South Financial (TSFG) 8-K Regulation FD Disclosure

Exhibit 99.2

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No.2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

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JOHN S. McMULLEN,on Behalf of ANDROS ) C.A. No.2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOINT MOTION FOR PRELIMINARY APPROVAL OF PROPOSED SETTLEMENT

The Parties hereby move the Court pursuant to South Carolina Rule of Civil Procedure 23 for an order preliminarily approving the Settlement¹ reached in the above-captioned Actions

_________________________

¹ Except as otherwise expressly provided below or as the context otherwise requires, all capitalized terms used in this Joint Motion for Preliminary Approval of Proposed Settlement (the “Joint Motion”) shall have the meanings and/or definitions given in the Stipulation of Compromise and Settlement dated March 31, 2009 (the “Stipulation”) entered into by and between the Parties, which is attached to this Joint Motion as Exhibit A. To the extent that there may be any conflict between the terms, definitions, provisions, reservations, and conditions set forth in this Joint Motion and those set forth in the Stipulation, the terms, definitions, provisions, reservations, and conditions of the Stipulation shall govern.

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brought derivatively for and on behalf of nominal defendant The South Financial Group, Inc. (“TSFG” or the “Company”) against the Individual Defendants (the “Joint Motion”).²

1.            The Parties to the Actions have agreed on a settlement of all derivative claims of Plaintiffs against the Defendants, and the parties to the Mercier Action have agreed on a settlement of the class claims contained in the Mercier Action.

2.            The purposes and intent of all Parties to this Joint Motion are that, subject to the final approval of the Court, (i) the Actions and the Released Claims shall be finally and fully compromised, settled, and released; and (ii) the Actions shall be dismissed with prejudice, as to all Parties, upon and subject to the terms and conditions of the Stipulation.

3.            In accordance with the provisions of the Stipulation, the Parties hereby move the Court for a Settlement Hearing, at which time (a) the Parties will seek final approval of the terms of the Settlement as fair, reasonable, and adequate; (b) the Parties to the Mercier Action will seek, for purposes of settlement only, certification of a settlement class of the of record and beneficial shareholders of TSFG at any time between November 7, 2008 through April 1, 2009; and (c) Plaintiffs’ Counsel will seek an award of attorneys’ fees and expenses in the amount of $500,000, $300,000 of which shall be paid on behalf of the Individual Defendants by TSFG’s insurer and the remaining $200,000 of which shall be paid by TSFG in the form of TSFG stock,

_________________________

² The Mercier Action was also brought as a putative class action on behalf of the Class consisting of certain TSFG stockholders. The McMullen Action does not contain any class action claims.

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all of which is unopposed by Defendants, to be awarded to Plaintiffs’ Counsel as fair and reasonable in light of the common benefit created on behalf of TSFG and its shareholders.

4.            The Parties agree that both the Settlement and the attorneys’ fees were negotiated at arm’s-length in good faith by the Parties, and reflect an agreement that was reached voluntarily after consultation with competent legal counsel.

5.            The Parties suggest that among the factors favoring Settlement on the terms proposed in the Stipulation are:

a. the uncertainty of the legal issues underlying the allegations in the Actions;

b.            the assurance that TSFG’s shareholders obtain benefits regardless of the outcome of further litigation;

c. the economy of costs/exposure reduction for the benefit of the Parties;

d. the costs of continued litigation; and

e.            the prevailing consideration in all compromises and settlements that the parties weigh the advantages and benefits of settlement against the risks of loss.

6.            The Parties further represent to the Court that, while the Defendants have denied, and continue to deny, the allegations in the Actions, the Settlement is fair, reasonable, and adequate, considering:

a. the complexity, expense, uncertainty, and likely duration of the litigations;

b. the state of the proceedings and the amount of discovery completed;

c.            the immediate benefits to the shareholders of TSFG arising out of the Settlement; and

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d.            the concurrences of counsel for the Parties as reflected in their respective signatures to this Joint Motion.

7.            Plaintiffs’ Counsel represent to the Court that, in their opinion, the Settlement, as proposed, is fair, reasonable, and adequate, especially in view of the uncertainties and vagaries of further litigation with the Defendants, the immediate benefits obtained for TSFG and its shareholders, and the nature of the relief sought.

8.            In accordance with the provisions of the Stipulation, Plaintiffs’ Counsel present for the approval of the Court the following proposed plan:

a.            Following the Court’s determination that the Settlement is preliminarily approved, Summary Notice shall be published in the Wall Street Journal, in the form attached hereto as Exhibit B, while Full Notice, in the form attached hereto as Exhibit C, shall be disseminated by means of individual notice and a Form 8-K filing by the Company, informing TSFG shareholders of their right to object to the terms of the proposed Settlement and Class certification and to be heard on their objections at the Settlement Hearing to be conducted at a prescribed time and place and in a prescribed manner.

b.            The Settlement Hearing shall be conducted in such manner as to assure full compliance with applicable considerations of due process of law and the provisions of the South Carolina Rules of Civil Procedure.

9.            To assure that the shareholders of TSFG are fully informed of (a) the proposed Settlement, (b) their rights to review the proposed Settlement documents, (c) their right to object to the proposed Settlement, and (d) the means whereby they may make their objections and be

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heard thereon at the Settlement Hearing to be held by the Court at a designated time and place, the Parties suggest that the Notice be approved by the Court and ordered disseminated to TSFG shareholders, as provided in the Preliminary Order, in accordance with due process and the South Carolina Rules of Civil Procedure. TSFG shall be responsible for disseminating the Notice in accordance with the terms in the Preliminary Order.

10.          To facilitate the proposed Settlement and in the interests of judicial economy, the Parties request that the commencement and/or prosecution of any and all related actions and proceedings (including discovery) and/or actions and proceedings arising out of the matters at issue here by, on behalf of, or through any TSFG shareholders or member of the Class against any of the Defendants (excluding, however, those proceedings within the Actions necessary to obtain final approval of the Settlement embodied in the Stipulation), should be enjoined and stayed during the pendency of these Settlement proceedings and until further ordered by this Court.

11.          As described in the Stipulation, the Parties agree that, in the event of termination of the Stipulation, the Actions shall revert to their status before the execution of the AIP on March 24, 2009, as if related orders and papers and the efforts leading to the Stipulation had not been entered, prepared, or taken.

12.          The Parties agree that the Court shall retain jurisdiction with respect to the implementation and enforcement of the terms of the Stipulation, and all Parties submit to the jurisdiction of the Court for the sole purpose of implementing and enforcing the Settlement embodied in the Stipulation. By submitting to the jurisdiction of the Court for the limited

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purpose of this Settlement, the Defendants do not waive, and shall not be deemed to have waived, any jurisdictional defenses that were otherwise available prior to the execution of the AIP and/or the Stipulation.

WHEREFORE, THE PARTIES REQUEST:

A.           That the Court review the proposed Stipulation and that the Stipulation and the Settlement contained therein be preliminarily approved by the Court as fair, reasonable, and adequate, and entered into in good faith after consultation with competent legal counsel by the Preliminary Order attached hereto as Exhibit D;

B.           That the Court approve the form of Notice to TSFG’s shareholders attached hereto as Exhibits B and C, and order its dissemination to the Company’s shareholders as provided in the Preliminary Order, so that the Court may obtain and consider comments/objections of the shareholders and members of the Class, if any, regarding the Stipulation and the Settlement set forth therein and consider its fairness, reasonableness, and adequacy;

C.           That the Court schedule a Settlement Hearing for final Court approval, at which time (a) the Parties will seek final approval of the terms of the Settlement, as defined in the Stipulation, to consider comments/objections regarding the Stipulation and the proposed Settlement set forth therein, and to consider its fairness, reasonableness, and adequacy under the provisions of the South Carolina Rules of Civil Procedure; (b) the Parties to the Mercier Action will seek, for purposes of settlement only, certification of the Class; and (c) Plaintiffs’ Counsel will seek an award of attorneys’ fees and expenses

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payable as outlined in the Stipulation to Plaintiffs’ Counsel in the amount of $500,000, which is unopposed by Defendants, as fair and reasonable in light of the common benefit created on behalf of all TSFG shareholders. Prior to the scheduled Settlement Hearing, Plaintiffs’ Counsel will file a memorandum of law supporting the approval of the terms of the Settlement and approval of the attorneys’ fees and expenses;

D.           That the Court enjoin and stay the commencement and/or prosecution of any and all actions and proceedings relating to the Actions (including discovery) and/or actions and proceedings arising out of the matters at issue here by, on behalf of, or through any TSFG shareholder or member of the Class against any of the Defendants (excluding, however, those proceedings within the Actions necessary to obtain final approval of the Settlement embodied in the Stipulation), during the pendency of this Settlement proceeding and until further ordered by this Court;

E.           That, should the Stipulation and the Settlement set forth therein not receive this Court’s final approval, should final approval be reversed or otherwise not affirmed on appeal, or should the Stipulation and the Settlement set forth therein otherwise fail to become effective, the Parties shall be returned for all purposes to the status that existed just prior to the execution of the AIP on March 24, 2009, and all claims and defenses, including the right to assert jurisdictional defenses and to oppose certification of a class, shall not be deemed to be waived, and the Stipulation, as well as any negotiations, proceedings, documents prepared and statements made in connection therewith, shall have no further force and effect with respect to the Parties and shall not be used in the

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Actions or in any other proceeding for any purpose, and any judgment or order entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated, nunc pro tunc, except in each case to the extent that the Stipulation expressly provides otherwise;

F.            That any TSFG shareholder who timely and properly files the appropriate documentation or an objection to the Settlement, as provided in the Notice and the Preliminary Order, may appear at the Settlement Hearing and articulate why the Settlement should not be approved as fair, reasonable, and adequate;

G.           That, in due course, and after appropriate notice and hearing(s), final judgment be entered by the Court, approving the Settlement, and all terms thereof as provided in the Stipulation, and dismissing with prejudice the Actions as set forth in the Stipulation, under the terms and conditions of the Stipulation, against the Defendants, by the Final Order and Judgment attached hereto as Exhibit E;

H.           That the Court maintain continuing jurisdiction solely for purposes of the Settlement proceedings to assure the effectuation thereof for the benefit of the Settlement; and

I. For such other relief that this Court deems appropriate.

IN WITNESS WHEREOF, the Parties hereto have caused the Joint Motion to be submitted, by their duly authorized attorneys.

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DATED: March 31, 2009 WHETSTONE, MYERS, PERKINS

& YOUNG, LLC

s/ Charles W. Whetstone, Jr.

Charles W. Whetstone, Jr.

Cheryl F. Perkins

P.O. Box 8086

601 Devine Street (In the Vista)

Columbia, South Carolina 29202

Tel: (803) 799-9400

Fax: (803) 799-2017

BARROWAY TOPAZ KESSLER

MELTZER & CHECK, LLP

Lee D. Rudy

Eric L. Zagar

Michael J. Hynes

J. Daniel Albert

280 King of Prussia Road

Radnor, PA 19087

Tel: (610) 667-7706

Fax: (610) 667-7056

Attorneys for Plaintiff Vernon A. Mercier

DATED: March 31, 2009 MOTLEY RICE LLC

s/ Badge Humphries

Ann K. Ritter

Badge Humphries

Josh C. Littlejohn

28 Bridge Blvd.

Mt. Pleasant, SC 29464

Tel: (843) 216-9000

Fax: 843-216-9430

           PYE & TALLEY, PA

           Scott F. Talley

           959 John B. White Sr. Blvd.

           Spartanburg, SC 29306

           Tel: (864) 583-5658

           Fax: (864) 583-5672

Attorneys for Plaintiff John S. McMullen

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DATED: March 31, 2009 WYCHE BURGESS FREEMAN

& PARHAM, P.A.

s/ Henry L. Parr, Jr.

Henry L. Parr, Jr.

Wallace K. Lightsey

J. Theodore Gentry

David H. Koysza

44 East Camperdown Way, 29601

Post Office Box 728

Greenville, S.C. 29602-0728

Tel: (864) 242-8200

Fax: (864) 235-8900

Attorneys for Defendants The South Financial Group, Inc., William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan and William P. Crawford.

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DATED: March 31, 2009NEXSEN PRUET, LLC

s/ William W. Wilkins

William W. Wilkins

Thomas L. Stephenson

55 East Camperdown Way

Suite 400

Greenville, S.C. 29601

Tel: (864) 282-1199

Fax: (864) 477-2699

Attorneys for Defendant Mack I. Whittle, Jr.

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EXHIBIT A

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No.2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN, On Behalf of ANDROS ) C.A. No.2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL )

GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

STIPULATION OF COMPROMISE AND SETTLEMENT

This Stipulation of Compromise and Settlement is made and entered into as of this 31st day of March, 2009, subject to the approval of the Court, by and among (i) plaintiff Vernon A. Mercier, who has brought suit, individually, on behalf of a class of shareholders and derivatively for and on behalf of nominal defendant The South Financial Group, Inc. (“TSFG” or the “Company”), (ii) plaintiff John S. McMullen, who has brought similar derivative claims and other derivative claims; (iii) individual defendants Mack I. Whittle, Jr., William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W.

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Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan, and William P. Crawford, Jr., and (iv) nominal defendant TSFG.

I. DEFINITIONS

As used in this Stipulation, the following terms shall have the meanings specified below:

 

1.1 “Actions” means the Mercier Action and the McMullen Action, collectively.

1.2         “AIP” means the Agreement in Principle entered into by the Parties on March 24, 2009 outlining the terms agreed upon by the Parties for the settlement of the Actions.  

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

1.4         “Class” means all holders of TSFG common or preferred stock of record or beneficially at any time from November 7, 2008 through April 1, 2009, and their successors in interest and transferees, immediate and remote, other than Defendants and any person, firm, trust, corporation, or other entity related to or affiliated with any of the Defendants.

1.5         “Complaints” means the complaint filed in the McMullen Action and the complaint and the amended complaint filed in the Mercier Action.

1.6         “Court” means the Court of Common Pleas for the Thirteenth Judicial Circuit, County of Greenville, South Carolina. The Actions have been assigned to the Business Court Pilot Program of the South Carolina Circuit Courts before the Hon. Edward W. Miller.

1.7         “Defendants” means the Individual Defendants and the Nominal Defendant, collectively.

1.8         “Defendants’ Counsel” means all counsel for the Individual Defendants and the Nominal Defendant, collectively.

 

1.9 “EESA” means the Emergency Economic Stabilization Act of 2008.

1.10        “Effective Date” means the date on which the Final Order and Judgment becomes Final.

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1.11       “Employment Agreement” means the Board approved employment agreement entered into by Defendant Whittle (“Whittle”) on September 3, 2006.

1.12       “Final” means no longer subject to review upon appeal or review in connection with a Petition for Writ of Certiorari or other similar writ, whether by exhaustion of any possible appeal, lapse of time or otherwise.

1.13       “Final Order and Judgment” means a final order and judgment in the form submitted contemporaneously herewith, except for any changes that may be accepted in writing by the Parties.

1.14       “Individual Defendants” means Mack I. Whittle, Jr., William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan, and William P. Crawford, Jr.

1.15       “McMullen” means John S. McMullen, who is the plaintiff in the McMullen Action.

1.16       “McMullen Action” means McMullen v. Whittle, et al., C.A. No. 2008-CP-23-8914, brought derivatively on behalf of TSFG, filed on November 26, 2008 in the Court of Common Pleas for the Thirteenth Judicial Circuit, County of Greenville, South Carolina.

1.17 “Mercier” means Vernon A. Mercier, who is plaintiff in the Mercier Action.

1.18       “Mercier Action” means Mercier v. Whittle, et al., C.A. No. 2008-CP-23-8395, brought derivatively on behalf of TSFG and as a putative class action, filed on November 7, 2008 in the Court of Common Pleas for the Thirteenth Judicial Circuit, County of Greenville, South Carolina.

1.19 “Nominal Defendant” means The South Financial Group, Inc.

1.20       “Nominal Defendant’s Counsel” means Wyche, Burgess, Freeman & Parham, P.A.

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1.21       “Notice” means the Summary Notice and Notice of Pendency and Settlement of Actions, substantially in the form submitted contemporaneously herewith.

1.22       “Parties” means Plaintiffs Vernon A. Mercier and John S. McMullen, Individual Defendants Mack I. Whittle, Jr., William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan, and William P. Crawford, Jr., and Nominal Defendant The South Financial Group, Inc.

1.23       “Person” means a natural person, individual, corporation, partnership, limited partnership, limited liability partnership, limited liability company, association, joint venture, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity.

1.24       “Plaintiffs” mean Vernon A. Mercier and John S. McMullen and their heirs, executors, administrators, successors and assigns.

1.25       “Plaintiffs’ Counsel” means Barroway Topaz Kessler Meltzer & Check, LLP and Motley Rice, LLC.

1.26       “Preliminary Order” means an order substantially in the form of the Preliminary Order Approving Settlement and Notice submitted contemporaneously herewith.

1.27       “Related Persons” means, with respect to any Person, such Person’s present and former parent entities, subsidiaries (direct or indirect) and affiliates, and each of their respective present and former shareholders, general partners, limited partners, members, managers, affiliates, divisions, joint ventures, partnerships, officers, directors, employees, agents, representatives, attorneys, insurers, excess insurers, experts, advisors, investment advisors, underwriters, fiduciaries, trustees, auditors, accountants, representatives, spouses and immediate family members, and the predecessors, heirs, legatees, successors, assigns, agents, executors, devisees, personal representatives, attorneys, advisors and administrators of any of them, and the

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predecessors, successors, and assigns of each of the foregoing, and any other Person in which any such Person has or had a controlling interest or which is or was related to or affiliated with such Person, and any trust of which such Person is the settler or which is for the benefit of such Person or member(s) of his or her family.

1.28       “Released Claims” means the Released Class Claims and the Released Derivative Claims, collectively.

1.29       “Released Class Claims” means any and all claims of any nature or description under statutory or common law of the federal government or any state (including without limitation claims arising under South Carolina law, the federal securities laws, or any rules or regulations promulgated thereunder and claims within the exclusive jurisdiction of federal courts), liabilities, obligations, causes of action, expenses, damages, losses or any other matters, whether known or unknown, foreseen or unforeseeable, certain or contingent, that have been or could have been asserted by any member of the Class in state or federal court or in arbitration or similar proceedings that are based on, relate in any manner to or arise out of the allegations, facts, events, transactions, acts, occurrences, statements, representations, misrepresentations, omissions or any other matter, thing or cause whatsoever, or any series thereof that (1) were involved, recited, described or referenced in the Actions¹ or (2) otherwise arise out of, recite, describe, involve, refer to or relate to the compensation and benefits provided to Whittle by the Company, the Company’s reimbursement of Whittle’s expenses, Whittle’s severance package, or any matters alleged in the complaints in the Actions.

1.30       “Released Defendant Persons” means Defendants, their respective predecessors, successors, parents, subsidiaries, affiliates, and their and each Defendant’s respective officers,

_________________________

¹ Notwithstanding any background references to TSFG financial data in the Actions, plaintiffs do not release any fraud-based claims related to any future accounting restatement.  Plaintiffs have no reason to suspect that any such restatement will occur.

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employees, agents, attorneys, advisors, accountants, directors, heirs, personal representatives, beneficiaries and assigns.

1.31       “Released Derivative Claims” means any and all claims of any nature or description under statutory or common law of the federal government or any state (including without limitation claims arising under South Carolina law, the federal securities laws, or any rules or regulations promulgated thereunder, and claims within the exclusive jurisdiction of federal courts), liabilities, obligations, causes of action, expenses, damages, losses or any other matters, whether known or unknown, foreseen or unforeseeable, certain or contingent, that have been or could have been asserted derivatively on behalf of TSFG or any of its subsidiaries in state or federal court or in arbitration or similar proceedings that are based on, relate in any manner to or arise out of the allegations, facts, events, transactions, acts, occurrences, statements, representations, misrepresentations, omissions or any other matter, thing or cause whatsoever, or any series thereof that (1) were involved, recited, described or referenced in the Actions²or (2) otherwise arise out of, recite, describe, involve, refer to or relate to the compensation and benefits provided to Whittle by the Company, the Company’s reimbursement of Whittle’s expenses, Whittle’s severance package, or any matters alleged in the complaints in the Actions.

1.32        “Separation Letter” means the Board approved agreement entered into by TSFG and Whittle on September 2, 2008, under which Whittle would retire from his positions as the Company’s Chairman of the Board, President, and Chief Executive Officer as of the earlier of December 30, 2008 or any prior date specified by the Board, but would continue to serve as a director through the end of his current term, which would expire in 2011.

_________________________

² Notwithstanding any background references to TSFG financial data in the Actions, plaintiffs do not release any fraud-based claims related to any future accounting restatement.  Plaintiffs have no reason to suspect that any such restatement will occur.

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1.33       “Settlement” means the settlement and compromise of the Actions as provided for herein.

1.34       “Settlement Hearing” means the hearing or hearings at which the Court will review the adequacy, fairness and reasonableness of the Settlement.

1.35 “Stipulation” means this Stipulation of Compromise and Settlement.

II. FACTUAL AND PROCEDURAL HISTORY

2.1             The Mercier Action was brought by a shareholder of TSFG, both derivatively on behalf of TSFG and as a putative class action on behalf of TSFG’s common stock shareholders and alleges, among other things, that the Board improperly accelerated the retirement of and approved excessive compensation for TSFG’s founder Whittle.

2.2             The McMullen Action asserts substantially similar derivative claims and other derivative claims against substantially similar Defendants as those derivative claims asserted in the Mercier Action, but does not contain any putative class claims.

2.3             Whittle served as the Company’s President and Chief Executive Officer from its organization in 1986 until his retirement on October 27, 2008, as Chairman of the Board from 2005 until October 27, 2008, and as a director of the Company from 1986 until the present.

2.4             On October 3, 2008, the EESA, a $700 billion stimulus plan designed to assist the country’s financial system, became law.

2.5             On October 20, 2008, the U.S. Department of the Treasury (the “Treasury”) issued an interim final rule and guidelines regarding Section 111(b) of EESA. See 31 C.F.R. § 30.0 et seq. Among other things, the Treasury rules state that “[i]n order to comply with section 111(b)(2)(C) of EESA for purposes of participation in the [Capital Purchase Program (“CPP”)], a

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financial institution must prohibit any golden parachute payment to a [Senior Executive Officer (“SEO”)] during the period the Treasury holds an equity or debt position acquired under the CPP.” 31 C.F.R. § 30.8. A “golden parachute payment” is defined as:

any payment in the nature of compensation to (or for the benefit of) a SEO made on account of an applicable severance from employment to the extent the aggregate present value of such payments equals or exceeds an amount equal to three times the SEO’s base amount.

31 C.F.R. § 30.9(a).

2.6             The Treasury rules also state that the golden parachute limits apply only to SEOs who are “employed by a financial institution that is participating in EESA whilethe Treasury holds an equity or debt position acquired under EESA.” 31 C.F.R. § 30.2(a)(1).

2.7             Whittle’s retirement package, as provided for in the Separation Letter, provided for certain payments that would be in excess of the limitations provided under Section 111(b)(2)(C) of the EESA, if such limitations applied to Whittle, which Defendants contend is not the case because Whittle was not employed by the Company “while the Treasury holds an equity or debt position acquired under [TARP].” 31 C.F.R. § 30.2(a)(1).

2.8             The Parties have exchanged confidential information which indicates that the amount of this excess would be approximately $2 million.

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2.9             The Company intended to seek a Treasury investment under EESA, the approval of which would have subjected certain of TSFG’s officers to the “golden parachute” limits called for in EESA.

2.10           Prior to the Company’s application for funds under EESA, Whittle, because his employment with the Company would end in approximately two months or less, elected not to sign a waiver of the right to receive compensation in excess of the compensation limitations contained in the EESA, which waiver was required under the EESA CPP regulations prior to receipt of EESA funds.

2.11           On October 24, 2008, the Board exercised the Separation Letter provision authorizing the Board to specify Whittle’s retirement date and determined that Whittle’s retirement date would be as of the close of business on October 27, 2008.

2.12            On October 24, 2008, the Company applied for emergency funds under the EESA.

2.13           On November 12, 2008, after being served with the complaint in the Mercier Action, Whittle authored a letter to the Treasury explaining the timing of his departure, that TSFG had applied for government monies under EESA, and offering that if his retirement agreement, which had previously been fully disclosed to the Treasury Department, caused an issue with the approval of TSFG’s application, he was willing to discuss with Treasury the aspects of his retirement agreement that were in excess of the

10

EESA limitations and in good faith mutually agree to something that would allow the EESA investment to be made.

2.14            On November 14, 2008, TSFG announced it had been “preliminarily approved” to participate in the EESA’s Capital Purchase Program, “subject to standard terms and conditions.” The announcement stated that “[t]he Treasury intends to invest approximately $347 million in TSFG senior preferred stock and common stock warrants.”

2.15           The Company subsequently received final approval to participate in the EESA’s Capital Purchase Program, and the Treasury acquired $347 million of Company preferred stock and common stock warrants.

2.16           Whittle maintains, based on legal advice, that the compensation limitations contained in EESA do not apply to his retirement package because he was not an executive officer in the Company at the time of the investment in the Company by the Treasury.

2.17           On January 30, 2009, counsel for all the Parties to the Actions participated in an all-day mediation session under the auspices of Thomas J. Wills (“Mr. Wills”), which did not result in an agreement to settle the Actions.

2.18            The Parties, with the help of Mr. Wills, continued thereafter in numerous telephonic and written negotiations, to attempt to resolve the Actions.

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2.19           Following negotiations between the Parties, Plaintiffs’ Counsel and Defendants’ Counsel reached an agreement in principle providing for the Settlement on the terms and conditions set forth below, and the Parties believe that the Settlement is in the best interests of the Parties.

2.20            On March 24, 2009, the Parties entered into the AIP. In the AIP, the Parties agreed to enter into the Settlement upon completion of additional discovery that was reasonably satisfactory to Plaintiffs’ Counsel.

2.21           Plaintiffs’ Counsel has deposed the Company’s General Counsel and two Board members, including the Chairman of the Board, and has interviewed outside counsel for the Company regarding the issues contained in the Complaints. In addition, Plaintiffs’ Counsel has reviewed numerous public and non-public documents regarding Whittle’s retirement package, the decision-making process surrounding the determination of his retirement date, and the potential effect of the Company’s acceptance of EESA monies in connection with that decision.

2.22           Discovery has been completed to the satisfaction of Plaintiffs’ Counsel, as described above.

2.23           Plaintiffs and Defendants in the Actions, by and through their undersigned attorneys, have engaged in good faith, arm’s-length discussions with regard to the possible settlement of the Actions and the Parties have reached an agreement in

12

principle providing for the proposed settlement of the Actions on the terms and conditions set forth in this Stipulation.

2.24           Defendants do not admit and expressly deny all of Plaintiffs’ claims in the Actions.

2.25           Plaintiffs acknowledge and agree that the execution of this Stipulation by the Defendants is not an admission on the part of any of the Defendants that they have in any way committed or attempted to commit any violation of law or breach of duty, including without limitation any breach of any duty to TSFG or its shareholders or otherwise acted in any improper manner.

2.26            The Parties to the McMullen Action believe that the proposed Settlement is in the best interests of TSFG. The Parties to the Mercier Action believe that the proposed Settlement is in the best interests of TSFG and TSFG’s shareholders.

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and between the undersigned counsel for the Parties herein, and subject to the approval of the Court pursuant to S.C.R.C.P. 23, that all Released Claims shall be and hereby are compromised, settled, discontinued and dismissed with prejudice and without costs (except as defined herein) as to all Released Defendant Persons upon the foregoing terms and conditions.

III. SETTLEMENT OF THE ACTIONS

3.1          Principal Terms of Settlement. The Parties agree that the benefits described herein constitute a substantial benefit for the Company and its shareholders and that the Actions were the material cause of those benefits.

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a. Monetary Remedies

1. Whittle will contribute to the Company $250,000 to assist the Company in settling this matter. The Company shall obtain this payment by reducing the aggregate amount due to be paid to him on April 28, 2009 under the Separation Letter.

b. Whittle’s Retirement from TSFG Board

1. Whittle shall resign from the Board, effective as of the date the Court approval of the Settlement becomes Final.

2. TSFG will commit to include language to the following effect in an SEC filing:

a) In August 2008, the Company’s Board of Directors determined it was in the Company’s best interest to change the CEO and, to that end, began a series of negotiations with Whittle, which resulted in his retirement and the monetary settlement between Whittle and the Company (the terms of which have been filed by TSFG with the SEC).

b) In October 2008, based on advice of counsel, the Company’s Board of Directors determined that Whittle had no legal obligation to agree to the TARP executive compensation limitations (compliance with which was necessary in order to receive a capital allocation under the Treasury’s TARP Capital Purchase Program). Because at that point his employment with the Company would end in approximately two months or less, Whittle elected not to agree to the TARP executive compensation limitations. Accordingly, based on the advice of counsel, the Company’s Board of Directors determined that the only prudent way that it could ensure compliance with the TARP executive compensation limitations (and participate in the Capital Purchase Program) was to exercise the right it had under the Company’s separation agreement with Whittle to select a date in advance of December 30, 2008 as his retirement date, which it did by selecting October 27, 2008 as his retirement date.

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c. Non Monetary Remedies³

1. The Board shall not nominate a former CEO of the Company to the TSFG Board for a period of two (2) years after the departure of the CEO from TSFG.

2. The Board shall add an additional independent⁴ director with a background in financial services. The Company will seek to speak with shareholders, other than index funds, beneficially holding greater than 5% of the Company’s common stock to solicit their suggestions for an appropriate person to fill this position. Although the Board does not commit to nominate any particular person recommended, it shall duly consider nominating any such person.

3. Seventy-five percent (75%) of the Board shall consist of independent directors.

4. The chairman of the Board (i) shall be independent; (ii) shall be elected by secret ballot of the Board annually; and (iii) shall be limited to four (4) consecutive years of service as Board Chairman.

5. Before the end of the current fiscal year, the Compensation Committee will rebid its engagement of its independent compensation consultants from among the following nationally recognized firms (Frederick W. Cook & Co., Mercer Human Resource Consulting, Towers Perrin, Hewitt Associates, Watson Wyatt Worldwide, or Pearl Meyer & Partners).

6. The Board shall designate the Audit Committee as the committee

_________________________

³ The commitments in items 1, 3, 4, 6, 7, 9, 11, 13, 14, 15 and 16 will be effective for five years. In addition, the obligations and commitments in this section 3.1.c shall terminate in the event of any merger, share exchange or other business combination transaction to which TSFG is a party unless TSFG is the surviving company in the transaction, remains a public reporting company following consummation of the transaction and the beneficial holders of securities of TSFG generally entitled to vote in the election of directors ("Voting Securities") as of immediately before such transaction continue to own beneficially, immediately after consummation of such transaction, more than 65% of the then-outstanding Voting Securities of TSFG in substantially the same proportions as their ownership immediately prior to such transaction.

⁴  Any references herein to “independence” or “independent” herein shall mean such term as defined in applicable NASDAQ rules.

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responsible for TARP compliance, provided that the primary responsibilities for (i) implementation of a company-wide policy regarding excessive or luxury expenditures, (ii) the required risk assessment regarding the structure of incentive compensation so as to not encourage excessive risk taking, and (iii) other matters that are predominantly compensation-related, may be delegated to the Compensation Committee (though the Audit Committee will still confirm completion by the Compensation Committee of these delegated matters).

7. If in the future TSFG is required to prepare an accounting restatement to correct a material accounting error included in a report on Form 10-Q or Form 10-K, a committee of independent directors shall determine whether the restatement was caused by misconduct of any Section 16 officer of TSFG.⁵ If the committee of independent directors determines that misconduct of any such officer caused the restatement, the Board shall require such officer to return to TSFG:

a) Any bonus or other incentive-based or equity-based compensation received by that person from TSFG during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such financial reporting requirement; and

b) Any profits realized from the sale of securities of TSFG during that 12-month period.

The committee of independent directors’ conclusions and determinations concerning its findings relating to misconduct and any required remediation will be disclosed in an appropriate filing with the SEC. By agreeing to this item, the Company does not imply that the Company believes that it is or will be required to prepare any accounting restatement to correct an accounting error.

8. TSFG commits, for as long as TARP requires a risk assessment of incentive compensation, to include in an appropriate SEC filing not

_________________________

⁵ “Section 16 officer” means “officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 as amended, and includes the president, the principal financial officer, the principal accounting officer, and any vice president in charge of a principal business unit, division, or function.

16

merely the conclusion of the TARP-mandated risk assessment of incentive compensation (i.e., that it does not induce excessive risk taking), but also a reasonable discussion of the methodology utilized in arriving at that conclusion. For the same period of time, the Company will also continue to include a Compensation Discussion and Analysis in its proxy statement which will provide a detailed description of the Compensation Committee’s thoughts and objectives of the incentive compensation arrangements.

9. Communications to the Board from shareholders or employees shall be delivered to Board members within six (6) weeks of receipt. All communications to the Board will be opened by the Corporate Secretary for the sole purpose of determining whether the contents represent a message to the Directors. The Corporate Secretary, in his discretion, shall forward items to the Board unless he deems them to be of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration.

10. TSFG will submit an advisory “say on pay” provision in its proxy statement this proxy year and in each subsequent year until the later of five years (i.e., ending with the proxy statement for the 2013 annual meeting) or three years after the Company satisfies its financial obligation to the federal government, thereby releasing itself from the TARP-mandated say-on-pay requirement. TSFG will include a Compensation Discussion and Analysis that in general, provides the same level of detail and disclosure as is set forth in RiskMetrics’ April 23, 2008 proxy statement.⁶

11. The Board shall amend TSFG’s Corporate Governance Guidelines to provide that the positions of Chairman of the Board and CEO shall be divided and held by two persons.

12. The Board will form an independent committee to review PricewaterhouseCoopers LLP’s performance as auditor, and make a special recommendation to the Audit Committee as to whether the Company’s external audit should be rebid. The Company’s agreement to this item 12 does not imply that the Company is aware of any disagreement by the Company with Pricewaterhouse Coopers LLP or any problem with Pricewaterhouse Coopers LLP’s performance. Furthermore, for at least the next ten years, the

_________________________

⁶ See RiskMetrics Group, Inc., Proxy Statement (Form DEF 14A), at 17-30 (Apr. 23, 2008).

17

Company will ensure compliance with the obligation of its external auditor to rotate its primary audit partner at least every five years.

13. The Company will commit to hold, at least twice per year, an open conference call to which all shareholders beneficially holding in excess of 3% of the Company’s common stock (who make filings under Section 13 of the Exchange Act; calculated on a fully diluted basis) may call in and speak with management about any matter reasonably and materially related to the Company’s business, subject to reasonable time and decorum limits.

14. Any director appointed to the Board by the Board of Directors will be presented by the Board at the next shareholder meeting for confirmation (or replacement).

15. The Company shall amend its Bylaws to:

a) Prevent any “poison pill” from being issued with a beneficial owner trigger below 20%, unless approved by shareholders; and

b) Prevent the Company from holding a pill without shareholder approval for more than one year.

16. When new independent board members are nominated to fill newly created positions or to replace incumbent board members who are leaving the board, the Board or the appropriate Board committee will also commit to seek to speak with shareholders, other than index funds, beneficially holding greater than 5% of the Company’s common stock to solicit their suggestions for appropriate persons to fill these position. Although the Company does not commit to nominate any particular person suggested, it shall duly consider nominating any such person.

3.2          Defendants’ Denial of Liability. TSFG and each of the Individual Defendants have denied and continue to deny all of the claims in the Actions, and have denied and continue to deny having committed, aided, or attempted to commit or aid any violations of law or breach of any duty of any kind or otherwise having acted in any improper manner. The Parties are

18

entering into the Stipulation because the Settlement would eliminate the expenses, burdens and risks associated with further litigation of the Actions, and because Defendants believe the Settlement is in the best interests of TSFG and its shareholders. Neither the Settlement nor any of its terms shall constitute an admission or finding of wrongful conduct, acts, or omissions.

3.3          Reliance Upon Own Knowledge. Plaintiffs expressly represent and warrant that, in entering into the Settlement, they relied upon their own knowledge and investigation (including the knowledge of and investigation performed by Plaintiffs’ Counsel), and not upon any promise, representation, warranty or other statement made by or on behalf of any of the Defendants or their Related Persons not expressly contained in the Stipulation.

3.4          Notice. TSFG shareholders shall be notified of the proposed settlement by individual notice, by publication of a summary of the settlement in a national business publication, and by filing a Form 8-K with the Securities and Exchange Commission summarizing the settlement and attaching a copy of the proposed Settlement Documents. TSFG shall disseminate notice of the Settlement to its shareholders as of April 1, 2009 in such form and manner as approved by the Court and shall be solely responsible to pay, up to a maximum amount of $75,000, the costs and expenses related to providing such notice, with Plaintiffs’ Counsel being jointly responsible to pay any costs and expenses above that amount even if the Settlement is not consummated.

3.5          Attorneys’ Fees and Expenses. The Parties agree to an award of attorneys’ fees to Plaintiffs’ Counsel in the amount of $500,000 to be paid as follows:

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3.5.1 $200,000 by TSFG in the form of TSFG common stock in an unregistered transaction with appropriate restrictions, valued based on the average closing price of the TSFG common stock for the 10 trading day period ending the trading day immediately preceding the final Settlement Hearing.

3.5.2 $300,000 to be paid in cash, on behalf of the Individual Defendants by the Company’s D&O insurance carrier.

3.5.3 Payment shall be made within ten business days of the date on which the Final Order and Judgment becomes Final. TSFG shall issue the TSFG common stock to the firm or person designated jointly by Plaintiffs’ Counsel. TSFG’s D&O insurance carrier shall make the $300,000 payment in the form of a check payable to an interest bearing account designated jointly by Plaintiffs’ Counsel where such funds shall be held until such time as they are allocated among respective Plaintiffs’ Counsel in a manner agreed to by Plaintiffs’ Counsel or as ordered by the Court.

Except as expressly provided herein, (i) Plaintiffs’ Counsel shall bear their own fees, costs, and expenses, and (ii) no Defendant shall assert any claim for expenses, costs, or fees against Plaintiffs or Plaintiffs’ Counsel.

3.6 Releases. Upon the Effective Date, the following releases shall be effective:

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3.6.1 Plaintiffs and TSFG release and discharge the Released Defendant Persons from the Released Derivative Claims.

3.6.2 Plaintiff Mercier and the Class release and discharge the Released Defendant Persons from the Released Class Claims.

3.6.3 Plaintiffs release and discharge all claims against Defendants’ Counsel related to the defense of the Actions.

3.6.4 Defendants release and discharge any claims they may have against Plaintiffs and Plaintiffs’ Counsel related to their bringing and prosecuting the Actions.

3.7           Certification of Settlement Class. The parties to the Mercier Action agree to provisional certification of the Class for purposes of effectuating the Settlement only, and for no other purpose. If the Settlement does not receive Final approval of the Court as described herein, the parties to the Mercier Action shall request that the Court de-certify any class certified pursuant to the Stipulation, this agreement as to certification of the Class shall become null and void ab initio, and each party shall retain all objections, arguments, positions, and/or defenses with respect to certification of any class in this case. The Parties acknowledge there has been no stipulation or agreement regarding class certification for any purpose other than effectuating the Settlement.

IV. PRELIMINARY ORDER AND SETTLEMENT HEARING

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4.1         Application for Preliminary Order. The Parties shall jointly submit the Stipulation together with its related documents to the Court, and the Parties shall apply for the Preliminary Order by filing proper notice and supporting papers with the Court:

(a) Approving the form of the Notice substantially in the form of such submitted contemporaneously herewith;

(b) Setting forth the method for providing Notice to TSFG shareholders of the Settlement and Settlement Hearing;

(c) Finding that the methods of providing Notice set forth in the Preliminary Order constitute the best Notice practicable under the circumstances and meet all requirements of Rule 23 of the South Carolina Rules of Civil Procedure and due process; and

(d) Setting a date for the Settlement Hearing to determine whether the Settlement should be approved as reasonable, adequate and in the best interests of TSFG and its current and former shareholders and whether the Class should be certified.

V. EFFECTIVENESS OF SETTLEMENT, WAIVER OR TERMINATION

5.1          The effectiveness of the Settlement shall be expressly conditioned upon the entry by the Court of the Final Order and Judgment and such Final Order and Judgment having become Final.

5.2          If the conditions identified in paragraph 5.1 fail to occur, then any of Parties may terminate the Stipulation and withdraw from the Settlement by providing written notice of such action to undersigned counsel for all of the Parties within thirty (30) days after the failure of such condition. In the event that the Settlement is not approved or is terminated, (a) the Settlement and any actions taken in connection therewith shall be vacated and terminated and shall become null and void for all purposes, and all negotiations, transactions, and proceedings connected with it: (i) shall be without prejudice to the rights of any Party hereto; (ii) shall not be deemed to be or construed as evidence of, or an admission by any Party of, any fact, matter, or thing; and (iii) shall not be admissible in evidence or be used for any purpose in any subsequent proceedings in the Actions or any other action or proceeding, and (b) the Parties to the Stipulation shall be

22

deemed to have reverted to their respective status in the Actions as of the date and time immediately prior to the execution of the AIP, and, except as otherwise expressly provided, the Parties shall proceed in all respects as if the Stipulation and any related orders had not been entered and shall not be entitled to recover from any other Party, except as expressly provided otherwise in this Stipulation, any costs or expenses incurred in connection with the implementation of the Stipulation or Settlement.

5.3          Standstill Agreement.   Pending entry of the Final Order and Judgment based on the Settlement provided for in the Stipulation, Plaintiffs, all other shareholders of TSFG and the Class are barred and enjoined from commencing, prosecuting, instigating, or in any way participating in the commencement or prosecution of any action asserting any Released Claims, either directly, representatively, derivatively, or in any other capacity, against TSFG or any Individual Defendant. Plaintiffs also agree not to oppose any motions to dismiss any other proceedings to the extent any claims that are the subject of the release and dismissal contemplated by the Stipulation are asserted or continue to be asserted in any court prior to or after the entry of a judgment based on the Settlement in the Actions.

VI. MISCELLANEOUS PROVISIONS

6.1          Cooperation of the Parties. The Parties (a) acknowledge that it is their intent to consummate this Settlement and (b) agree to cooperate to the extent reasonably necessary to effectuate and implement all terms and conditions of the Stipulation and to exercise their reasonable efforts to accomplish the foregoing terms and conditions of the Stipulation. The Parties will seek the Court’s approval of the Preliminary Order and, when appropriate, the Final Order and Judgment.

6.2          Acknowledgment of Adequate Consideration. The Parties acknowledge, represent and warrant to each other that the terms of the Settlement are such that each of the Parties is to receive adequate consideration for the consideration given.

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6.3          No Admissions. Neither the Stipulation nor the Settlement, nor any act performed or document executed pursuant to or in furtherance of the Stipulation or the Settlement (a) is or may be deemed to be or may be used as an admission of, or evidence of the validity or lack of validity of any Released Claims, any violation of any statute or law or any wrongdoing or liability of any of the Parties or any of their Related Persons; (b) is or may be deemed to be or may be used as an admission of, or evidence of, any fault or omission of any of the Parties or any of their Related Persons in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal; or (c) is or may be alleged or mentioned so as to contravene clause (a) above in any litigation or other action unrelated to the enforcement of the Stipulation. Notwithstanding the foregoing, the Parties may file the Stipulation or any judgment or order of the Court related hereto in any action that may be brought against any of them in order to support a defense or a counterclaim based on res judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim.

6.4          Confidentiality Agreements. All agreements made during the course of the negotiations relating to the confidentiality of information shall survive the Stipulation and the Settlement.

6.5          Costs.    Except as otherwise expressly provided herein, the Parties shall bear their own costs.

6.6          Entire Agreement. The Stipulation and all documents executed pursuant hereto constitute the entire agreement between the Parties with respect to the Settlement of the Actions and supersede any and all prior negotiations, discussions, agreements or undertakings, whether oral or written, with respect to the Settlement of the Actions.

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6.7          Counterparts.  The Stipulation may be executed in one or more counterparts, including by signature transmitted by facsimile. Each counterpart when so executed shall be deemed to be an original, and all such counterparts together shall constitute the same instrument.

6.8          Binding Effect. The Stipulation shall be binding upon, and inure to the benefit of all Parties and their respective heirs, personal representatives, successors, and assigns. The Stipulation is not intended, and shall not be construed, to create rights in or confer benefits on any other Persons, and there shall not be any third party beneficiaries hereto, except as expressly provided hereby with respect to any such aforementioned Persons who are not Parties hereto.

6.9          Judicial Enforcement.   The Court shall retain jurisdiction with respect to the implementation and enforcement of the terms of the Stipulation and the Settlement, and the Parties submit to the jurisdiction of the Court for purposes of implementing and enforcing the terms of the Stipulation and Settlement.

6.10       Choice of Law. The Stipulation and the Settlement shall be governed by, and construed in accordance with, the laws of the State of South Carolina, without regard to conflict of laws principles.

6.11       Warrant of Authority.   Each counsel or person executing the Stipulation or any of the related documents on behalf of any Party hereto hereby warrants that such Person has the full authority to do so.

6.12       Waiver of Breach. The Parties may not waive or vary any right hereunder except by an express written waiver or variation. Any failure to exercise or any delay in exercising any of such rights, or any partial or defective exercise of such rights, shall not operate as a waiver or variation of that or any other such right. The waiver by one Party of any breach of the Stipulation by another Party shall not be deemed a waiver of any other prior or subsequent breach of the Stipulation.

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6.13       Fair Construction. The Stipulation shall not be construed more strictly against one Party than another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one of the Parties. The Stipulation is the result of arm’s length negotiations between the Parties and all Parties have contributed substantially and materially to the preparation of the Stipulation.

6.14       No Assignment of Claims. Plaintiffs hereby represent and warrant that they have not assigned any rights, claims or causes of action that were asserted or could have been asserted in connection with, under or arising out of any of the claims being settled or released herein.

6.15       Facsimile and Scanned Signatures.      Any signature to the Stipulation, to the extent signed and delivered by means of a facsimile machine or electronically scanned and sent via email, shall be treated in all manner and respects as an original signature and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of a Party to the Stipulation, any other Party to the Stipulation so executing and delivering this document by means of a facsimile machine or via email shall reexecute original forms thereof and deliver them to the requesting Party. No Party to the Stipulation shall raise the use of a facsimile machine or email to deliver a signature or the fact that any signature or agreement was transmitted or communicated through the use of a facsimile machine or email as a defense to the formation or the enforceability of the Stipulation and each such Person forever waives any such defense.

6.16       Extensions of Time. Without further order of the Court, the Parties hereto may agree to reasonable extensions of time to carry out any of the provisions of the Stipulation.

The Parties have caused the Stipulation to be duly executed and delivered by their counsel of record:

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DATED: March 31, 2009 WHETSTONE, MYERS, PERKINS

& YOUNG, LLC

s/ Charles W. Whetstone, Jr.

Charles W. Whetstone, Jr.

Cheryl F. Perkins

P.O. Box 8086

601 Devine Street (In the Vista)

Columbia, South Carolina 29202

Tel: (803) 799-9400

Fax: (803) 799-2017

BARROWAY TOPAZ KESSLER

MELTZER & CHECK, LLP

Lee D. Rudy

Eric L. Zagar

Michael J. Hynes

J. Daniel Albert

280 King of Prussia Road

Radnor, PA 19087

Tel: (610) 667-7706

Fax: (610) 667-7056

Attorneys for Plaintiff Vernon A. Mercier

27

DATED: March 31, 2009MOTLEY RICE LLC

s/ Badge Humphries

Ann K. Ritter

Badge Humphries

Josh C. Littlejohn

28 Bridge Blvd.

Mt. Pleasant, SC 29464

Tel: (843) 216-9000

Fax: (843) 216-9450

          PYE & TALLEY, PA

          Scott F. Talley

          959 John B. White Sr. Blvd.

          Spartanburg, SC 29306

          Tel: (864) 583-5658

          Fax: (864) 583-5672

Attorneys for Plaintiff John S. McMullen

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DATED: March 31, 2009WYCHE BURGESS FREEMAN

& PARHAM, P.A.

s/ Henry L. Parr, Jr.

Henry L. Parr, Jr.

Wallace K. Lightsey

J. Theodore Gentry

David H. Koysza

44 East Camperdown Way, 29601

Post Office Box 728

Greenville, S.C. 29602-0728

Tel: (864) 242-8200

Fax: (864) 235-8900

Attorneys for Defendants The South Financial Group, Inc., William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan, and William P. Crawford, Jr.

29

DATED: March 31, 2009NEXSEN PRUET, LLC

s/ William W. Wilkins

William W. Wilkins

Thomas L. Stephenson

55 East Camperdown Way

Suite 400

Greenville, S.C. 29601

Tel: (864) 282-1199

Fax: (864) 477-2699

Attorneys for Defendant Mack I. Whittle, Jr.

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EXHIBIT B

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No.2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN, on Behalf of ANDROS ) C.A. No.2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )  

SUMMARY NOTICE OF SETTLEMENT OF

SHAREHOLDER ACTIONS

TO: ALL HOLDERS OF COMMON OR PREFERRED STOCK OF THE SOUTH FINANCIAL GROUP, INC. (“TSFG”) OF RECORD OR BENEFICIALLY AT ANY TIME FROM NOVEMBER 7, 2008 THROUGH APRIL 1, 2009, AND THEIR SUCCESSORS IN INTEREST AND TRANSFEREES, IMMEDIATE AND REMOTE, AND ANY CURRENT STOCKHOLDERS OF TSFG

YOU ARE HEREBY NOTIFIED, pursuant to South Carolina Rule of Civil Procedure 23 and an Order of the Court (the “Court”), that the above-captioned actions pending in the Court of Common Pleas for the Thirteenth Judicial Circuit, County of Greenville, South Carolina (the “Actions”) are shareholder actions¹ brought respecting TSFG, and that a proposed settlement (the “Settlement”) of the Actions has been reached with defendants listed above, subject to Court approval. A hearing will be held before the Honorable Judge Edward W. Miller of the Greenville County Court of Common Pleas, at the Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601, on May 21, 2009, at 9:30 a.m. (the “Hearing”), to determine whether the proposed settlement of the Actions should be approved by the Court as fair, reasonable, and adequate and to consider the application of plaintiffs’ counsel for attorneys’ fees and expenses.

IF YOU HELD COMMON OR PREFERRED STOCK OF TSFG AT ANY TIME FROM NOVEMBER 7, 2008 THROUGH APRIL 1, 2009, OR ARE A SUCCESSOR IN INTEREST OR TRANSFEREE, IMMEDIATE OR REMOTE, OF SUCH A HOLDER, OR IF YOU ARE A CURRENT STOCKHOLDER OF TSFG, YOUR RIGHTS MAY BE AFFECTED BY THE SETTLEMENT OF THE ACTION.

This is a summary notice only. For additional information about the allegations of the complaints and the terms of the proposed settlement, shareholders are directed to [link to Form 8-K on the Internet], or shareholders without access to the Internet can obtain a copy of this document by contacting:

Mercier / McMullen Litigation Administrator, The South Financial Group, Inc., 104 South Main Street, Poinsett Plaza 10th Floor, Greenville, SC 29601

If you held common or preferred stock of TSFG at any time from November 7, 2008 though April 1, 2009, or are a successor in interest or transferee, immediate or remote, of such a holder, or if you are a current stockholder of TSFG, you have the right to appear in these Actions. Unless otherwise ordered by the Court, however, no TSFG shareholder or any other person shall be heard or shall be entitled to contest the approval of the Settlement, or plaintiffs’ counsels’ fee application, and no papers, briefs, pleadings or other documents submitted by any TSFG shareholder or any other person shall be received and considered, unless, no later than May 7, 2009, that person has caused to be filed written objections, stating all supporting bases and reasons, with:

Clerk of the Court, Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601

and has served copies of all such papers at the same time upon the following by first class mail:

_________________________

¹ The Mercier Action contains derivative claims and a putative class action claim on behalf of a class of holders of stock of TSFG of record or beneficially at any time from November 7, 2008 through April 1, 2009, while the McMullen Action contains only derivative claims.

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Michael J. Hynes, BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP, 280 King of Prussia Road, Radnor Pennsylvania, 19087, Counsel for Plaintiff Mercier

Badge Humphries, MOTLEY RICE LLC, 28 Bridgeside Blvd., Mt. Pleasant SC 29464,Counsel for Plaintiff McMullen

Henry L. Parr, Jr., WYCHE BURGESS FREEMAN AND PARHAM, P.A., Post Office Box 728, 44 East Camperdown Way, Greenville, SC 29602–0728, Counsel for Defendants other than Whittle

William W. Wilkins, NEXSEN PRUET LLC, 55 E. Camperdown Way, Greenville SC,Counsel for Defendant Mack I. Whittle, Jr

Every objection must contain: (1) the person’s name, address, and telephone number; (2) proof that such person is a TSFG shareholder or was a shareholder during the pertinent time period, including the number of shares of TSFG common stock or preferred stock held currently and/or during the pertinent time; (3) the date(s) of purchase of such shares; (4) a detailed statement of the all the bases and reasons for the person’s objections to or comments upon the Settlement, plaintiffs’ counsels’ request for attorneys’ fees, or any other matter before the Court and the identities of any witness such person plans to call at the Hearing; (5) any supporting papers, including all documents and writings that the person desires the Court to consider; and (6) a representation as to whether the person intends to appear at the Hearing.

Any current or former TSFG stockholder who does not make his, her, or its objection in the manner provided for in the preceding paragraphs shall be deemed to have waived such objection and shall forever be foreclosed from making any objections to the fairness, adequacy, or reasonableness of the Settlement, or plaintiffs’ counsels’ fee application and shall otherwise be bound by any judgment entered in the Actions and by any releases given.

DO NOT CONTACT THE COURT REGARDING THIS NOTICE

By Order of the Court

Dated: _______________, 2009

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EXHIBIT C

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No. 2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN, on Behalf of ANDROS ) C.A. No. 2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

NOTICE OF PENDENCY AND SETTLEMENT OF ACTIONS

AND OF SETTLEMENT HEARING

TO: ALL HOLDERS OF THE COMMON OR PREFERRED STOCK OF THE SOUTH FINANCIAL GROUP, INC. (“TSFG” OR “COMPANY”) OF RECORD OR BENEFICIALLY AT ANY TIME FROM NOVEMBER 7, 2008 THROUGH APRIL 1, 2009, AND THEIR SUCCESSORS IN INTEREST AND TRANSFEREES, IMMEDIATE AND REMOTE, AND ANY CURRENT STOCKHOLDERS OF TSFG. PLEASE READ THIS NOTICE CAREFULLY AND COMPLETELY. YOUR RIGHTS WILL BE AFFECTED. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF TWO SHAREHOLDER ACTIONS AND CLAIMS ASSERTED THEREIN.

I. WHY THIS NOTICE IS BEING PROVIDED

You are receiving this Notice of Pendency and Settlement of Actions and of Settlement Hearing (“Notice”) pursuant to South Carolina Rule of Civil Procedure 23 and an Order of the Court of Common Pleas for the Thirteenth Judicial Circuit, Greenville County, South Carolina (the “Court”). The purpose of this Notice is to advise you that shareholder actions are now pending in the Court relating to TSFG and that the Parties thereto have entered into a Stipulation of Compromise and Settlement (the “Stipulation”), dated as of March 31, 2009 (the “Stipulation Date”) which is on file with the Court, reflecting a settlement (the “Settlement”), subject to Court approval, which would fully, finally and forever resolve the Actions on the terms and conditions summarized in this Notice and that a settlement hearing (the “Settlement Hearing”) will be held on May 21, 2009 at 9:30 a.m., before the Honorable Edward W. Miller at the Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601.

THIS IS NOT AN EXPRESSION OF ANY OPINION BY THE COURT AS TO THE MERITS OF ANY CLAIMS OR ANY DEFENSES ASSERTED BY ANY PARTY IN THE ACTIONS, OR THE FAIRNESS, REASONABLENESS OR ADEQUACY OF THE PROPOSED SETTLEMENT.

II. BACKGROUND – WHAT THIS SETTLEMENT IS ABOUT

On November 7, 2008, an action captionedMercier v. Whittle, et al., C.A. No. 2008-CP-23-8395 was filed with the Court (the “Mercier Action”). The Mercier Action was brought by a shareholder of TSFG, both derivatively on behalf of Nominal Defendant TSFG and as a putative class action on behalf of its stockholders and alleges, among other things, that the Board of Directors of TSFG (the “Board”) improperly accelerated the retirement of TSFG’s founder, Chief Executive Officer (“CEO”) and Chairman of the Board, Mack Whittle, Jr. (“Whittle”) and breached fiduciary duties by overcompensating Whittle. On November 26, 2008, an action captioned McMullen v. Whittle, et al., C.A. No. 2008-CP-23-8914, also brought derivatively on behalf of TSFG, was filed with the Court (the “McMullen Action,” and together with the Mercier Action, the “Actions”). The McMullen Action asserts substantially similar derivative claims and other derivative claims against substantially similar Defendants as those asserted in the Mercier Action; however, the McMullen Action does not assert class action claims. The individuals included as Defendants in addition to nominal defendant TSFG are Whittle, William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan and William P. Crawford, Jr.

The Parties have reached an agreement in principle providing for the Settlement on the terms and conditions contained in the Stipulation. The Parties believe the Settlement is in the best interests of the Parties and

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TSFG stockholders. As a part of the Settlement, the Actions will be dismissed.

Plaintiffs and their counsel believe that the claims asserted in the Actions have merit. Nevertheless, Plaintiffs and their counsel, considering the Settlement’s terms and the significant risks associated with the Plaintiffs’ claims in the Actions, believe that the Settlement, described below, is in the best interests of the Company and its shareholders. Plaintiffs’ Counsel have evaluated information made available in the settlement negotiations, and have taken into account the risks and uncertainties of the continued prosecution of the Actions. Plaintiffs and their counsel believe that the Settlement’s terms have materially benefitted, and will continue to materially benefit, TSFG. They have balanced these benefits against the risks of continued litigation which include, among other things: the uncertainty and difficulty of (i) overcoming Defendants’ motions to dismiss; (ii) prevailing on the merits of the claims asserted in the Actions; (iii) proving liability and non-exculpated damages at trial; and (iv) prevailing on post-trial motions and likely appeals. Plaintiffs’ Counsel have also taken into consideration the value of timely relief versus the delay of protracted litigation, and the substantial time and expense that would be incurred by the Company. Based upon their consideration of all of these factors, Plaintiffs and their counsel believe that the Settlement is in the best interests of the Company and its stockholders.

Defendants deny any and all liability to Plaintiffs and the Company. Defendants deny that any of the claims asserted in the Actions have merit and have agreed to settle the Actions to avoid the expense and burdens and risks associated with further litigation of the Actions. TSFG is entering into the Settlement for the further reason that it believes that the Settlement confers substantial benefits upon TSFG and its stockholders and is in the best interests of TSFG and its stockholders.

There will be no claims procedure and no payments will be made to any TSFG stockholder.

III. WHAT CLASS CERTIFICATION IS

For purposes of the Settlement, the Court has preliminarily certified a non-opt-out Class consisting of all holders of TSFG common or preferred stock of record or beneficially at any time from November 7, 2008 through April 1, 2009, and their successors in interest and transferees, immediate and remote, other than Defendants and any person, firm, trust, corporation, or other entity related to or affiliated with any of the Defendants (the “Settlement Class”). If you fit within this definition of the Settlement Class, you will be considered a member of the Class (“Class Member”).

IV. TERMS OF THE PROPOSED SETTLEMENT

TSFG acknowledges that the pendency and prosecution of the Actions was a substantial and material causal factor contributing to the remedies achieved through the Settlement, including but not limited to, the following¹:

_________________________

¹ Items marked with an asterisk (*) will be effective for five years. In addition, the non-monetary obligations and commitments in the Settlement shall terminate in the event of any merger, share exchange or other business combination transaction to which TSFG is a party unless TSFG is the surviving company in the transaction, remains a public reporting company following consummation of the transaction and the beneficial holders of securities of TSFG generally entitled to vote in the election of directors ("Voting Securities") as of immediately before such transaction continue to own beneficially, immediately after consummation of such transaction, more than 65% of the then-outstanding Voting Securities of TSFG in substantially the same proportions as their ownership immediately prior to such transaction.

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- Defendant Whittle will contribute to the Company $250,000 by reducing the aggregate amount due to be paid to him on April 28, 2009 under the existing severance agreement between the Company and Whittle.

- Defendant Whittle shall resign from the Board, effective as of the date the Court approval of the Settlement becomes Final.

- The Board shall add an additional independent² director with a background in financial services. The Company will seek to speak with shareholders, other than index funds, beneficially holding greater than 5% of the Company’s common stock to solicit their suggestions for an appropriate person to fill this position. Although the Board does not commit to nominate any particular person recommended, it shall duly consider nominating any such person.

- Seventy-five percent (75%) of the Board shall be comprised of independent directors.*

- The chairman of the Board (i) shall be independent; (ii) shall be elected by secret ballot of the Board annually; and (iii) shall be limited to four (4) consecutive years of service as Board Chairman.*

- If in the future TSFG is required to prepare an accounting restatement to correct a material accounting error included in a report on Form 10-Q or Form 10-K, a committee of independent directors shall determine whether the restatement was caused by misconduct of any Section 16 officer of TSFG³. If the committee of independent directors determines that misconduct of any such officer caused the restatement, the Board shall require such officer to return to TSFG:

a) Any bonus or other incentive-based or equity-based compensation received by that person from TSFG during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such financial reporting requirement; and

b) Any profits realized from the sale of securities of TSFG during that 12-month period.

The committee of independent directors’ conclusions and determinations concerning its findings relating to misconduct and any required remediation will be disclosed in an appropriate filing with the SEC. By agreeing to this item, the Company does not imply that the Company believes that it is or will be required to prepare any accounting restatement to correct an accounting error.*

- TSFG will submit an advisory “say on pay” provision in its proxy statement this proxy year and in each subsequent year until the later of five years (i.e., ending with the proxy statement for the 2013 annual meeting) or three years after the Company satisfies its

_________________________

² Any references herein to “independence” or “independent” herein shall mean such term as defined in applicable NASDAQ rules.

³ “Section 16 officer” means “officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 as amended, and includes the president, the principal financial officer, the principal accounting officer, and any vice president in charge of a principal business unit, division, or function.

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financial obligation to the federal government, thereby releasing itself from the TARP-mandated say-on-pay requirement. TSFG will include a Compensation Discussion and Analysis that in general provides the same level of detail and disclosure as is set forth in RiskMetrics’ April 23, 2008 proxy statement.⁴

- The Company will commit to hold, at least twice per year, an open conference call to which all shareholders beneficially holding in excess of 3% of the Company’s common stock (who make filings under Section 13 of the Exchange Act; calculated on a fully diluted basis) may call in and speak with management about any matter reasonably and materially related to the Company’s business, subject to reasonable time and decorum limits.*

- When new independent board members are nominated to fill newly created positions or to replace incumbent board members who are leaving the board, the Board or the appropriate Board committee will also commit to seek to speak with shareholders, other than index funds, beneficially holding greater than 5% of the Company’s common stock to solicit their suggestions for appropriate persons to fill these positions. Although the Company does not commit to nominate any particular person suggested, it shall duly consider nominating any such person.*

V. WHAT CLAIMS THE SETTLEMENT WILL RELEASE

The terms of the release and the discharge of claims are set forth in the Stipulation. The following is only a summary. Pursuant to the terms of the Settlement, the Actions shall be dismissed with prejudice, and the Plaintiffs and TSFG shall be deemed to have fully, finally, and forever released and discharged the Released Derivative Claims (as defined in the Stipulation) against the Released Defendant Persons (as defined in the Stipulation), and the Plaintiffs and TSFG will be forever barred from seeking other or further relief on such claims against the Released Defendant Persons. The Released Class Claims (as defined in the Stipulation) will also be fully, finally, and forever released and discharged, and the Class Members will be forever barred from seeking other or further relief on such claims against the Released Defendant Persons. In addition, the Settlement will release all claims by the Defendants against Plaintiffs’ Counsel related to their bringing and prosecuting the Actions and all claims by Plaintiffs against Defendants’ Counsel related to their defense of the Actions.

“Released Derivative Claims,” “Released Class Claims,” and “Released Defendant Persons” are terms fully defined in the Stipulation. In summary, “Released Derivative Claims” means all claims that may be asserted derivatively on behalf of TSFG related in any way to the subject matter of the Actions or the compensation and benefits provided to Whittle by the Company, the Company’s reimbursement of Whittle’s expenses, or Whittle’s severance package. “Released Class Claims” have the same meaning as “Released Derivative Claims” except that “Released Class Claims” are claims of Class Members rather than derivative claims on behalf of TSFG. “Released Defendant Persons” means the Defendants, their respective predecessors, successors, parents, subsidiaries, affiliates, and their and each Defendant’s respective officers, employees, agents, attorneys, advisors, accountants, directors, heirs, personal representatives, beneficiaries and assigns.

VI. ATTORNEYS’ FEES AND EXPENSES

At the Settlement Hearing, Plaintiffs’ Counsel will request that the Court approve the agreed-to fees (“Fees”) for their efforts in filing, prosecuting and settling the Actions. The Fees shall be in an amount of $500,000, subject to Court approval, to be paid $200,000 by TSFG in the form of TSFG common stock, valued based on the

_________________________

⁴ See RiskMetrics Group, Inc., Proxy Statement (Form DEF 14A), at 17-30 (Apr. 23, 2008).

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average closing price of the TSFG common stock for the 10 trading day period ending the trading day immediately preceding the final settlement hearing, and $300,000 paid in cash on behalf of the Individual Defendants by the Company’s D & O insurance carrier. Plaintiffs’ Counsel has not received any fee to date, nor have they been reimbursed for their out-of-pocket expenses. The Fees would compensate Plaintiffs’ Counsel for the benefits achieved in the Actions and the risks Plaintiffs’ Counsel undertook to represent the Plaintiffs on a fully-contingent basis.

VII. SETTLEMENT HEARING AND YOUR RIGHT TO BE HEARD

The Settlement Hearing will be held before the Honorable Judge Edward W. Miller of the Greenville County Court of Common Pleas, at the Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601, on May 21, 2009, at 9:30 a.m. The Court may continue or adjourn the Settlement Hearing without any further notice of any kind, other than an order prior to or at the Settlement Hearing or subsequent adjournment of the Settlement Hearing. The purpose of the Settlement Hearing is: (a) to determine whether the proposed Settlement is fair, reasonable, adequate, and in the best interests of TSFG and its current stockholders and should be finally approved by the Court; (b) to determine whether the Court should certify the Settlement Class in the Mercier Action; (c) to determine whether the Court should enter the Final Order and Judgment as provided in the Stipulation (i) in both Actions dismissing and releasing the Released Derivative Claims against the Released Defendant Persons with prejudice against the Plaintiffs and TSFG and (ii) in the Mercier Action dismissing and releasing the Released Class Claims against the Released Defendant Persons with prejudice against the Settlement Class; (d) if the Settlement is approved, to consider the appropriate award to be made to Plaintiffs’ Counsel for attorneys’ fees and expenses; and (f) to rule upon such other matters as the Court may deem appropriate or may properly come before the Court. The Court may approve the Settlement, with such modifications as may be agreed to by counsel for the Parties to the Settlement consistent with the Settlement, enter a final judgment, and order the payment of attorneys’ fees, with or without further notice of any kind.

Current TSFG common and preferred stockholders who comply with the procedures set forth below for making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement of the derivative claims and Plaintiffs’ Counsel fee petitions. Class Members who comply with the procedures set forth below for making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement of the Class claims and Plaintiffs’ Counsel fee petitions. Attendance at the Settlement Hearing is not necessary in order for the objection to be considered by the Court; however, persons wishing to be heard orally in opposition to the approval of the Settlement are required to indicate in their written objection their intention to appear at the hearing. To the extent that the Court allows TSFG stockholders and Class Members to be heard, they will be heard at the Settlement Hearing. You are not required to retain your own counsel, but if you choose to do so, it will be at your own expense. In no event shall any person be heard in opposition to the Settlement, and in no event shall any paper or brief submitted by any such person be accepted or considered by the Court, unless by May 7, 2009 such person (i) files with the Clerk of the Court at the address below notice stating such person’s intention to appear or not appear at the Settlement Hearing, showing proof that such person is a TSFG stockholder or was a stockholder during the pertinent time period, including the number of shares of TSFG common or preferred stock held and the date of purchase, and providing a detailed statement of all the bases and reasons for the person’s objections or comments upon the Settlement, Plaintiffs’ Counsel’s request for attorneys’ fees and reimbursement of expenses, or any other matter before the Court and the identities of any witnesses that such person plans to call at the Settlement Hearing, and any supporting papers, including all documents and writings that the person desires the Court to consider in support of any objection, and (ii) simultaneously serves by first class mail copies of such notice, proof, statement and documentation, together with copies of any other papers or briefs such person files with the Court, upon each of the counsel listed below:

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Michael J. Hynes BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP 280 King of Prussia Road Radnor, Pennsylvania, 19087 Counsel for Plaintiff Mercier	Badge Humphries MOTLEY RICE LLC 28 Bridgeside Blvd. Mt. Pleasant, SC 29464 Counsel for Plaintiff McMullen
Henry L. Parr, Jr. WYCHE BURGESS FREEMAN & PARHAM, P.A. 44 East Camperdown Way, 29601 Post Office Box 728 Greenville, SC 29602–0728 Counsel for Defendants other than Mr. Whittle	William W. Wilkins NEXSEN PRUET LLC 55 E. Camperdown Way Suite 400 Greenville, SC 29601 Counsel for Defendant Mack I. Whittle, Jr.

Any stockholder of TSFG or Class Member who does not timely and properly make his, her or its objection to the Settlement as set forth above shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the proposed Settlement or Plaintiffs’ Counsel’s fee petitions and shall otherwise be bound by any judgment entered in the Actions and by any releases given.

VIII. NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES

If you hold TSFG common or preferred stock for the benefit of another, you are directed to provide copies of this Notice to such beneficial owners, postmarked no more than ten (10) days after receipt of this Notice.

IX. FURTHER INFORMATION

The description of the Settlement provided above is incomplete. For a complete description of the Settlement terms, please see the Stipulation which is available as an exhibit to TSFG’s April o, 2009 Form 8-K filing with the Securities and Exchange Commission and can be accessed electronically on TSFG’s corporate website. Alternatively, you may obtain a copy of the Stipulation by contacting the counsel for Plaintiffs listed below. Further information regarding the Actions, the Settlement, and this Notice may also be obtained by contacting counsel for Plaintiffs:

Michael J. Hynes

BARROWAY TOPAZ KESSLER

MELTZER & CHECK, LLP

280 King of Prussia Road

Radnor, Pennsylvania 19087

Counsel for Plaintiff Mercier

Badge Humphries

MOTLEY RICE LLC

28 Bridgeside Blvd.

Mt. Pleasant, SC 29464

Counsel for Plaintiff McMullen

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The pleadings, including the Stipulation and other records of the Actions, may be examined and copied at any time during regular office hours at:

Clerk of the Court

Greenville County Courthouse

305 East North Street

Greenville, South Carolina 29601

Please Do Not Telephone the Court or the Clerk’s Office Regarding this Notice.

DATED: April 1, 2009

BY ORDER OF THE GREENVILLE COUNTY COURT

OF COMMON PLEAS FOR THE THIRTEENTH JUDICIAL

CIRCUIT

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EXHIBIT D

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No.2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN, on Behalf of ANDROS ) C.A. No.2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

PRELIMINARY ORDER APPROVING SETTLEMENT AND NOTICE

WHEREAS, as of March 31, 2009, plaintiffs Vernon A. Mercier and John S. McMullen (“Plaintiffs”), The South Financial Group, Inc. (“TSFG” or the “Company”), and defendants Mack I. Whittle, Jr., William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan and William P. Crawford, Jr. (collectively, the “Settling Defendants”), by and through their respective counsel, have entered into a Stipulation of Compromise and Settlement (the “Stipulation”), which is subject to review under South Carolina Rule of Civil Procedure 23, and which sets forth the terms and conditions of the proposed settlement (the “Settlement”) of the claims alleged in the above-captioned shareholder’s actions (the “Actions”), with prejudice upon the terms and conditions set forth in the Stipulation; and the Court having read and considered

2

the Stipulation and the accompanying documents; and the parties to the Stipulation having consented to the entry of this order preliminarily approving the Settlement and the proposed Notice (the “Order”); and, subject to final determination by the Court as to the fairness, reasonableness, and adequacy of the Settlement, finds and orders as follows:

NOW, THEREFORE, IT IS HEREBY ORDERED, this ___day of _____, 2009, that:

1.            Unless otherwise stated herein, all capitalized terms contained in this Order shall have the same meaning and effect as stated in the Stipulation.

2.            As to the class claim contained in the Mercier Action, the Court preliminarily certifies, for purposes of effectuating this Settlement only, a non-opt-out Class (the “Class”) pursuant to SCRCP 23 consisting of the following: all holders of TSFG common or preferred stock of record or beneficially at any time from November 7, 2008 through April 1, 2009, and their successors in interest and transferees, immediate and remote, other than Defendants and any person, firm, trust, corporation, or other entity related to or affiliated with any of the Defendants.

3.            For purposes of the settlement of the Mercier Action only, the Court preliminarily finds and concludes pursuant to SCRCP 23(a): (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, (4) the representative parties will fairly and adequately protect the interests of the class, and (5) the relief primarily sought is injunctive or declaratory with respect to the class as a whole.

4.            Pursuant to South Carolina Rule of Civil Procedure 23(b)(1), and for the purposes of Settlement only, the Court finds preliminarily that the Actions were properly brought

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as derivative actions for and on behalf of TSFG, and that Plaintiffs fairly and adequately represent the interests of the shareholders similarly situated in enforcing the rights of TSFG.

5.            The terms of the Settlement are preliminarily approved as fair, reasonable and adequate, subject to further consideration thereof at the Settlement Hearing described in this Order.

6.            A final hearing (the “Settlement Hearing”) is hereby scheduled to be held before the Court on May 21, 2009, at 9:30 a.m., for the following purposes:

a.            to determine whether the proposed Settlement is fair, reasonable, adequate, and in the best interests of TSFG and its current stockholders and whether the Settlement should be finally approved by the Court;

b.            to determine whether the Court should certify the Class in the Mercier Action;

c.            to determine whether the Court should enter the Final Order and Judgment as provided in the Stipulation (i) in both Actions dismissing and releasing the Released Derivative Claims against the Released Defendant Persons with prejudice against the Plaintiffs and TSFG and (ii) in the Mercier Action dismissing and releasing the Released Class Claims against the Released Defendant Persons with prejudice against the Class;

d. to consider any objections to the Settlement;

e.            if the Settlement is approved, to consider the appropriate award to be made to Plaintiffs’ Counsel for attorneys’ fees and expenses; and

f. to rule upon such other matters as the Court may deem appropriate.

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7.            The Court reserves: (a) the right to approve the Settlement, with such modifications as may be agreed to by counsel for the Parties to the Settlement consistent with such Settlement, without further notice to TSFG stockholders or members of the Class; and (b) the right to continue or adjourn the Settlement Hearing from time to time, by oral announcement at the Settlement Hearing or at any adjournment thereof, without further notice to the TSFG stockholders or members of the Class.

8.            The Court approves the form, substance, and requirements of (a) the Summary Notice of Shareholder Derivative Litigation (the “Summary Notice”) annexed hereto as Exhibit A and (b) the Notice of Settlement of Derivative Litigation (the “Full Notice”) annexed hereto as Exhibit B.

9. The Court orders that:

a.            the Summary Notice shall be published by TSFG once in the Wall Street Journal or some other nationwide business publication within four (4) business days of the entry of this Order;

b.            the Full Notice shall be published by TSFG in a TSFG Current Report on Form 8-K within two (2) business days of the entry of this Order;

c.            the Full Notice shall be mailed within twelve business days of the entry of this Order to TSFG common and preferred stockholders as of April 1, 2009 to the extent that TSFG can identify them through reasonable efforts in sufficient time prior to the mailing deadline;

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d.            at least seven (7) days prior to the Settlement Hearing, Defendants’ Counsel shall file with the Court and serve on Plaintiff’s Counsel proof, by affidavit or declaration, of the timely completion of Notice; and

e.              at least seven (7) days prior to the Settlement Hearing Plaintiffs’ Counsel will file a memorandum of law supporting the approval of the terms of the Settlement and approval of the attorneys’ fees and expenses.

10.          The form and method set forth herein of notifying TSFG stockholders of the Settlement and its terms and conditions meet the requirements of South Carolina Rule of Civil Procedure 23 and due process and shall constitute due and sufficient notice to all persons and entities entitled thereto.

11.          Current TSFG common and preferred stockholders who comply with the procedures set forth below for making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement of the derivative claims and Plaintiffs’ Counsel fee petitions. Members of the Class who comply with the procedures set forth below for making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement of the Class Claims and plaintiffs’ counsel fee petitions. No TSFG stockholder or Class member shall be heard or entitled to contest the approval of the foregoing, unless such stockholder or Class member, no later than fourteen days (14) days prior to the Settlement Hearing, has caused to be filed written objections, stating all

6

supporting bases and reasons for the objections or comments on the Settlement and the information and documentation required below, with:

Clerk of the Court

Greenville County Courthouse

305 East North Street

Greenville, South Carolina 29601

and has served copies of all such papers at the same time upon the following by first class mail :

Michael J. Hynes BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP 280 King of Prussia Road Radnor, Pennsylvania, 19087 Counsel for Plaintiff Mercier	Badge Humphries MOTLEY RICE LLC 28 Bridgeside Blvd. Mt. Pleasant, SC 29464 Counsel for Plaintiff McMullen
Henry L. Parr, Jr. WYCHE BURGESS FREEMAN & PARHAM, P.A. 44 East Camperdown Way, 29601 Post Office Box 728 Greenville, S.C. 29602–0728 Counsel for Defendants other than Whittle	William W. Wilkins NEXSEN PRUET, LLC 55 E. Camperdown Way Suite 400 Greenville, South Carolina 29601 Counsel for Defendant Mack I. Whittle, Jr.

Attendance at the Hearing is not necessary in order for the objection to be considered by the Court; however, persons wishing to be heard orally in opposition to the approval of the Settlement are required to indicate in their written objection their intention to appear at the hearing. Thus, every objection must contain: (1) the Person’s name, address, and telephone number; (2) proof that such person is a TSFG shareholder or was a shareholder during the pertinent time period, including the number of shares of TSFG common stock or preferred stock held currently and/or during the pertinent time; (3) the date(s) of purchase of such shares; (4) a

7

detailed statement of the all the bases and reasons for the Person’s objections or comments upon the Settlement, Plaintiffs’ Counsel’s request for attorneys’ fees and reimbursement of expenses, or any other matter before the Court and the identities of any witness such Person plans to call at the Settlement Hearing; (5) any supporting papers, including all documents and writings that the Person desires the Court to consider; and (6) a representation as to whether the Person intends to appear at the Settlement Hearing.

12.          .Any stockholder of TSFG or member of the Class who does not make his, her, or its objection in the manner provided in the preceding paragraph of this Order shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the proposed Settlement or Plaintiffs’ Counsel’s fee petitions and shall otherwise be bound any judgment entered in the Actions and by any releases given.

13.          If the Stipulation is not approved or does not become effective or final for any reason, including as a result of modification of the Final Order and Judgment on appeal, the Stipulation, except to the extent that it expressly provides otherwise, and all proceedings held in connection therewith shall be null and void and vacated, including but not limited to provisional certification of the Class, and the Actions shall proceed completely without prejudice to the status quo ante rights of the Parties as to any matter of law or fact, all Parties shall be returned to their positions as of the date of the Agreement in Principle and all documents executed pursuant to the Agreement in Principle shall be revoked and canceled.

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14.          Each current TSFG common or preferred stockholder and each member of the Class shall be bound by the applicable determinations and orders, and the Final Order and Judgment, whether favorable or unfavorable to any of them.

15.          The Court retains exclusive jurisdiction over the Actions to consider all further matters arising out of or connected with the Settlement.

16.          Institution or prosecution of any and all proceedings in this Court or any other court against any of the Released Defendant Persons relating to the Released Claims, as that term is defined in the Stipulation, other than such proceedings as may be necessary to carry out the terms and conditions of the Stipulation or the responsibilities related or incidental thereto, shall be barred.

17.            Neither the Stipulation nor the Settlement, nor any act performed or document executed pursuant to or in furtherance of the Stipulation or the Settlement: (a) is or may be deemed to be or may be used as an admission of, or evidence of the validity or lack of validity of any Released Claims, any violation of any statute or law or any wrongdoing or liability of any of the Parties or any of their Related Persons; (b) is or may be deemed to be or may be used as an admission of, or evidence of, any fault or omission of any of the Parties or any of their Related Persons in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal; or (c) is or may be alleged or mentioned so as to contravene clause (a) above in any litigation or other action unrelated to the enforcement of the Stipulation. Notwithstanding the foregoing, the Parties may file the Stipulation or any judgment or order of the Court related hereto in any action that may be brought against any of them in

9

order to support a defense or a counterclaim based on res judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim.

Dated: _______

___________________________

The Honorable Edward W. Miller

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EXHIBIT A

TO PRELIMINARY ORDER APPROVING

SETTLEMENT AND NOTICE

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No.2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN, on Behalf of ANDROS ) C.A. No.2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

SUMMARY NOTICE OF SETTLEMENT OF

SHAREHOLDER ACTIONS

TO: ALL HOLDERS OF COMMON OR PREFERRED STOCK OF THE SOUTH FINANCIAL GROUP, INC. (“TSFG”) OF RECORD OR BENEFICIALLY AT ANY TIME FROM NOVEMBER 7, 2008 THROUGH APRIL 1, 2009, AND THEIR SUCCESSORS IN INTEREST AND TRANSFEREES, IMMEDIATE AND REMOTE, AND ANY CURRENT STOCKHOLDERS OF TSFG

YOU ARE HEREBY NOTIFIED, pursuant to South Carolina Rule of Civil Procedure 23 and an Order of the Court (the “Court”), that the above-captioned actions pending in the Court of Common Pleas for the Thirteenth Judicial Circuit, County of Greenville, South Carolina (the “Actions”) are shareholder actions¹ brought respecting TSFG, and that a proposed settlement (the “Settlement”) of the Actions has been reached with defendants listed above, subject to Court approval. A hearing will be held before the Honorable Judge Edward W. Miller of the Greenville County Court of Common Pleas, at the Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601, on May 21, 2009, at 9:30 a.m. (the “Hearing”), to determine whether the proposed settlement of the Actions should be approved by the Court as fair, reasonable, and adequate and to consider the application of plaintiffs’ counsel for attorneys’ fees and expenses.

IF YOU HELD COMMON OR PREFERRED STOCK OF TSFG AT ANY TIME FROM NOVEMBER 7, 2008 THROUGH APRIL 1, 2009, OR ARE A SUCCESSOR IN INTEREST OR TRANSFEREE, IMMEDIATE OR REMOTE, OF SUCH A HOLDER, OR IF YOU ARE A CURRENT STOCKHOLDER OF TSFG, YOUR RIGHTS MAY BE AFFECTED BY THE SETTLEMENT OF THE ACTION.

This is a summary notice only. For additional information about the allegations of the complaints and the terms of the proposed settlement, shareholders are directed to [link to Form 8-K on the Internet], or shareholders without access to the Internet can obtain a copy of this document by contacting:

Mercier / McMullen Litigation Administrator, The South Financial Group, Inc., 104 South Main Street, Poinsett Plaza 10th Floor, Greenville, SC 29601

If you held common or preferred stock of TSFG at any time from November 7, 2008 though April 1, 2009, or are a successor in interest or transferee, immediate or remote, of such a holder, or if you are a current stockholder of TSFG, you have the right to appear in these Actions. Unless otherwise ordered by the Court, however, no TSFG shareholder or any other person shall be heard or shall be entitled to contest the approval of the Settlement, or plaintiffs’ counsels’ fee application, and no papers, briefs, pleadings or other documents submitted by any TSFG shareholder or any other person shall be received and considered, unless, no later than May 7, 2009, that person has caused to be filed written objections, stating all supporting bases and reasons, with:

Clerk of the Court, Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601

and has served copies of all such papers at the same time upon the following by first class mail:

_________________________

¹ The Mercier Action contains derivative claims and a putative class action claim on behalf of a class of holders of stock of TSFG of record or beneficially at any time from November 7, 2008 through April 1, 2009, while the McMullen Action contains only derivative claims.

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Michael J. Hynes, BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP, 280 King of Prussia Road, Radnor Pennsylvania, 19087, Counsel for Plaintiff Mercier

Badge Humphries, MOTLEY RICE LLC, 28 Bridgeside Blvd., Mt. Pleasant SC 29464,Counsel for Plaintiff McMullen

Henry L. Parr, Jr., WYCHE BURGESS FREEMAN AND PARHAM, P.A., Post Office Box 728, 44 East Camperdown Way, Greenville, SC 29602–0728, Counsel for Defendants other than Whittle

William W. Wilkins, NEXSEN PRUET LLC, 55 E. Camperdown Way, Greenville SC,Counsel for Defendant Mack I. Whittle, Jr

Every objection must contain: (1) the person’s name, address, and telephone number; (2) proof that such person is a TSFG shareholder or was a shareholder during the pertinent time period, including the number of shares of TSFG common stock or preferred stock held currently and/or during the pertinent time; (3) the date(s) of purchase of such shares; (4) a detailed statement of the all the bases and reasons for the person’s objections to or comments upon the Settlement, plaintiffs’ counsels’ request for attorneys’ fees, or any other matter before the Court and the identities of any witness such person plans to call at the Hearing; (5) any supporting papers, including all documents and writings that the person desires the Court to consider; and (6) a representation as to whether the person intends to appear at the Hearing.

Any current or former TSFG stockholder who does not make his, her, or its objection in the manner provided for in the preceding paragraphs shall be deemed to have waived such objection and shall forever be foreclosed from making any objections to the fairness, adequacy, or reasonableness of the Settlement, or plaintiffs’ counsels’ fee application and shall otherwise be bound by any judgment entered in the Actions and by any releases given.

DO NOT CONTACT THE COURT REGARDING THIS NOTICE

By Order of the Court

Dated: _______________, 2009

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EXHIBIT B

TO PRELIMINARY ORDER APPROVING

SETTLEMENT AND NOTICE

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No. 2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN, on Behalf of ANDROS ) C.A. No. 2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

NOTICE OF PENDENCY AND SETTLEMENT OF ACTIONS

AND OF SETTLEMENT HEARING

TO: ALL HOLDERS OF THE COMMON OR PREFERRED STOCK OF THE SOUTH FINANCIAL GROUP, INC. (“TSFG” OR “COMPANY”) OF RECORD OR BENEFICIALLY AT ANY TIME FROM NOVEMBER 7, 2008 THROUGH APRIL 1, 2009, AND THEIR SUCCESSORS IN INTEREST AND TRANSFEREES, IMMEDIATE AND REMOTE, AND ANY CURRENT STOCKHOLDERS OF TSFG. PLEASE READ THIS NOTICE CAREFULLY AND COMPLETELY. YOUR RIGHTS WILL BE AFFECTED. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF TWO SHAREHOLDER ACTIONS AND CLAIMS ASSERTED THEREIN.

I. WHY THIS NOTICE IS BEING PROVIDED

You are receiving this Notice of Pendency and Settlement of Actions and of Settlement Hearing (“Notice”) pursuant to South Carolina Rule of Civil Procedure 23 and an Order of the Court of Common Pleas for the Thirteenth Judicial Circuit, Greenville County, South Carolina (the “Court”). The purpose of this Notice is to advise you that shareholder actions are now pending in the Court relating to TSFG and that the Parties thereto have entered into a Stipulation of Compromise and Settlement (the “Stipulation”), dated as of March 31, 2009 (the “Stipulation Date”) which is on file with the Court, reflecting a settlement (the “Settlement”), subject to Court approval, which would fully, finally and forever resolve the Actions on the terms and conditions summarized in this Notice and that a settlement hearing (the “Settlement Hearing”) will be held on May 21, 2009 at 9:30 a.m., before the Honorable Edward W. Miller at the Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601.

THIS IS NOT AN EXPRESSION OF ANY OPINION BY THE COURT AS TO THE MERITS OF ANY CLAIMS OR ANY DEFENSES ASSERTED BY ANY PARTY IN THE ACTIONS, OR THE FAIRNESS, REASONABLENESS OR ADEQUACY OF THE PROPOSED SETTLEMENT.

II. BACKGROUND – WHAT THIS SETTLEMENT IS ABOUT

On November 7, 2008, an action captionedMercier v. Whittle, et al., C.A. No. 2008-CP-23-8395 was filed with the Court (the “Mercier Action”). The Mercier Action was brought by a shareholder of TSFG, both derivatively on behalf of Nominal Defendant TSFG and as a putative class action on behalf of its stockholders and alleges, among other things, that the Board of Directors of TSFG (the “Board”) improperly accelerated the retirement of TSFG’s founder, Chief Executive Officer (“CEO”) and Chairman of the Board, Mack Whittle, Jr. (“Whittle”) and breached fiduciary duties by overcompensating Whittle. On November 26, 2008, an action captioned McMullen v. Whittle, et al., C.A. No. 2008-CP-23-8914, also brought derivatively on behalf of TSFG, was filed with the Court (the “McMullen Action,” and together with the Mercier Action, the “Actions”). The McMullen Action asserts substantially similar derivative claims and other derivative claims against substantially similar Defendants as those asserted in the Mercier Action; however, the McMullen Action does not assert class action claims. The individuals included as Defendants in addition to nominal defendant TSFG are Whittle, William P. Brant, J.W. Davis, M. Dexter Hagy, William S. Hummers, III, Challis M. Lowe, Darla D. Moore, Jon W. Pritchett, H. Earle Russell, Jr., Edward J. Sebastian, John C.B. Smith, Jr., William R. Timmons, III, David C. Wakefield, III, Michael R. Hogan and William P. Crawford, Jr.

The Parties have reached an agreement in principle providing for the Settlement on the terms and conditions contained in the Stipulation. The Parties believe the Settlement is in the best interests of the Parties and

2

TSFG stockholders. As a part of the Settlement, the Actions will be dismissed.

Plaintiffs and their counsel believe that the claims asserted in the Actions have merit. Nevertheless, Plaintiffs and their counsel, considering the Settlement’s terms and the significant risks associated with the Plaintiffs’ claims in the Actions, believe that the Settlement, described below, is in the best interests of the Company and its shareholders. Plaintiffs’ Counsel have evaluated information made available in the settlement negotiations, and have taken into account the risks and uncertainties of the continued prosecution of the Actions. Plaintiffs and their counsel believe that the Settlement’s terms have materially benefitted, and will continue to materially benefit, TSFG. They have balanced these benefits against the risks of continued litigation which include, among other things: the uncertainty and difficulty of (i) overcoming Defendants’ motions to dismiss; (ii) prevailing on the merits of the claims asserted in the Actions; (iii) proving liability and non-exculpated damages at trial; and (iv) prevailing on post-trial motions and likely appeals. Plaintiffs’ Counsel have also taken into consideration the value of timely relief versus the delay of protracted litigation, and the substantial time and expense that would be incurred by the Company. Based upon their consideration of all of these factors, Plaintiffs and their counsel believe that the Settlement is in the best interests of the Company and its stockholders.

Defendants deny any and all liability to Plaintiffs and the Company. Defendants deny that any of the claims asserted in the Actions have merit and have agreed to settle the Actions to avoid the expense and burdens and risks associated with further litigation of the Actions. TSFG is entering into the Settlement for the further reason that it believes that the Settlement confers substantial benefits upon TSFG and its stockholders and is in the best interests of TSFG and its stockholders.

There will be no claims procedure and no payments will be made to any TSFG stockholder.

III. WHAT CLASS CERTIFICATION IS

For purposes of the Settlement, the Court has preliminarily certified a non-opt-out Class consisting of all holders of TSFG common or preferred stock of record or beneficially at any time from November 7, 2008 through April 1, 2009, and their successors in interest and transferees, immediate and remote, other than Defendants and any person, firm, trust, corporation, or other entity related to or affiliated with any of the Defendants (the “Settlement Class”). If you fit within this definition of the Settlement Class, you will be considered a member of the Class (“Class Member”).

IV. TERMS OF THE PROPOSED SETTLEMENT

TSFG acknowledges that the pendency and prosecution of the Actions was a substantial and material causal factor contributing to the remedies achieved through the Settlement, including but not limited to, the following¹:

_________________________

¹ Items marked with an asterisk (*) will be effective for five years. In addition, the non-monetary obligations and commitments in the Settlement shall terminate in the event of any merger, share exchange or other business combination transaction to which TSFG is a party unless TSFG is the surviving company in the transaction, remains a public reporting company following consummation of the transaction and the beneficial holders of securities of TSFG generally entitled to vote in the election of directors ("Voting Securities") as of immediately before such transaction continue to own beneficially, immediately after consummation of such transaction, more than 65% of the then-outstanding Voting Securities of TSFG in substantially the same proportions as their ownership immediately prior to such transaction.

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- Defendant Whittle will contribute to the Company $250,000 by reducing the aggregate amount due to be paid to him on April 28, 2009 under the existing severance agreement between the Company and Whittle.

- Defendant Whittle shall resign from the Board, effective as of the date the Court approval of the Settlement becomes Final.

- The Board shall add an additional independent² director with a background in financial services. The Company will seek to speak with shareholders, other than index funds, beneficially holding greater than 5% of the Company’s common stock to solicit their suggestions for an appropriate person to fill this position. Although the Board does not commit to nominate any particular person recommended, it shall duly consider nominating any such person.

- Seventy-five percent (75%) of the Board shall be comprised of independent directors.*

- The chairman of the Board (i) shall be independent; (ii) shall be elected by secret ballot of the Board annually; and (iii) shall be limited to four (4) consecutive years of service as Board Chairman.*

- If in the future TSFG is required to prepare an accounting restatement to correct a material accounting error included in a report on Form 10-Q or Form 10-K, a committee of independent directors shall determine whether the restatement was caused by misconduct of any Section 16 officer of TSFG³. If the committee of independent directors determines that misconduct of any such officer caused the restatement, the Board shall require such officer to return to TSFG:

c) Any bonus or other incentive-based or equity-based compensation received by that person from TSFG during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such financial reporting requirement; and

d) Any profits realized from the sale of securities of TSFG during that 12-month period.

The committee of independent directors’ conclusions and determinations concerning its findings relating to misconduct and any required remediation will be disclosed in an appropriate filing with the SEC. By agreeing to this item, the Company does not imply that the Company believes that it is or will be required to prepare any accounting restatement to correct an accounting error.*

- TSFG will submit an advisory “say on pay” provision in its proxy statement this proxy year and in each subsequent year until the later of five years (i.e., ending with the proxy statement for the 2013 annual meeting) or three years after the Company satisfies its

_________________________

² Any references herein to “independence” or “independent” herein shall mean such term as defined in applicable NASDAQ rules.

³ “Section 16 officer” means “officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 as amended, and includes the president, the principal financial officer, the principal accounting officer, and any vice president in charge of a principal business unit, division, or function.

4

financial obligation to the federal government, thereby releasing itself from the TARP-mandated say-on-pay requirement. TSFG will include a Compensation Discussion and Analysis that in general provides the same level of detail and disclosure as is set forth in RiskMetrics’ April 23, 2008 proxy statement.⁴

- The Company will commit to hold, at least twice per year, an open conference call to which all shareholders beneficially holding in excess of 3% of the Company’s common stock (who make filings under Section 13 of the Exchange Act; calculated on a fully diluted basis) may call in and speak with management about any matter reasonably and materially related to the Company’s business, subject to reasonable time and decorum limits.*

- When new independent board members are nominated to fill newly created positions or to replace incumbent board members who are leaving the board, the Board or the appropriate Board committee will also commit to seek to speak with shareholders, other than index funds, beneficially holding greater than 5% of the Company’s common stock to solicit their suggestions for appropriate persons to fill these positions. Although the Company does not commit to nominate any particular person suggested, it shall duly consider nominating any such person.*

V. WHAT CLAIMS THE SETTLEMENT WILL RELEASE

The terms of the release and the discharge of claims are set forth in the Stipulation. The following is only a summary. Pursuant to the terms of the Settlement, the Actions shall be dismissed with prejudice, and the Plaintiffs and TSFG shall be deemed to have fully, finally, and forever released and discharged the Released Derivative Claims (as defined in the Stipulation) against the Released Defendant Persons (as defined in the Stipulation), and the Plaintiffs and TSFG will be forever barred from seeking other or further relief on such claims against the Released Defendant Persons. The Released Class Claims (as defined in the Stipulation) will also be fully, finally, and forever released and discharged, and the Class Members will be forever barred from seeking other or further relief on such claims against the Released Defendant Persons. In addition, the Settlement will release all claims by the Defendants against Plaintiffs’ Counsel related to their bringing and prosecuting the Actions and all claims by Plaintiffs against Defendants’ Counsel related to their defense of the Actions.

“Released Derivative Claims,” “Released Class Claims,” and “Released Defendant Persons” are terms fully defined in the Stipulation. In summary, “Released Derivative Claims” means all claims that may be asserted derivatively on behalf of TSFG related in any way to the subject matter of the Actions or the compensation and benefits provided to Whittle by the Company, the Company’s reimbursement of Whittle’s expenses, or Whittle’s severance package. “Released Class Claims” have the same meaning as “Released Derivative Claims” except that “Released Class Claims” are claims of Class Members rather than derivative claims on behalf of TSFG. “Released Defendant Persons” means the Defendants, their respective predecessors, successors, parents, subsidiaries, affiliates, and their and each Defendant’s respective officers, employees, agents, attorneys, advisors, accountants, directors, heirs, personal representatives, beneficiaries and assigns.

VI. ATTORNEYS’ FEES AND EXPENSES

At the Settlement Hearing, Plaintiffs’ Counsel will request that the Court approve the agreed-to fees (“Fees”) for their efforts in filing, prosecuting and settling the Actions. The Fees shall be in an amount of $500,000, subject to Court approval, to be paid $200,000 by TSFG in the form of TSFG common stock, valued based on the

_________________________

⁴ See RiskMetrics Group, Inc., Proxy Statement (Form DEF 14A), at 17-30 (Apr. 23, 2008).

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average closing price of the TSFG common stock for the 10 trading day period ending the trading day immediately preceding the final settlement hearing, and $300,000 paid in cash on behalf of the Individual Defendants by the Company’s D & O insurance carrier. Plaintiffs’ Counsel has not received any fee to date, nor have they been reimbursed for their out-of-pocket expenses. The Fees would compensate Plaintiffs’ Counsel for the benefits achieved in the Actions and the risks Plaintiffs’ Counsel undertook to represent the Plaintiffs on a fully-contingent basis.

VII. SETTLEMENT HEARING AND YOUR RIGHT TO BE HEARD

The Settlement Hearing will be held before the Honorable Judge Edward W. Miller of the Greenville County Court of Common Pleas, at the Greenville County Courthouse, 305 East North Street, Greenville, South Carolina 29601, on May 21, 2009, at 9:30 a.m. The Court may continue or adjourn the Settlement Hearing without any further notice of any kind, other than an order prior to or at the Settlement Hearing or subsequent adjournment of the Settlement Hearing. The purpose of the Settlement Hearing is: (a) to determine whether the proposed Settlement is fair, reasonable, adequate, and in the best interests of TSFG and its current stockholders and should be finally approved by the Court; (b) to determine whether the Court should certify the Settlement Class in the Mercier Action; (c) to determine whether the Court should enter the Final Order and Judgment as provided in the Stipulation (i) in both Actions dismissing and releasing the Released Derivative Claims against the Released Defendant Persons with prejudice against the Plaintiffs and TSFG and (ii) in the Mercier Action dismissing and releasing the Released Class Claims against the Released Defendant Persons with prejudice against the Settlement Class; (d) if the Settlement is approved, to consider the appropriate award to be made to Plaintiffs’ Counsel for attorneys’ fees and expenses; and (f) to rule upon such other matters as the Court may deem appropriate or may properly come before the Court. The Court may approve the Settlement, with such modifications as may be agreed to by counsel for the Parties to the Settlement consistent with the Settlement, enter a final judgment, and order the payment of attorneys’ fees, with or without further notice of any kind.

Current TSFG common and preferred stockholders who comply with the procedures set forth below for making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement of the derivative claims and Plaintiffs’ Counsel fee petitions. Class Members who comply with the procedures set forth below for making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement of the Class claims and Plaintiffs’ Counsel fee petitions. Attendance at the Settlement Hearing is not necessary in order for the objection to be considered by the Court; however, persons wishing to be heard orally in opposition to the approval of the Settlement are required to indicate in their written objection their intention to appear at the hearing. To the extent that the Court allows TSFG stockholders and Class Members to be heard, they will be heard at the Settlement Hearing. You are not required to retain your own counsel, but if you choose to do so, it will be at your own expense. In no event shall any person be heard in opposition to the Settlement, and in no event shall any paper or brief submitted by any such person be accepted or considered by the Court, unless by May 7, 2009 such person (i) files with the Clerk of the Court at the address below notice stating such person’s intention to appear or not appear at the Settlement Hearing, showing proof that such person is a TSFG stockholder or was a stockholder during the pertinent time period, including the number of shares of TSFG common or preferred stock held and the date of purchase, and providing a detailed statement of all the bases and reasons for the person’s objections or comments upon the Settlement, Plaintiffs’ Counsel’s request for attorneys’ fees and reimbursement of expenses, or any other matter before the Court and the identities of any witnesses that such person plans to call at the Settlement Hearing, and any supporting papers, including all documents and writings that the person desires the Court to consider in support of any objection, and (ii) simultaneously serves by first class mail copies of such notice, proof, statement and documentation, together with copies of any other papers or briefs such person files with the Court, upon each of the counsel listed below:

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Michael J. Hynes BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP 280 King of Prussia Road Radnor, Pennsylvania, 19087 Counsel for Plaintiff Mercier	Badge Humphries MOTLEY RICE LLC 28 Bridgeside Blvd. Mt. Pleasant, SC 29464 Counsel for Plaintiff McMullen
Henry L. Parr, Jr. WYCHE BURGESS FREEMAN & PARHAM, P.A. 44 East Camperdown Way, 29601 Post Office Box 728 Greenville, SC 29602–0728 Counsel for Defendants other than Mr. Whittle	William W. Wilkins NEXSEN PRUET LLC 55 E. Camperdown Way Suite 400 Greenville, SC 29601 Counsel for Defendant Mack I. Whittle, Jr.

Any stockholder of TSFG or Class Member who does not timely and properly make his, her or its objection to the Settlement as set forth above shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the proposed Settlement or Plaintiffs’ Counsel’s fee petitions and shall otherwise be bound by any judgment entered in the Actions and by any releases given.

VIII. NOTICE TO BANKS, BROKERS, AND OTHER NOMINEES

If you hold TSFG common or preferred stock for the benefit of another, you are directed to provide copies of this Notice to such beneficial owners, postmarked no more than ten (10) days after receipt of this Notice.

IX. FURTHER INFORMATION

The description of the Settlement provided above is incomplete. For a complete description of the Settlement terms, please see the Stipulation which is available as an exhibit to TSFG’s April o, 2009 Form 8-K filing with the Securities and Exchange Commission and can be accessed electronically on TSFG’s corporate website. Alternatively, you may obtain a copy of the Stipulation by contacting the counsel for Plaintiffs listed below. Further information regarding the Actions, the Settlement, and this Notice may also be obtained by contacting counsel for Plaintiffs:

Michael J. Hynes

BARROWAY TOPAZ KESSLER

MELTZER & CHECK, LLP

280 King of Prussia Road

Radnor, Pennsylvania 19087

Counsel for Plaintiff Mercier

Badge Humphries

MOTLEY RICE LLC

28 Bridgeside Blvd.

Mt. Pleasant, SC 29464

Counsel for Plaintiff McMullen

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The pleadings, including the Stipulation and other records of the Actions, may be examined and copied at any time during regular office hours at:

Clerk of the Court

Greenville County Courthouse

305 East North Street

Greenville, South Carolina 29601

Please Do Not Telephone the Court or the Clerk’s Office Regarding this Notice.

DATED: April 1, 2009

BY ORDER OF THE GREENVILLE COUNTY COURT OF

COMMON PLEAS FOR THE THIRTEENTH JUDICIAL

CIRCUIT

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EXHIBIT E

STATE OF SOUTH CAROLINA )

) IN THE COURT OF COMMON PLEAS

COUNTY OF GREENVILLE ) FOR THE THIRTEENTH JUDICIAL CIRCUIT

VERNON A. MERCIER, Individually and ) C.A. No.2008-CP-23-8395

Derivatively on Behalf of Nominal Defendant )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., WILLIAM P. BRANT, )

J.W. DAVIS, M. DEXTER HAGY, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

JOHN C.B. SMITH, JR., WILLIAM R. )

TIMMONS, III, and DAVID C. WAKEFIELD, III, )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

JOHN S. McMULLEN,on Behalf of ANDROS ) C.A. No.2008-CP-23-8914

ASSOCIATES, INC., Derivatively on Behalf of )

THE SOUTH FINANCIAL GROUP, INC. )

)

Plaintiff, )

)

v. )

)

MACK I. WHITTLE, JR., JOHN C.B. SMITH, JR., )

WILLIAM P. BRANT, J.W. DAVIS, M. DEXTER )

HAGY, MICHAEL R. HOGAN, WILLIAM S. )

HUMMERS, III, CHALLIS M. LOWE, DARLA )

D. MOORE, JON W. PRITCHETT, H. EARLE )

RUSSELL, JR., EDWARD J. SEBASTIAN, )

WILLIAM R. TIMMONS, III, DAVID C. )

WAKEFIELD, III, AND WILLIAM P. )

CRAWFORD, JR., )

)

Defendants, )

)

and )

)

THE SOUTH FINANCIAL GROUP, INC., )

)

Nominal Defendant. )

__________________________________________        )

FINAL ORDER AND JUDGMENT

A hearing having been held before this Court on May 21, 2009, pursuant to this Court’s Preliminary Approval Order, dated April ___, 2009, on the Settlement set forth in the Stipulation of Compromise and Settlement, dated March 31, 2009 (the “Stipulation”), and on the application for an award of attorneys’ fees and expenses to Plaintiffs’ Counsel as set forth in the Stipulation (the “Fee Application”); and given that due notice of the Hearing was provided in accordance with the Preliminary Approval Order (the “Notice”); the respective parties having appeared by their respective attorneys, and such attorneys having been heard; [no person having objected] to the Settlement and Fee Application; the matters having been considered by the Court; all parties having consented to the entry of this Order; and the Court having made its findings of fact and conclusions of law as set forth below:

IT IS ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:

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1.            For purposes of this Final Order and Judgment (the “Judgment”), the Court adopts and incorporates the definitions contained in the Stipulation. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Stipulation.

2.            This Court has jurisdiction over the subject matter of the Actions, and over all parties to the Actions.

3.            The Court certifies a non-opt-out Class pursuant to South Carolina Civil Procedure Rule 23(a) consisting of the following:

2.1             all holders of TSFG common or preferred stock of record or beneficially at any time from November 7, 2008 through April 1, 2009, and their successors in interest and transferees, immediate and remote, other than Defendants and any person, firm, trust, corporation, or other entity related to or affiliated with any of the Defendants.

4.            With respect to the Class, this Court finds and concludes, for purposes of the Settlement only, that the prerequisites for a class action and non-opt-out class have been satisfied in that: (a) the Class is so numerous that joinder of all members is impracticable, (b) there are questions of law or fact common to the Class, (c) the claims or defenses of the representative parties are typical of the claims or defenses of the Class, (d) the representative parties will fairly and adequately protect the interests of the Class, and (e) the predominant relief sought for the Class involves the uniform group remedies of injunctive and declaratory relief and such relief is applicable and appropriate with respect to the Class as a whole.

5.            With respect to the derivative claims, pursuant to South Carolina Rule of Civil Procedure 23 and for the purposes of the Settlement only, the Court finds that the Actions

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were properly brought as derivative actions for and on behalf of TSFG, and that Plaintiffs are adequate derivative representatives of TSFG who adequately represent the interests of the shareholders similarly situated in enforcing the rights of TSFG in the Actions.

6.            The Court finds that the Notice was given in accordance with the Preliminary Approval Order and such notice was reasonable and constituted the most practicable notice under the circumstances, constituted valid, due, and sufficient notice to all persons entitled to receive such notice, and complied fully with the requirements of due process and any other applicable law.

7.            The Court finds that Plaintiffs’ Counsel conducted a comprehensive, independent investigation to assess the merits of claims arising from or relating to allegations in the Actions.

8.            This Court hereby approves the Settlement as set forth in the Stipulation and finds, in accordance with Rule 23 of the South Carolina Rules of Civil Procedure, that said Settlement is, in all respects, fair, reasonable, adequate, and in the best interests of TSFG and its shareholders and directs the consummation and implementation of the Settlement in accordance with the terms and provisions of the Stipulation.

9.            This Court further finds that the Settlement has been entered into and made in good faith, and Plaintiffs’ Counsel has fairly and adequately represented the interests of TSFG and its shareholders in connection with the Actions and the settlement of the Actions.

10.          The Plaintiffs, TSFG, and all Class members, on their own behalf and on behalf of their respective predecessors, successors, affiliates, heirs, agents, executors,

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administrators, assigns, subsidiaries, members, managers, directors, officers, employees, partners, and agents are hereby permanently barred and enjoined from prosecuting the Released Claims against the Released Defendant Persons.

11.          The Released Defendant Persons are permanently barred and enjoined from prosecuting any claim for damages, injunctive relief, or any other remedy against Platintiffs, their attorneys and their respective predecessors, successors, affiliates, heirs, agents, executors, administrators, assigns, subsidiaries, members, directors, officers, employees, partners, and agents based upon, arising from, or related to the subject matter of the Actions.

12.          The Released Derivative Claims against the Released Defendant Persons are hereby compromised, settled, released, discharged, and dismissed with prejudice as against the Plaintiffs and TSFG.

13.          The Released Class Claims against the Released Defendant Persons are hereby compromised, settled, released, discharged, and dismissed with prejudice as against the Class..

14.          This Court hereby decrees that neither the Stipulation, nor this Judgment, nor the fact of the Settlement nor any act performed or document executed pursuant to or in furtherance of the Stipulation, the Settlement or this Judgment (a) is or may be deemed to be or may be used as an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by any of the Parties or their Related Persons or of the validity or lack of validity of any of the claims or allegations alleged in these Actions; (b) is or may be deemed to be or may be used as an admission of, or evidence of, any fault or omission of any of the Parties or any of

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their Related Persons in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal; or (c) is or may be alleged or mentioned so as to contravene clause (a) above in any litigation or other action unrelated to the enforcement of the Stipulation or this Judgment. Notwithstanding the foregoing, any of the Parties may file the Stipulation or any judgment or order of the Court related to it in any action that may be brought against any of them in order to support a defense or a counterclaim based on res judicata, collateral estoppel, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim.

15.          Without affecting the finality of this Judgment in any way, this Court retains continuing jurisdiction: (a) over the implementation, administration, and consummation of this Settlement; (b) over the Actions until the Judgment contemplated hereby has become Final and each and every act agreed to be performed by the parties to the Stipulation shall have been performed pursuant to the Stipulation; and (c) over all parties to the Actions and all parties to the Stipulation for the purpose of taking such other actions as may be necessary to conclude and administer this Settlement and to implement and enforce the Stipulation.

16.          In the event that the Settlement does not become Final or is terminated in accordance with the terms and provisions of the Stipulation, then this Judgment shall be rendered null and void and be vacated and the Stipulation, except to the extent that it expressly provides otherwise, and all orders entered in connection therewith by this Court shall be rendered null and void.

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17.          The Fee Application is granted and Plaintiffs’ Counsel are hereby awarded the sum of $__________________ , in accordance with and in the manner outlined in the Stipulation, as and for payment of their reasonable attorneys’ fees and expenses incurred in connection with the Actions. The Attorneys’ Fee shall be distributed in accordance with the terms of the Stipulation.

18.          The Court finds that no just reason exists for delay in entering judgment in accordance with the Stipulation. Accordingly, the Clerk is hereby directed to enter this Judgment forthwith.

Dated: __________________

_____________________________

The Honorable Edward W. Miller

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