The South Financial Group Securities Division Annual Incentive Plan prior
to January 1, 2008 at 100% of such deferrals.

3.7

Vesting.

 

(a)

A Participant shall at all times be 100% vested in his or her Deferral Account.

 

(b)

A Participant shall not vest in his or her Restricted Stock Award Account until
such time or times, and pursuant to the terms and conditions, set forth in the
Company-sponsored plan or program that provided the Restricted Stock Award.

 

(c)

A Participant shall not vest to any extent in an Annual Company Match Amount
until the January 1 immediately following the fifth year anniversary of the
Annual Company Match Amount, at which point the Participant shall become 100%
vested in such Amount, provided that he has remained continuously employed
by one or more Employers during such period. For example, for Annual Company
Match Amounts made for the 2002 Plan Year, a Participant will vest 100% in those
amounts on January 1, 2008 (assuming he was continuously employed by one or more
Employers from the 2002 Plan Year through January 1, 2008).

 

(d)

Notwithstanding anything to the contrary contained in this Section 3.7, in the
event of a Change in Control, or upon a Participant’s Retirement, death while
employed by an Employer, or Disability, a Participant’s Company Match Account
shall immediately become 100% vested (if it is not already vested in accordance
with the above vesting schedules).

 

 

 

14

 

(e)

Notwithstanding subsection 3.7(d) above but subject to Section 3.7(f) below, the
vesting schedule for a Participant’s Company Match Account shall not be
accelerated to the extent that the Committee determines that such acceleration
would cause the deduction limitations of Section 280G of the Code to become
effective. In the event that all of a Participant’s Company Match Account is not
vested pursuant to such a determination, the Participant may request independent
verification of the Committee’s calculations with respect to the application of
Code Section 280G. In such case, the Committee must provide to the Participant
within ninety (90) days of such a request an opinion from a nationally
recognized accounting firm selected by the Participant (the “Accounting Firm”).
The opinion shall state the Accounting Firm’s opinion that any limitation in the
vested percentage hereunder is necessary to avoid the limits of Code Section
280G and contain supporting calculations. The cost of such opinion shall be paid
for by the Company.

 

(f)

Section 3.7(e) shall not prevent the acceleration of the vesting schedule
applicable to a Participant’s Company Match Account if such Participant is
entitled to a “gross-up” payment, to eliminate the effect of the Code section
4999 excise tax, pursuant to his or her employment agreement or other agreement
entered into between such Participant and the Employer (an “Individual
Agreement”); provided that, if a Participant’s Individual Agreement provides for
the reduction or forfeiture of certain compensation upon a Change of Control to
satisfy the limitations under Section 280G, the Individual Agreement shall
control to the extent it satisfies the requirements of Code Section 409A
regarding the timing of deferral elections.

3.8

Crediting/Debiting of Account Balances. In accordance with, and subject to, the
rules and procedures that are established from time to time by the Committee, in
its sole discretion, amounts shall be credited or debited to a Participant’s
Account Balance in accordance with the following rules:

 

(a)

Measurement Funds. Subject to the restrictions found in Section 3.8.(c) below,
the Participant may elect one or more of the measurement funds selected by the
Committee, in its sole discretion, which are based on certain mutual funds or
publicly traded stocks (the “Measurement Funds”), for the purpose of crediting
or debiting additional amounts to his or her Account Balance. As necessary, the
Committee may, in its sole discretion, discontinue, substitute or add a
Measurement Fund.

 

(i)

Prime Rate Fund. Amounts deferred into the Prime Rate Measurement Fund shall be
credited on a daily basis with an amount equal to an imputed interest on the
Deferral Account at a rate that equals the average Prime Lending Rate for the
previous calendar year. Such rate shall be determined on an annual basis, not
later than January 31 of each Plan Year. In the event that all or a portion of a
Deferral Account is remitted to the Participant, payment shall include
applicable accrued interest calculated to the date of payment.

 

(b)

Election of Measurement Funds. Subject to the restrictions found in Section
3.8(c) below, a Participant, in connection with his or her initial deferral
election in accordance with Section 3.3(a) or 3.3(c) above, shall elect, on the
Election Form, one or more Measurement Fund(s) (as described in Section 3.8(a)
above) to be used to determine the amounts to be credited or debited to his or
her Account Balance. If a Participant does not elect any of the Measurement
Funds as described in the previous sentence, the Participant’s Account Balance
shall automatically be allocated into the Prime Rate Measurement Fund, as
determined by the Committee, in its sole discretion. Subject to the restrictions
found in Section 3.8(c) below, the Participant may (but is not required to)
elect, by submitting an Election Form to the Committee that is accepted by the
Committee, to add or delete one or more Measurement Fund(s) to be used to
determine the amounts to be credited or debited to his or her Account Balance,
or to change the portion of his or her Account Balance allocated to

 

 

 

15

each previously or newly elected Measurement Fund. If an election is made in
accordance with the previous sentence, it shall apply as of the first business
day deemed reasonably practicable by the Committee, in its sole discretion, and
shall continue thereafter for each subsequent day in which the Participant
participates in the Plan, unless changed in accordance with the previous
sentence.

 

(c)

The South Financial Group Stock Funds.

 

(i)

A Participant may allocate any portion of his or her Annual Deferral Amount or
Annual Bonus, at the time the deferral election is made, to the TSFG Common
Stock Fund Measurement Fund. Restricted Stock Awards and any portion of an
Annual Deferral Amount paid in the form of TSFG common stock that are deferred
into this Plan shall be allocated to the TSFG Common Stock Measurement Fund. No
portion of the Participant’s Account Balance held in either the TSFG Common
Stock Measurement Fund or the TSFG Preferred Stock Measurement Fund may be
re-allocated out of those Funds to any other Measurement Fund at any time. All
distributions will be made in shares of Company Stock only. Notwithstanding the
preceding sentence, the Committee may postpone any re-allocation of a
Participant’s Account Balance into The South Financial Group Common Stock Fund
Measurement Fund or any other transfer that would otherwise be made in a period
in which the Participant would be prohibited (by Company policy or otherwise)
from acquiring or disposing of equity securities of the Company until after such
period has expired.

 

(ii)

Any stock dividends, cash dividends or other non-cash dividends that would have
been payable on the Stock credited to a Participant’s Account Balance (including
Restricted Stock Awards deferred into this Plan) shall be credited to the
Participant’s Account Balance in the form of additional shares of Stock. Cash
dividends paid on shares credited a Participant's Account balance in the TSFG
Preferred Stock Measurement Fund will be credited to that Participant's Account
Balance in the form of additional shares of Common Stock credited to the TSFG
Common Stock Measurement Fund. The number of shares credited to the Participant
for a particular stock dividend shall be equal to (a) the number of shares of
Stock credited to the Participant’s Account Balance as of the payment date for
such dividend in respect of each share of Stock, multiplied by (b) the number of
additional shares of Stock actually paid as a dividend in respect of each share
of Stock. The number of shares credited to the Participant for a particular cash
dividend or other non-cash dividend shall be equal to (a) the number of shares
of Stock credited to the Participant’s Account Balance as of the payment date
for such dividend in respect of each share of Stock, multiplied by (b) the fair
market value of the dividend, divided by (c) the “fair market value” of the
Stock on the payment date for such dividend.

 

(iii)

The number of shares of Stock credited to the Participant’s Account Balance
shall be adjusted by the Committee, in its sole discretion, to prevent dilution
or enlargement of Participants’ rights with respect to the portion of his or her
Account Balance allocated to the TSFG Common Stock Measurement Fund or the TSFG
Preferred Stock Measurement Fund, in the event of any reorganization,
reclassification, stock split, or other unusual corporate transaction or event
which affects the value of the Stock, provided that any such adjustment shall be
made taking into account any crediting of shares of Stock to the Participant
under Section 3.8.

 

(iv)

For purposes of this Section 3.8(c), the fair market value of the Stock shall be
determined by the Committee in its sole discretion.

 

 

 

16

 

(d)

Proportionate Allocation. In making any election described in Section 3.8(b)
above, the Participant shall specify on the Election Form, in increments of one
percent (1%), the percentage of his or her Account Balance to be allocated to a
Measurement Fund (as if the Participant was making an investment in that
Measurement Fund with that portion of his or her Account Balance).

 

(e)

Crediting or Debiting Method. The performance of each elected Measurement Fund
(either positive or negative) will be determined by the Committee, in its
reasonable discretion, based on the performance of the Measurement Funds
themselves. A Participant’s Account Balance shall be credited or debited on a
daily basis based on the performance of each Measurement Fund selected by the
Participant, such performance being determined by the Committee in its sole
discretion.

 

(f)

No Actual Investment. Notwithstanding any other provision of this Plan that may
be interpreted to the contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant’s election of any such Measurement
Fund, the allocation to his or her Account Balance thereto, the calculation of
additional amounts and the crediting or debiting of such amounts to a
Participant’s Account Balance shall not be considered or construed in any manner
as an actual investment of his or her Account Balance in any such Measurement
Fund. In the event that the Company or the Trustee, in its own discretion,
decides to invest funds in any or all of the investments on which the
Measurement Funds are based, no Participant shall have any rights in or to such
investments themselves. Without limiting the foregoing, a Participant’s Account
Balance shall at all times be a bookkeeping entry only and shall not represent
any investment made on his or her behalf by the Company; the Participant shall
at all times remain an unsecured creditor of the Company.

3.9

FICA and Other Taxes.

 

(a)

Annual Deferral Amounts. For each Plan Year in which an Annual Deferral Amount
or a Company Contribution Amount is being withheld from a Participant, the
Participant’s Employer(s) shall withhold from that portion of the Participant’s
Base Annual Salary and Annual Bonus amounts that are not being deferred, in a
manner determined by the Employer(s), the Participant’s share of FICA and other
employment taxes on such Annual Deferral Amount or Company Contribution Amount.
If necessary, the Committee may reduce the Annual Deferral Amount or Company
Contribution Amount in order to comply with this Section 3.9.

 

(b)

Restricted Stock Awards. When a Participant’s Restricted Stock Award Account
ceases to be subject to a substantial risk of forfeiture, the Participant’s
Employer(s) shall withhold from the Participant’s Base Annual Salary and Annual
Bonus that are not deferred, in a manner determined by the Employer(s), the
Participant’s share of FICA and other employment taxes. In accordance with Code
Section 409A and Section 17.15 of the Plan, the Committee may reduce the Annual
Deferred Amount in order to comply with this Section 3.9.

 

(c)

Company Match Account. When a Participant becomes vested in a portion of his or
her Company Match Account, the Participant’s Employer(s) shall withhold from the
Participant’s Base Annual Salary and Annual Bonus that are not deferred, in a
manner determined by the Employer(s), the Participant’s share of FICA and other
employment taxes. In accordance with Code Section 409A and Section 17.15 of the
Plan,, the Committee may reduce the vested portion of the Participant’s Company
Match Account, as applicable, in order to comply with this Section 3.9.

 

(d)

Distributions. The Participant’s Employer(s) shall withhold from any payments
made to a Participant under this Plan all federal, state and local income,
employment and other taxes required to be withheld by the Employer(s) in
connection with such payments, in amounts and in a manner to be determined in
the sole discretion of the Employer(s).

 

 

 

17

 

ARTICLE 4

Deduction Limitation

4.1

Deduction Limitation on Benefit Payments. A payment may be delayed to the extent
that the Employer reasonably anticipates that if the payment were made as
scheduled, the Employer’s deduction with respect to such payment would not be
permitted due to the application of Code Section 162(m), provided that the
payment is made either during the Participant’s first taxable year in which the
Employer reasonably anticipates, or should reasonably anticipate, that if the
payment is made during such year, the deduction of such payment will not be
barred by application of Code Section 162(m) or during the period beginning with
the date of the Participant’s Termination of Employment or Retirement and ending
on the later of the last day of the taxable year of the Employer which includes
the Participant’s Termination of Employment or Retirement or the 15th day of the
third month following the Participant’s Termination of Employment or Retirement,
and provided further that where any scheduled payment to a Participant in a
taxable year is delayed in accordance with this paragraph, the delay in payment
will be treated as a subsequent deferral election unless all scheduled payments
to that Participant that could be delayed in accordance with this paragraph are
also delayed. Where the payment is delayed to a date on or after the
Participant’s Termination of Employment or Retirement, the payment will be
considered a payment upon a “separation from service” for purposes of the rules
under Treasury Regulation Section 1.409A-3(i)(2) (payments to specified
employees upon a separation from service) and, in the case of a Participant who
is a “specified employee” (as determined under Treasury Regulation Section
1.409A-1(i) and related Employer procedures), the date that is six months after
a Participant’s Termination of Employment or Retirement is substituted for any
reference to a Participant’s Termination of Employment or Retirement in the
first sentence of this Section 4.1. No election may be provided to a Participant
with respect to the timing of the payment under this Section 4.1.

ARTICLE 5

   In-Service Distribution; Unforeseeable Emergencies

5.1

In-Service Distribution.

 

(a)

In connection with each election to defer an Annual Deferral Amount, a
Participant may irrevocably elect to receive an In-Service Distribution from the
Plan with respect to all or a portion of (i) the Annual Deferral Amount or (ii)
the Annual Company Match Amount. The In-Service Distribution shall be a lump sum
payment in an amount that is equal to the portion of the Annual Deferral Amount
and the vested portion of the Annual Company Match Amount that the Participant
elected to have distributed as an In-Service Distribution, plus amounts credited
or debited in the manner provided in Section 3.8 above on that amount,
calculated as of the close of business on or around the date on which the
In-Service Distribution becomes payable, as determined by the Committee in its
sole discretion. Subject to the other terms and conditions of this Plan, each
In-Service Distribution elected shall be paid out during a sixty (60) day period
commencing immediately after the first day of any Plan Year designated by the
Participant. The Plan Year designated by the Participant must be at least three
Plan Years after the end of the Plan Year in which the Annual Deferral Amount is
actually deferred, or the vested portion of the Annual Company Match Amount is
actually contributed. By way of example, if an In-Service Distribution is
elected for Annual Deferral Amounts that are deferred in the Plan Year
commencing January 1, 2003, the In-Service Distribution would become payable
during a sixty (60) day period commencing January 1, 2007. Notwithstanding the
language set forth above, the Committee shall, in its sole discretion, adjust
the amount distributable as an In-Service Distribution

 

 

 

18

if any portion of the Annual Company Match Amount is unvested on the In-Service
Distribution Date.

 

(b)

Notwithstanding Section 5.1(a), the Participant may make a subsequent election
to delay a payment of an In-Service Distribution by submitting a new Election
Form to the Committee, provided that such election must comply with Code Section
409A(a)(4)(B) and (i) the election shall not take effect until at least twelve
(12) months after the date the election is made, (ii) the payment shall be
deferred for a period of at least five (5) years from the date such payment
would otherwise have been made, and (iii) the election must made at least twelve
(12) months prior to the date any such payment was scheduled to begin.

5.2

Other Benefits Take Precedence Over In-Service Distributions. Subject to the
requirements of Code Section 409A(a)(4)(B) and Section 5.1(b), should an event
occur that triggers a benefit under Article 6, 7, 8, 9 or 10 prior to an
In-Service Distribution, any Annual Deferral Amount or Annual Company Match
Amount, plus amounts credited or debited thereon, that is subject to an
In-Service Distribution election under Section 5.1 shall not be paid in
accordance with Section 5.1 but shall be paid in accordance with the other
applicable Article.

5.3

Withdrawal Payout/Suspensions for Unforeseeable Emergencies. If a Participant
experiences an Unforeseeable Emergency, the Participant may petition the
Committee to receive a partial or full payout from the Plan. The payout shall
not exceed the lesser of the Participant’s vested Account Balance, calculated as
if such Participant were receiving a Termination Benefit, or the amount
reasonably needed to satisfy the Unforeseeable Emergency (including any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the payout). Notwithstanding any provision
in the Plan to the contrary, any payment made pursuant to this Section 5.3 shall
comply with Code Section 409A(a)(2)(A)(vi) and the related treasury regulations.

If the Committee, in its sole discretion, approves a Participant’s petition for
payout due to an Unforeseeable Emergency, the Participant’s deferral elections
for any amounts payable for the remainder of the Plan Year shall be cancelled as
of the date of such approval, and the Participant shall receive a payout from
the Plan within sixty (60) days of the date of such approval. A Participant may
re-enroll in the Plan for a subsequent Plan Year by making an annual enrollment
in accordance with Section 3.3.

ARTICLE 6

Change in Control Benefit

6.1

Change in Control Benefit. The Participant will receive a Change in Control
Benefit, which shall be equal to the Participant’s vested Account Balance,
calculated as of the close of business on or around the date of the Change in
Control, as selected by the Committee in its sole discretion, if (i) the
Participant has elected to receive a Change in Control Benefit, as set forth in
Section 6.2 below, and (ii) if a Change in Control occurs prior to the
Participant’s Termination of Employment, Retirement, death or Disability.

6.2

Payment of Change in Control Benefit. A Participant, in connection with his or
her commencement of participation in the Plan, shall irrevocably elect on an
Election Form whether to (i) receive a Change in Control Benefit, or (ii) have
his or her Account Balance remain in the Plan upon the occurrence of a Change in
Control and to have his or her Account Balance remain subject to the terms and
conditions of the Plan. If a Participant does not make any election with respect
to the payment of the Change in Control Benefit, then such Participant’s Account
Balance shall remain in the Plan upon a Change in Control and shall be subject
to the terms and conditions of the Plan. The Change in Control Benefit, if any,
shall be paid to the Participant in a lump sum no later than sixty (60) days
after a Change in Control.

 

 

 

19

ARTICLE 7

Retirement Benefit

7.1

Retirement Benefit. A Participant who Retires shall receive, as a Retirement
Benefit, his or her vested Account Balance, calculated as of the close of
business on or around the date on which the Participant Retires, as determined
by the Committee in its sole discretion.

7.2

Payment of Retirement Benefit. In connection with each election to defer an
Annual Deferral Amount, a Participant shall elect to receive the portion of the
Retirement Benefit attributable to such Annual Deferral Amount in a lump sum or
pursuant to an Annual Installment Method of up to 20 years (or if elected and
distributed on or before December 31, 2007, a combination of lump sum or
installments). A Participant who is a Director shall elect on an Election Form
to receive the Retirement Benefit in a lump sum or pursuant to an Annual
Installment Method of up to 5 years. The Participant may change his or her
election attributable to each Annual Deferral Amount to an allowable alternative
payout period or to an allowable alternative form of payment by submitting a new
Election Form to the Committee, provided that (i) any such Election Form is
submitted to and accepted by the Committee in its sole discretion at least
twelve (12) months prior to the Participant’s Retirement and (ii) the payout is
deferred for a period of at least five (5) years from the date such payment
would otherwise have been made. If a Participant does not make any election with
respect to the payment of a portion of the Retirement Benefit, then such benefit
shall be payable in a lump sum. The lump sum payment shall be made, or
installment payments shall commence, no later than sixty (60) days after the
date on which the Participant Retires. Notwithstanding the above, if the
Participant is a “specified employee” of the Company within the meaning of
Treasury Regulations Section 1.409A-1(i), any such payments shall be made, or
shall commence, within thirty (30) days following the end of the sixth month
after the Participant’s Retirement. Remaining installments, if any, shall be
paid no later than sixty (60) days after each anniversary of the date on which
the Participant Retires.

ARTICLE 8

Termination Benefit

8.1

Termination Benefit. A Participant who experiences a Termination of Employment
shall receive a Termina­tion Benefit, which shall be equal to the Participant’s
vested Account Balance, calculated as of the close of business on or around the
date on which the Participant experiences a Termination of Employment, as
determined by the Committee in its sole discretion.

8.2

Payment of Termination Benefit. The Termination Benefit shall be paid to the
Participant in a lump sum payment no later than sixty (60) days after the date
on which the Participant experiences the Termination of Employment.
Notwithstanding the above, if the Participant is a “specified employee” of the
Company within the meaning of Treasury Regulations Section 1.409A-1(i), such
lump sum payment shall be made within thirty (30) days following the end of the
sixth month after the Participant’s Termination of Employment.

ARTICLE 9

Disability Benefit

9.1

Deferrals.

 

(c)

Deferral During Disability. A Participant who is deter­mined to be suffering
from a Disability shall continue to be eligible for the benefits provided in
Articles 5, 6, 7, 8, 9 or 10 in accordance with the provisions of those
Articles, and any previously elected deferrals of Restricted Stock Awards shall
continue to be withheld during the remainder of the Plan Year in which the
Participant first suffers the Disability. However, such Disabled Participant
shall be excused from fulfilling that portion of the Annual Deferral Amount
commitment that would otherwise have been withheld from a

 

 

 

20

Participant’s Base Annual Salary, Annual Bonus, or Director’s Fees. During the
remaining period of Disability, the Participant shall not be allowed to make any
additional deferral elections, except that deferral elections with respect to
Restricted Stock Awards may continue. Notwithstanding the preceding sentence,
Restricted Stock Awards may not be deferred by a Participant after December 31,
2006.

 

(d)

Deferral Following Disability. If a Participant returns to employment with an
Employer after a Disability ceases, the Participant may elect to defer an Annual
Deferral Amount for the Plan Year following his or her return to employment or
service and for every Plan Year thereafter while a Participant in the Plan;
provided such deferral elections are otherwise allowed and an Election Form is
delivered to and accepted by the Committee for each such election in accordance
with Section 3.3 above.

9.2

Continued Eligibility; Disability Benefit.

 

(a)

Continued Eligibility. A Participant suffering a Disability shall, for benefit
purposes under this Plan, continue to be considered to be employed, or continue
in service as a Director, and shall be eligible for the benefits provided for in
Articles 5, 6, 7, 8 or 10 in accordance with the provisions of those Articles.

 

(b)

Deemed Termination of Employment. If a Disabled Participant experiences a
Termination of Employment, and such Participant is not otherwise eligible to
Retire, the Participant shall be deemed to have experienced a Termination of
Employment for purposes of this Plan and will receive a Disability Benefit. The
Disability Benefit shall be equal to his or her vested Account Balance,
calculated as of the close of business on or around the date on which the
Disabled Participant is deemed to have experienced a Termination of Employment,
as determined by the Committee in its sole discretion. The Participant shall
receive his or her Disability Benefit in a lump sum payment no later than sixty
(60) days after the date on which the Committee deems the Disabled Participant
to have experienced a Termination of Employment. Notwithstanding the above, if
the Participant is a “specified employee” of the Company within the meaning of
Treasury Regulations Section 1.409A-1(i), such lump sum payment shall be made
within thirty (30) days following the end of the sixth month after the
Participant’s Termination of Employment.

 

(c)

Deemed Retirement. If, in the Committee’s discretion, the Disabled Participant’s
employment has terminated, and such Participant is otherwise eligible to Retire,
the Participant shall be deemed to have Retired for purposes of this Plan and
will receive a Disability Benefit. The Disability Benefit shall be equal to his
or her vested Account Balance, calculated as of the close of business on or
around the date on which the Participant is deemed to have Retired, as
determined by the Committee in its sole discretion. The Participant shall
receive his or her Disability Benefit in the same form in which such Participant
elected to receive his or her Retirement Benefit. The lump sum payment shall be
made, or installment payments shall commence, no later than sixty (60) days
after the date on which the Disabled Participant is deemed to have Retired.
Remaining installments, if any, shall be paid no later than sixty (60) days
after each anniversary of the date on which the Disabled Participant is deemed
to have Retired. Notwithstanding the above, if the Participant is a “specified
employee” of the Company within the meaning of Treasury Regulations Section
1.409A-1(i), any such payments shall be made, or shall commence, within thirty
(30) days following the sixth month after the Participant’s Retirement.
Remaining installments, if any, shall be paid no later than sixty (60) days
after each anniversary of the date on which the Participant Retires.

 

 

 

21

ARTICLE 10

Survivor Benefit

10.1

Survivor Benefit. The Participant’s Beneficiary(ies) shall receive a Survivor
Benefit upon the Participant’s death which will be equal to (i) the
Participant’s vested Account Balance, calculated as of the close of business on
or around the date of the Participant’s death, as selected by the Committee in
its sole discretion, if the Participant dies prior to his or her Retirement,
Termination of Employment or Disability, or (ii) the Participant’s unpaid
Retirement Benefit or Disability Benefit, calculated as of the close of business
on or around the date of the Participant’s death, as selected by the Committee
in its sole discretion, if the Participant dies before his or her Retirement
Benefit is paid in full.

10.2

Payment of Survivor Benefit. The Survivor Benefit shall be paid to the
Participant’s Beneficiary(ies) in a lump sum payment no later than sixty (60)
days after the Participant’s death. The Committee may require the Participant’s
Beneficiary(ies) to show satisfactory proof of the Participant’s death.

ARTICLE 11

Beneficiary Designation

11.1

Beneficiary. Each Participant shall have the right, at any time, to designate
his or her Beneficiary(ies) (both primary as well as contingent) to receive any
benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of an Employer
in which the Participant participates.

11.2

Beneficiary Designation; Change; Spousal Consent. A Participant shall designate
his or her Beneficiary by completing and signing the Beneficiary Designation
Form, and returning it to the Committee or its designated agent. A Participant
shall have the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary Designation Form and the
Committee’s rules and procedures, as in effect from time to time. Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Committee shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.

11.3

Acknowledgment. No designation or change in designation of a Beneficiary shall
be effective until received and acknowledged in writing by the Committee or its
designated agent.

11.4

No Beneficiary Designation. If a Participant fails to designate a Beneficiary as
provided in Sections 11.1, 11.2 and 11.3 above, or if all designated
Beneficia­ries predecease the Participant or die prior to complete distribution
of the Participant’s benefits, then the Participant’s designated Beneficiary
shall be deemed to be his or her surviving spouse. If the Participant has no
surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of the
Participant’s estate.

11.5

Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee shall have
the right, exercisable in its discretion, to cause the Participant’s Employer to
withhold such payments until this matter is resolved to the Committee’s
satisfaction.

11.6

Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the Committee
from all further obligations under this Plan with respect to the Participant,
and that Participant’s Plan Agreement shall terminate upon such full payment of
benefits.

 

 

 

22

ARTICLE 12

Leave of Absence

12.1

Paid Leave of Absence. If a Participant is authorized by the Participant’s
Employer to take a paid leave of absence from the employment of the Employer
and, if and until, such leave of absence does not constitute a Termination of
Employment, (i) the Partici­pant shall continue to be considered eligible for
the benefits provided in Articles 5, 6, 7, 8, 9 or 10 in accordance with the
provisions of those Articles, and (ii) the Annual Deferral Amount and previously
elected deferrals of Restricted Stock Awards shall continue to be withheld
during such paid leave of absence in accordance with Section 3.3.
Notwithstanding the preceding sentence, Restricted Stock Awards may not be
deferred by a Participant after December 31, 2006.

12.2

Unpaid Leave of Absence. If a Participant is authorized by the Participant’s
Employer to take an unpaid leave of absence from the employ­ment of the Employer
for any reason and, if and until, such leave of absence does not constitute a
Termination of Employment, (i) such Participant shall continue to be eligible
for the benefits provided in Articles 5, 6, 7, 8, 9 or 10 in accordance with the
provisions of those Articles, and (ii) the Annual Deferral Amount and any
previously elected deferrals of Restricted Stock Awards shall continue to be
withheld during the remainder of the Plan Year in which the unpaid leave of
absence is taken. During the unpaid leave of absence, the Participant shall not
be allowed to make any additional deferral elections, except that deferral
elections with respect to Restricted Stock Awards may continue. Notwithstanding
the preceding sentence, Restricted Stock Awards may not be deferred by a
Participant after December 31, 2006. If the Participant returns to paid
employment, the Participant may elect to defer an Annual Deferral Amount for the
Plan Year following his or her return to employment and for every Plan Year
thereafter while a Participant in the Plan.

ARTICLE 13

Termination or Amendment of Plan

13.1

Termination. The Board reserves the right to terminate the Plan at any time, as
permitted under Code Section 409A and its related treasury regulations and other
guidance. Upon the termination of the Plan, the Plan Agreements of the affected
Participants shall terminate and their vested Account Balances shall be
determined (i) as if they had experienced a Termination of Employment on the
date of Plan termination; or (ii) if Plan termination occurs after the date upon
which a Participant was eligible to Retire, then with respect to that
Participant as if he or she had Retired on the date of Plan termination. A
Participant’s Account Balance shall be paid on the date of Plan termination if
and to the extent permitted under Code Section 409A and the regulations
thereunder. Notwithstanding the preceding, however, in accordance with Code
Section 409A and its related treasury regulations, the Plan may be terminated in
the discretion of the Company and benefits paid to Participants in accordance
with one of the following:

 

(i)

the termination of the Plan within twelve (12) months of a corporate dissolution
taxed under Code Section 331 or with the approval of a bankruptcy court pursuant
to 11 U.S.C. 503(b)(1)(A), as provided in Treasury Regulation Section
1.409A-3(j)(4)(ix)(A); or

 

(ii)

the termination of the Plan within the thirty (30) days preceding or the twelve
(12) months following a Change in Control, provided that all substantially
similar arrangements are also terminated, as provided in Treasury Regulation
Section 1.409A-3(j)(4)(ix)(B); or

 

(iii)

the termination of the Plan, provided that the termination does not occur
proximate to a downturn in the financial health of the Employer, if all
arrangements that would be aggregated with the Plan under Treasury Regulation
Section 1.409A-1(c) are terminated, and no payments other than payments that
would be payable under the terms of the Plan if the termination had not occurred
are made within twelve (12) months of the Plan termination, and all payments are
made within twenty-four (24) months of the Plan termination, and no new
arrangement that would be

 

 

 

23

aggregated with the Plan under Treasury Regulation Section 1.409A-1(c) is
adopted within three (3) years following the Plan termination, as provided in
Treasury Regulation Section 1.409A-3(j)(4)(ix)(C); or

 

(iv)

such other events and conditions as the IRS may prescribe in generally
applicable published regulatory or other guidance under Code Section 409A.

The termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits under the
Plan as of the date of termination.

13.2

Amendment. The Board may, at any time, amend or modify the Plan in whole or in
part with respect to any or all Employers; provided, however, that: (i) no
amendment or modification shall be effective to decrease or restrict the value
of a Participant’s vested Account Balance in existence at the time the amendment
or modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or
modification or, if the amendment or modification occurs after the date upon
which the Participant was eligible to Retire, the Participant had Retired as of
the effective date of the amendment or modification, and (ii) no amendment or
modification of Section 14.2 of the Plan shall be effective. The amendment or
modification of the Plan shall not affect any Participant or Beneficiary who has
become entitled to the payment of benefits under the Plan as of the date of the
amendment or modification. Notwithstanding the foregoing, the Board may amend
the Plan retroactively to the extent required to qualify the Plan under Code
Section 409A, provided that no such amendment may reduce any Participant’s
Account Balance.

13.3

Plan Agreement. Despite the provisions of Sections 13.1 and 13.2 above, if a
Participant’s Plan Agreement contains benefits or limitations that are not in
this Plan document, the Employer may only amend or terminate such provisions
with the written consent of the Participant.

13.4

Effect of Payment. The full payment of the Participant’s vested Account Balance
under Articles 5, 6, 7, 8, 9 or 10 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries under this
Plan and the Participant’s Plan Agreement shall terminate.

ARTICLE 14

Administration

14.1

Committee Duties. Except as otherwise provided in this Article 14, this Plan
shall be administered by a Committee, which shall consist of the Board, or such
committee as the Board shall appoint. Members of the Committee may be
Participants under this Plan. The Committee shall also have the discretion and
authority to (i) make, amend, interpret, and enforce all appropriate rules and
regulations for the administra­tion of this Plan and (ii) decide or resolve any
and all ques­tions including interpretations of this Plan, as may arise in
connection with the Plan. Any individual serving on the Committee who is a
Participant shall not vote or act on any matter relating solely to himself or
herself. When making a determination or calculation, the Committee shall be
entitled to rely on information furnished by a Participant or an Employer.

14.2

Administration Upon Change In Control. For purposes of this Plan, the Committee
shall be the “Administrator” at all times prior to the occurrence of a Change in
Control. Within one-hundred and twenty (120) days following a Change in Control,
an independent third party “Administrator” may be selected by the Compensation
Committee of the Board in existence immediately prior to the Change in Control
(the “Pre-CoC Compensation Committee”). The Committee, as constituted prior to
the Change in Control, shall continue to be the Administrator until the earlier
of (i) the date on which such independent third party is selected and approved,
or (ii) the expiration of the one-hundred and twenty (120) day period following
the Change in Control. If an independent third party is not selected within
one-hundred and twenty (120) days of such Change in Control, the Committee, as
described in Section 14.1 above, shall be

 

 

 

24

the Administrator. The Administrator shall have the discretionary power to
determine all questions arising in connection with the administration of the
Plan and the interpretation of the Plan including, but not limited to benefit
entitlement determinations; provided, however, upon and after the occurrence of
a Change in Control, the Administrator shall have no power to direct the
investment of Plan assets or select any investment manager or custodial firm for
the Plan. Upon and after the occurrence of a Change in Control, the Company
must: (1) pay all reasonable administrative expenses and fees of the
Administrator; (2) indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorney’s fees and expenses arising
in connection with the performance of the Administrator hereunder, except with
respect to matters resulting from the gross negligence or willful misconduct of
the Administrator or its employees or agents; and (3) supply full and timely
information to the Administrator on all matters relating to the Plan, the
Participants and their Beneficiaries, the Account Balances of the Participants,
the date and circumstances of the Retirement, Disability, death or Termination
of Employment of the Participants, and such other pertinent information as the
Administrator may reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement appointed) only with the
approval of the Pre-CoC Compensation Committee. Upon and after a Change in
Control, the Administrator may not be terminated by the Company.

14.3

Agents. In the administration of this Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it sees
fit (including acting through a duly appointed representative) and may from time
to time consult with counsel who may be counsel to any Employer.

14.4

Binding Effect of Decisions. The decision or action of the Administrator with
respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.

14.5

Indemnity of Committee. All Employers shall indemnify and hold harmless the
members of the Committee, any Employee to whom the duties of the Committee may
be delegated, and the Administrator against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Plan, except in the case of willful misconduct by the Committee, any of
its members, any such Employee or the Administrator.

14.6

Employer Information. To enable the Committee and/or Administrator to perform
its functions, the Company and each Employer shall supply full and timely
information to the Committee and/or Administrator, as the case may be, on all
matters relating to the compensation of its Participants, the date and
circum­stances of the Retirement, Disability, death or Termination of Employment
of its Participants, and such other pertinent information as the Committee or
Administrator may reasonably require.

ARTICLE 15

Other Benefits and Agreements

15.1

Coordination with Other Benefits. The benefits provided for a Participant and
Participant’s Beneficiary under the Plan are in addition to any other benefits
available to such Participant under any other plan or program for employees of
the Participant’s Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may otherwise be
expressly provided. Code Section 409A applies to certain amounts which were
deferred under the Prior Plan but which were not vested as of December 31, 2004.
To the extent required by Code Section 409A and the regulations and guidance
promulgated thereunder, such amounts shall be governed by the provisions of this
Plan instead of by the Prior Plan, with payout conditions roughly equivalent to
the payouts elected under the Prior Plan.

 

 

 

25

ARTICLE 16

Claims Procedures

16.1

Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to below as a “Claimant”) may
deliver to the Committee a written claim for a determination with respect to the
amounts distributable to such Claimant from the Plan. The claim must state with
particularity the determination desired by the Claimant.

16.2

Claims Procedure. The Committee shall notify any person or entity that makes a
claim against the Plan in writing, within 90 days of Claimant's written
application for benefits, of his or her eligibility or noneligibility for
benefits under the Plan. If the Committee 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 Plan 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 Plan’s
claims review procedure and other appropriate information as to the steps to be
taken if the Claimant wishes to have the claim reviewed. If the Committee
determines that there are special circumstances requiring additional time to
make a decision, the Committee 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.

16.3

Review Procedure. If the Claimant is determined by the Committee 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 Committee by filing a petition for review with the
Committee within 60 days after receipt of the notice issued by the Committee.
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 Committee of the petition, the Committee shall afford
the Claimant (and counsel, if any) an opportunity to present his or her position
to the Committee 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 Committee 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 Plan 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 Committee, but notice of this
deferral shall be given to the Claimant.

16.4

Special Procedures Applicable to Disability Benefits. If a claim for benefits
under the Plan is contingent on a determination by the Committee (or its
designee) that the Participant suffers from a Disability, the Claimant shall
receive a written response to the initial claim from the Committee within 45
days, rather than 90 days. If special circumstances require an extension, the
Committee shall notify the Claimant within the 45-day processing period that
additional time is needed. If the Committee 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 Committee 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 Committee’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, and the fiduciary also cannot be subordinate to the fiduciary
who originally denied the claim. If the

 

 

 

26

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 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.

16.5

Legal Action. A Claimant’s compliance with the foregoing provisions of this
Article 16 is a mandatory prerequisite to a Claimant’s right to commence any
legal action with respect to any claim for benefits under this Plan.

ARTICLE 17

Miscellaneous

17.1

Status of Plan. The Plan is intended to be a plan that is not qualified within
the meaning of Code Section 401(a) and that “is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees” within the meaning
of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be
administered and interpreted to the extent possible in a manner consistent with
that intent.

17.2

Unsecured General Creditor. Participants and their Bene­ficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer. For purposes of the payment of
benefits under this Plan, any and all of an Employer’s assets shall be, and
remain, the general, unpledged unrestricted assets of the Employer. An
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

17.3

Employer’s Liability. An Employer’s liability for the payment of benefits shall
be defined only by the Plan and the Plan Agreement, as entered into between the
Employer and a Participant. An Employer shall have no obliga­tion to a
Participant under the Plan except as expressly provided in the Plan and his or
her Plan Agreement.

17.4

Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and non-transfer­able. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant’s or any other person’s bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.

17.5

Not a Contract of Employment. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between any Employer and the
Participant. Such employment is hereby acknowledged to be an “at will”
employment relationship that can be terminated at any time for any reason, or no
reason, with or without cause, and with or without notice, unless expressly
provided in a written employment agreement. Nothing in this Plan shall be deemed
to give a Participant the right to be retained in the service of any Employer,
either as an Employee or Director, or to inter­fere with the right of any
Employer to discipline or discharge the Participant at any time.

17.6

Furnishing Information. A Participant or his or her Beneficiary will cooperate
with the Committee by furnishing any and all information requested by the
Committee and take such other actions as may be requested in order to facilitate
the administra­tion of the Plan and the payments of benefits hereunder,
including but not limited to taking such physical examinations as the Committee
may deem necessary.

 

 

 

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17.7

Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.

17.8

Captions. The captions of the articles, sections and paragraphs of this Plan are
for convenience only and shall not control or affect the meaning or construction
of any of its provisions.

17.9

Governing Law. Subject to ERISA, the provisions of this Plan shall be construed
and interpreted according to the internal laws of the State of South Carolina
without regard to its conflicts of laws principles.

17.10

Notice. Any notice or filing required or permitted to be given to the Committee
under this Plan shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:

The South Financial Group, Inc.

104 South Main Street

Poinsett Plaza

Greenville, South Carolina 29601

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

17.11

Successors. The provisions of this Plan shall bind and inure to the benefit of
the Participant’s Employer and its successors and assigns and the Participant
and the Participant’s designated Beneficiaries.

17.12

Spouse’s Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass to the
Participant and shall not be transferable by such spouse in any manner,
including but not limited to such spouse’s will, nor shall such interest pass
under the laws of intestate succession.

17.13

Validity. In case any provision of this Plan shall be illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal or
invalid provision had never been inserted herein.

17.14

Incompetent. If the Committee determines in its discretion that a benefit under
this Plan is to be paid to a minor, a person declared incompetent or to a person
incapable of handling the disposition of that person’s property, the Committee
may direct payment of such benefit to the guardian, legal representative or
person having the care and custody of such minor, incompetent or incapable
person. The Committee may require proof of minority, incompetence, incapacity or
guardianship, as it may deem appropriate prior to distribution of the benefit.
Any payment of a benefit shall be a payment for the account of the Participant
and the Participant’s Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Plan for such payment amount.

17.15

Acceleration of Payment. The time or schedule of payment of a benefit hereunder
may only be accelerated 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, payment to a person other than the
Participant to the extent necessary to fulfill the terms of a domestic relations
order (as defined in Code Section 414(p)(1)(B)), payment of FICA tax and income
tax on wages imposed on any

 

 

 

28

amounts under this Agreement, or payment of the amount required to be included
in income for the Participants of Code Section 409A with respect to the
Participant.

17.16

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) as provided in Section 4.1, or will
violate Federal securities laws or other applicable law; 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.

17.17

Compliance With Code Section 409A. The Plan is intended to comply with the
requirements of Code Section 409A and the treasury regulations and other
guidance issued thereunder, as in effect from time to time. To the extent a
provision of the Plan is contrary to or fails to address the requirements of
Code Section 409A and related treasury regulations, the Plan shall be construed
and administered as necessary to comply with such requirements to the extent
allowed under applicable treasury regulations until the Plan is appropriately
amended to comply with such requirements.

17.18

Mandatory Cash Out of Small Accounts. Notwithstanding any provision herein to
the contrary, a Participant’s benefit under the Plan and all agreements,
methods, programs, or other arrangements with respect to which deferrals of
compensation are treated as having been deferred under a single nonqualified
deferred compensation plan under Treasury Regulation Section 1.409A-1(c)(2)
(“Aggregated Plans”) shall be paid in a mandatory lump sum payment in cash, or
Stock in the case of investment in a TSFG Stock Measurement Fund, if, at the
time the Participant’s benefit is scheduled to be paid or commence to be paid,
the payment under the Plan and all Aggregated Plans is not greater than the
applicable dollar amount under Code Section 402(g)(1)(B) and the payment results
in the termination and liquidation of the Participant’s interest under the Plan
and all Aggregated Plans.

17.19

Insurance. The Employers, on their own behalf or on behalf of the trustee of the
Trust, and, in their sole discretion, may apply for and procure insurance on the
life of the Participant, in such amounts and in such forms as the Employer may
choose. The Employers shall be the sole owner and beneficiary of any such
insurance. The Participant shall have no interest whatsoever in any such policy
or policies, and at the request of the Employers shall submit to medical
examinations and supply such information and execute such documents as may be
required by the insurance company or companies to whom the Employers have
applied for insurance.

17.20

Legal Fees To Enforce Rights After Change in Control. The Company and each
Employer is aware that upon the occurrence of a Change in Control, the Board or
the board of directors of a Participant’s Employer (which might then be composed
of new members) or a shareholder of the Company or the Participant’s Employer,
or of any successor corporation might then cause or attempt to cause the
Company, the Participant’s Employer or such successor to refuse to comply with
its obligations under the Plan and might cause or attempt to cause the Company
or the Participant’s Employer to institute, or may institute, litigation seeking
to deny Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly, if,
following a Change in Control, it should appear to any Participant that the
Company, the Participant’s Employer or any successor corporation has failed to
comply with any of its obligations under the Plan or any agreement thereunder
or, if the Company, such Employer or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation or other
legal action designed to deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company and the Participant’s
Employer irrevocably authorize such Participant to retain counsel, for a period
extending for the lifetime of the Participant and thereafter for five years, of
his or her choice at the expense of the Company and the Participant’s Employer
(who shall be

 

 

 

29

jointly and severally liable) to represent such Participant in connection with
the initiation or defense of any litigation or other legal action, whether by or
against the Company, the Participant’s Employer or any director, officer,
shareholder or other person affiliated with the Company, the Participant’s
Employer or any successor thereto in any jurisdiction. The amount of such legal
expenses that the Employer is obligated to pay in any given calendar year shall
not affect the legal expenses that the Employer is obligated to pay in any other
calendar year, and the Participant’s right to have the Employer pay such legal
expenses may not be liquidated or exchanged for any other benefit.

 

IN WITNESS WHEREOF, the Company has signed this Plan document as of December 11,
2008.

THE SOUTH FINANCIAL GROUP, INC.

By: /s/ James R. Gordon

 

Title: Sr. Executive Vice President

 

 

 

 

 

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