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Exhibit 10.25
 
 
SHARE EXCHANGE AGREEMENT
 
This SHARE EXCHANGE AGREEMENT (the “Agreement”) is entered into this 22nd day of
February, 2011, by and among UNITED COMMUNITY BANKS, INC., a Georgia corporation
(the “Company”) ELM RIDGE OFFSHORE MASTER FUND, LTD (the “Master Fund”), and ELM
RIDGE VALUE PARTNERS, L.P. (“Value Partners” and, together with the Master Fund,
collectively, the “Shareholders”).
 
WHEREAS, the Shareholders are the owners of shares of the Company’s Common
Stock, $1.00 par value per share (“Common Shares”) in such amounts as are set
forth on Schedule A attached hereto; and
 
WHEREAS, the Shareholders desire to transfer to the Company 7,755,631 Common
Shares (the “Transferred Common Shares”) in exchange for (i) shares of the
Company’s Cumulative Perpetual Preferred Stock, Series D (the “Series D
Preferred Stock”), having the rights, restrictions, privileges and preferences
set forth in the Amendment to the Company’s Restated Articles of Incorporation,
as amended, the form of which is attached hereto as Exhibit A (the “Amendment”)
and (ii) warrants to purchase Common Shares in the form attached hereto as
Exhibit B (each, a  “Warrant” and, collectively, the “Warrants”), and the
Company desires to issue to the Shareholders the Series D Preferred Shares
(defined below) and the Warrant in exchange for the Transferred Common Shares;
 
NOW THEREFORE, for and in consideration of the premises and the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
represent, warrant, covenant and agree as follows:
 
ARTICLE I.
 
EXCHANGE; CLOSING
 
    1.01.  Exchange.  Subject to the conditions set forth in this Agreement and
in consideration of the sale, transfer and conveyance to the Company of all
right, title and interest in the Transferred Common Shares, free and clear of
all mortgages, pledges, liens, security interests, leases, charges and other
encumbrances (“Liens”), at the Closing (as defined below), the Company shall
issue to the Shareholders (a) 16,613 shares of the Series D Preferred Stock (the
“Series D Preferred Shares”) and (b) Warrants to purchase 7,755,631 Common
Shares, which Series D Preferred Shares and Warrants will be apportioned among
the Shareholders ratably in accordance with their ownership set forth in
Schedule A.
 
    1.02.      Closing.  The closing of the transactions contemplated hereby
(the “Closing”) shall take place at the offices of Kilpatrick Townsend &
Stockton LLP, 1100 Peachtree Street, Suite 2800, Atlanta, Georgia, on the date
hereof (the “Closing Date”).  Simultaneously with the Closing, the Company shall
cause to be filed the Amendment (defined below) with the Secretary of State of
Georgia.
 
    1.03.      Delivery.  At the Closing, subject to the terms and conditions
hereof, the Company shall register the Series D Preferred Shares in each
Shareholder’s name in uncertificated, book-entry form on the books of the
Company in accordance with the Company’s applicable direct registration system
and deliver the applicable Warrant(s) to each Shareholder, in each case against
each Shareholder’s transfer of the Transferred Common Shares on the books of the
Company in accordance with the Company’s applicable direct registration system.
 
 
 

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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to each of the Shareholders that, as of the
Closing:
 
2.01.  Organization and Qualification. The Company is duly organized and validly
existing and in good standing under the laws of the jurisdiction in which it is
formed, and has the requisite power and authorization to own its properties and
to carry on their business as now being conducted and as presently proposed to
be conducted.  The Company is duly qualified as a foreign entity to do business
and is in good standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on (i)
the business, properties, assets, liabilities, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any
of its subsidiaries, individually or taken as a whole, or (ii) the transactions
contemplated hereby.
 
2.02.  Authority; Non-Contravention; Filings.
 
(a)          The Company has the corporate power and authority to execute and
deliver this Agreement and the Warrant and to carry out its obligations
hereunder and thereunder.  The execution, delivery and performance by the
Company of this Agreement and the Warrant, and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company and its shareholders, and
no further approval or authorization is required on the part of the Company or
any of its shareholders.  This Agreement is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles, regardless of whether such
enforceability is considered in a proceeding at law or in equity (“Bankruptcy
Exceptions”).
 
(b)          The execution, delivery and performance by the Company of this
Agreement and the Warrant and the consummation of the transactions contemplated
hereby and thereby and compliance by the Company with the provisions and
obligations set forth herein and therein will not (i) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any Lien upon any of the properties or assets of the Company or any of its
subsidiaries under any of the terms, conditions or provisions of (A) its
organizational documents (including, without limitation, any certificates of
designation or similar documents with respect to any preferred or other
securities) or (B) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which it or any of its subsidiaries may be
bound, or to which the Company or any of its subsidiaries or any of the
properties or assets of the Company or any of its subsidiaries may be subject,
or (ii) subject to compliance with the statutes and regulations referred to in
the next paragraph, violate any statute, rule or regulation or any judgment,
ruling, order, writ, injunction or decree applicable to the Company or any of
its subsidiaries or any of their respective properties or assets except, in the
case of subsections (i)(B) and (ii), for those occurrences that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
material adverse effect on the Company or the transactions contemplated hereby
and by the Warrant.
 
 
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(c)          Other than the filing of the Amendment with the Secretary of State
of Georgia, any current report on Form 8-K required to be filed with the SEC,
and such filings and approvals as are required to be made or obtained under any
state “blue sky” laws, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any governmental entity is required to be
made or obtained by the Company in connection with the consummation by the
Company of the transactions contemplated hereby except for any such notices,
filings, exemptions, reviews, authorizations, consents and approvals the failure
of which to make or obtain would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the Company or the
transactions contemplated hereby and by the Warrant.
 
2.03.  Series D Preferred Shares.  The Series D Preferred Shares have been duly
and validly authorized and, when issued and delivered pursuant to this
Agreement, such Series D Preferred Shares will be duly and validly issued and
fully paid and nonassessable and free and clear of any Liens, will not be issued
in violation of any preemptive rights, consent rights or any other rights of,
and will further will rank pari passu or senior to, all other series or classes
of Preferred Stock of the Company, whether or not issued or outstanding, with
respect to the payment of dividends and priority of distribution of assets in
the event of any dissolution, liquidation or winding up of the Company.
 
2.04.  The Warrant and Warrant Shares.  The Warrant has been duly authorized
and, when executed and delivered as contemplated hereby, will constitute a valid
and legally binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the same may be limited by the Bankruptcy
Exceptions.  The Common Shares issuable upon exercise of the Warrant (the
“Warrant Shares”) have been duly authorized and reserved for issuance upon
exercise of the Warrant and when so issued in accordance with the terms of the
Warrant will be validly issued, fully paid and non-assessable and free and clear
of any Liens.
 
2.05.  SEC Documents; Financial Statements.  As of their respective dates, all
reports, schedules, forms, statements and other documents required to be filed
by the Company during the two (2) years prior to the date hereof with the
Securities and Exchange Commission (the “SEC”) pursuant to the reporting
requirements of the Securities Act of 1934 (the “1934 Act”) (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements, notes and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the “SEC Documents”) were
timely filed and complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect as
of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information
provided by or on behalf of the Company to the Shareholders which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein not misleading, in the light of the circumstance under which they are or
were made.
 
 
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2.06.  Absence of Certain Changes.  Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, there has been no
material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or its
subsidiaries not otherwise disclosed in the SEC Documents.  Since the date of
the Company’s most recent audited financial statements contained in a Form 10-K,
neither the Company nor any of its subsidiaries has (i) declared or paid any
dividends on its Common Shares, (ii) sold any material assets outside of the
ordinary course of business, individually or in the aggregate, or (iii) made any
material capital expenditures, individually or in the aggregate.  Neither the
Company nor any of its subsidiaries has taken any steps to seek protection
pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, liquidation or winding up, nor does the Company or any of its
subsidiaries have any knowledge or reason to believe that any of their
respective creditors intend to initiate involuntary bankruptcy proceedings or
any actual knowledge of any fact which would reasonably lead a creditor to do
so. The Company and its subsidiaries, individually and on a consolidated basis,
are not as of the date hereof insolvent.
 
2.07.  Capitalization.  Schedule 2.08 sets forth the capitalization of the
Company (a) immediately prior to the consummation of the transactions
contemplated hereby and (b) immediately following the consummation of the
transactions contemplated hereby.
 
2.08.  Exempted Offering.  Assuming the trust of the representations and
warranties of the Shareholders set forth in Article III, the transaction
contemplated hereby is exempt from the registration requirements of the
Securities Act of 1933 (the “1933 Act”).
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
 
Each Shareholder hereby severally, and not jointly, represents and warrants
that, as of the Closing:
 
3.01.  Authority.
 
(a)          Such Shareholder has all limited liability company power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder.  The execution, delivery and performance by such Shareholder of this
Agreement, and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary limited liability company action on the
part of such Shareholder, and no further approval or authorization is required
on the part of such Shareholder.  This Agreement is a valid and binding
obligation of such Shareholder enforceable against such Shareholder in
accordance with its terms, except as the same may be limited by the Bankruptcy
Exceptions.
 
(b)          The execution, delivery and performance by the Shareholder of this
Agreement and the consummation of the transactions contemplated hereby and
compliance by the Shareholder with the provisions hereof will not (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien upon any of the properties or assets of
the Shareholder or any of its subsidiaries under any of the terms, conditions or
provisions of (A) its organizational documents or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Shareholder or any of its subsidiaries is a party or by
which it or any of its subsidiaries may be bound, or to which the Shareholder or
any of its subsidiaries or any of the properties or assets of the Shareholder or
any of its subsidiaries may be subject, or (ii) violate any statute, rule or
regulation or any judgment, ruling, order, writ, injunction or decree applicable
to the Shareholder or any of its subsidiaries or any of their respective
properties or assets except, in the case of subsections (i)(B) and (ii), for
those occurrences that, individually or in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on the
Shareholder’s ability to perform the actions contemplated by this Agreement.
 
 
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3.02.  Title.  Such Shareholder has good and valid title to its applicable
portion of the Transferred Common Shares, in each case free and clear of all
Liens, and after the transfer of its applicable portion of the Transferred
Common Shares contemplated herein, the Company will have good and valid title to
such Shareholder’s applicable portion of the Transferred Common Shares, free and
clear of all Liens.  The Transferred Common Shares represent all of the issued
and outstanding Common Shares held, directly or indirectly, by such Shareholder.
 
3.03.  Knowledge and Experience.
 
   (a)            Such Shareholder has such knowledge and experience in business
and financial matters as to be capable of evaluating the merits and risks of an
investment in the Series D Preferred Shares, the Warrant and the Warrant Shares
and protecting its own interests in connection with such an investment.
 
  (b)            Such Shareholder acknowledges that such Shareholder and its
advisors have been furnished with all materials relating to the business,
finances and operations of the Company that have been requested by such
Shareholder or its advisors and has been given the opportunity to ask questions
of, and to receive answers from, persons acting on behalf of the Company
concerning terms and conditions of the transactions contemplated by this
Agreement in order to make an informed and voluntary decision to enter into such
Agreement.  Notwithstanding the foregoing, such Shareholder acknowledges that,
at the request of such Shareholder (as evidenced in that certain Letter
Agreement, dated January 7, 2011, by and among the Company and the Shareholders
(the “Non-Disclosure Letter Agreement”)), the Company has not disclosed or
provided any material nonpublic information in its possession to such
Shareholder and that, notwithstanding the withholding of any such material
nonpublic information by the Company at such Shareholder’s request, such
Shareholder desires to enter into this Agreement and the transactions
contemplated hereby.  Such Shareholder acknowledges that it has reviewed the
public filings of the Company available on the Securities and Exchange
Commission’s (the “SEC”) website, www.sec.gov.
 
3.04.  Investment.  Such Shareholder is acquiring the Series D Preferred Shares,
the Warrant and the Warrant Shares for investment for such Shareholder’s own
account and not with a view to, or for resale in connection with, any
distribution thereof, and such Shareholder has no present intention of selling
or distributing the Series D Preferred Shares, the Warrant or the Warrant
Shares.  Such Shareholder does not have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant participation
to such person or entity or to any third person or entity with respect to any of
the Series D Preferred Shares, the Warrant or the Warrant Shares other than as
set forth in this Agreement.
 
3.05.  Accredited Investor.  Such Shareholder is an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
 
ARTICLE IV.
COVENANTS AND AGREEMENTS
 
4.01.  Commercially Reasonable Efforts.  Subject to the terms and conditions of
this Agreement, each of the parties will use commercially reasonable efforts in
good faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Closing on the Closing Date and
otherwise to enable consummation of the transactions contemplated hereby and
shall use commercially reasonable efforts to cooperate with the other party to
that end.
 
 
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4.02.  Sufficiency of Authorized Common Stock; Exchange Listing.
 
(a)          During the period from the Closing Date until the date on which the
Warrant has been fully exercised, the Company shall at all times have reserved
for issuance, free of preemptive or similar rights, a sufficient number of
authorized and unissued Warrant Shares to effectuate such exercise.  Nothing in
this Section 4.02(a) shall preclude the Company from satisfying its obligations
in respect of the exercise of the Warrant by delivery of Common Shares which are
held in the treasury of the Company.  As soon as reasonably practicable
following the Closing, the Company shall, at its expense, cause the Warrant
Shares to be listed on the Nasdaq Global Select Market, subject to official
notice of issuance, and shall maintain such listing for so long as any Common
Shares are listed on such exchange.
 
(b)          If requested by the Shareholders, the Company shall use its
commercially reasonable efforts to cause the Series D Preferred Shares to be
approved for listing on the Nasdaq Global Select Market as soon as reasonably
practicable following such request.
 
4.03.  Appointment of Company as Power of Attorney.  The Shareholders
irrevocably appoint the Company or any of its officers to be its true and lawful
attorney-in-fact following the Closing, with full power of substitution, and
empowers such attorney, for and in the name and stead of such attorney, to
cancel, sell, transfer, hypothecate, liquidate or otherwise dispose of all of or
any portion of the Transferred Common Shares following the Closing, from time to
time, and, for that purpose, to make, sign, execute and deliver any documents or
perform any other act necessary for such cancellation, sale, transfer,
hypothecation, liquidation or other disposition.  The Shareholders acknowledge
that this appointment is coupled with an interest and shall not be revocable by
the Shareholders’ dissolution or any other reason.  The Shareholders hereby
ratify and approve all acts that such attorney or any substitute therefor shall
do by virtue hereof.
 
4.04.  Purchase for Investment.  The Shareholders acknowledge that the Series D
Preferred Shares, the Warrant and the Warrant Shares have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”) or under any
state securities laws.  The Shareholders (a) are acquiring the Series D
Preferred Shares and the Warrant pursuant to an exemption from registration
under the Securities Act solely for investment with no present intention to
distribute them in violation of the Securities Act or any applicable United
States securities laws and (b) will not sell or otherwise dispose of any of the
Series D Preferred Shares, the Warrant  or the Warrant Shares, except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any applicable United States securities laws.
 
4.05.  Legends.
 
(a)          The Shareholders agree that all certificates or other instruments
representing the Series D Preferred Shares, the Warrant and the Warrant Shares
will bear a legend substantially to the following effect:
 
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER ANY APPLICABLE STATE
SECURITIES LAW.  THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,
IF REQUESTED, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”
 
 
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(b)          In the event that any of the Series D Preferred Shares, the Warrant
or the Warrant Shares (i) become registered under the Securities Act or (ii) are
eligible to be transferred without restriction in accordance with Rule 144 or
another exemption from registration under the Securities Act, the Company shall
issue new certificates or other instruments representing such Series D Preferred
Shares, Warrant or Warrant Shares, which shall not contain the legend in Section
4.05(a) above; provided that the Shareholders surrender to the Company the
previously issued certificates or other instruments.
 
4.06.  Registration Rights.
 
(a)          Registration.
 
  (i)          Subject to the terms and conditions of this Agreement, the
Company covenants and agrees that as promptly as practicable after the Closing
Date (and in any event no later than 60 days after the Closing Date), the
Company shall prepare and file with the SEC a shelf registration on an
appropriate form under Rule 415 under the Securities Act (a “Shelf Registration
Statement”) covering all of the Registrable Securities (as defined below), and,
to the extent the Shelf Registration Statement has not theretofore been declared
effective, the Company shall use commercially reasonable efforts to cause such
Shelf Registration Statement to be declared or become effective as promptly as
practicable (and in any event no later than 120 days after the Closing Date) and
to keep such Shelf Registration Statement continuously effective and in
compliance with the Securities Act and usable for resale of such Registrable
Securities for a period from the date of its initial effectiveness until such
time as there are no Registrable Securities remaining (including by refiling
such Shelf Registration Statement (or a new Registration Statement) if the
initial Registration Statement expires).  Notwithstanding the foregoing, if the
Company shall no longer be eligible to file a Shelf Registration Statement, then
the Company shall not be obligated to file or keep effective a Shelf
Registration Statement and the Company shall not be required to effect any other
registration with respect to the Registrable Securities unless and until
requested to do so in writing by the Shareholders or Holders; provided, that, in
such event that the Company becomes no longer eligible to file a Shelf
Registration Statement, any Shareholder or Holder shall have the right to demand
the registration (a “Demand Registration”) of the Registrable Securities, and,
in such event, the Company shall file with the SEC a registration statement (a
“Demand Registration Statement”) on an appropriate form covering all Registrable
Securities no less than 30 days following the Company’s receipt of notice of
such demand from any Shareholder or Holder, and further to the extent the Demand
Registration Statement has not theretofore been declared effective, the Company
shall use commercially reasonable efforts to cause such Demand Registration
Statement to be declared or become effective as promptly as practicable (and in
any event no later than 45 days after the Company’s receipt of notice of such
demand from any Shareholder or Holder).
 
  (ii)          The Company shall not be required to effect a registration with
respect to securities that are not Registrable Securities, or if the Company has
notified the Shareholders and all other Holders that in the good faith judgment
of the Board of Directors, it would be materially detrimental to the Company or
its securityholders for such registration to be effected at such time, in which
event the Company shall have the right to defer such registration for a period
of not more than 90 days after receipt of the request of any Shareholder or any
other Holder.
 
 
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  (iii)          If during any period when an effective Shelf Registration
Statement or Demand Registration Statement is not available, the Company
proposes to register any of its equity securities and the registration form to
be filed may be used for the registration or qualification for distribution of
Registrable Securities, the Company will give prompt written notice to the
Shareholders of its intention to effect such a registration (but in no event
less than ten (10) business days prior to the anticipated filing date) and will
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within five (5)
business days after the date of the Company’s notice (a “Piggyback
Registration”).
 
  The Company may terminate or withdraw any registration under this Section
4.06(a)(iii) prior to the effectiveness of such registration, whether or not the
Shareholders or any other Holders have elected to include Registrable Securities
in such registration.
 
  (iv)          If the registration referred to in Section 4.06(a)(iii) is
proposed to be underwritten, the Company will so advise the Shareholders and all
other Holders as a part of the written notice given pursuant to Section
4.06(a)(iii).  In such event, the right of the Shareholders and all other
Holders to Piggyback Registration will be conditioned upon such persons’
participation in such underwriting and the inclusion of such person’s
Registrable Securities in the underwriting if such securities are of the same
class of securities as the securities to be offered in the underwritten
offering, and each such person will (together with the Company and the other
persons distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If any participating person
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the managing underwriters and the
Shareholders (if the Shareholders is participating in the underwriting).
 
  (v)          If either (A) the Company grants “piggyback” registration rights
to one or more third parties to include their securities in an underwritten
offering under the Shelf Registration Statement or (B) a Piggyback Registration
relates to an underwritten offering on behalf of the Company, and in either case
the managing underwriters advise the Company that in their reasonable opinion
the number of securities requested to be included in such offering exceeds the
number which can be sold without adversely affecting the marketability of such
offering (including an adverse effect on the per share offering price), the
Company will include in such offering only such number of securities that in the
reasonable opinion of such managing underwriters can be sold without adversely
affecting the marketability of the offering (including an adverse effect on the
per share offering price), which securities will be so included in the following
order of priority: (1) first, in the case of a Piggyback Registration under, the
securities the Company proposes to sell, (2) then the Registrable Securities of
the Shareholders and all other Holders who have requested inclusion of
Registrable Securities pro rata on the basis of the aggregate number of such
securities or shares owned by each such person and (3) lastly, any other
securities of the Company that have been requested to be so included, subject to
the terms of this Agreement.
 
(b)          Expenses of Registration.  All Registration Expenses incurred in
connection with any registration, qualification or compliance hereunder shall be
borne by the Company.  All Selling Expenses incurred in connection with any
registrations hereunder shall be borne by the holders of the securities so
registered pro rata on the basis of the aggregate offering or sale price of the
securities so registered.
 
(c)          Obligations of the Company.  The Company shall use its commercially
reasonable efforts, for so long as there are Registrable Securities outstanding,
to take such actions as are under its control to not become an ineligible issuer
(as defined in Rule 405 under the Securities Act). In addition, whenever
required to effect the registration of any Registrable Securities or facilitate
the distribution of Registrable Securities pursuant to an effective Shelf
Registration Statement or Demand Registration Statement, the Company shall, as
expeditiously as reasonably practicable:
 
 
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  (i)          Furnish to the Holders and any underwriters such number of copies
of the applicable registration statement and each such amendment and supplement
thereto (including in each case all exhibits) and of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned or to be distributed
by them.
 
  (ii)          Use its commercially reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders or any underwriter, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and to take any other action which may be reasonably necessary to enable
such seller to consummate the disposition in such jurisdictions of the
securities owned by such Holder; provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
 
  (iii)          Notify each Holder of Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the applicable prospectus, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
 
  (iv)          Give written notice to the Holders:
 
(A)           when any registration statement filed pursuant to Section 5.05(a)
or any amendment thereto has been filed with the SEC (except for any amendment
effected by the filing of a document with the SEC pursuant to the Exchange Act)
and when such registration statement or any post-effective amendment thereto has
become effective;
 
(B)           of any request by the SEC for amendments or supplements to any
registration statement or the prospectus included therein or for additional
information;
 
(C)           of the issuance by the SEC of any stop order suspending the
effectiveness of any registration statement or the initiation of any proceedings
for that purpose;
 
(D)           of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the Common
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
 
(E)           of the happening of any event that requires the Company to make
changes in any effective registration statement or the prospectus related to the
registration statement in order to make the statements therein not misleading
(which notice shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made).
 
 
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(d)          Furnishing Information.
 
  (i)          Neither the Shareholders nor any Holder shall use any free
writing prospectus (as defined in Rule 405 under the Securities Act) in
connection with the sale of Registrable Securities without the prior written
consent of the Company.
 
  (ii)          It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 4.06(c) that the Shareholders
and/or the selling Holders and the underwriters, if any, shall furnish to the
Company such information regarding themselves, the Registrable Securities held
by them and the intended method of disposition of such securities as shall be
required to effect the registered offering of their Registrable Securities.
 
(e)          Assignment of Registration Rights. The rights to cause the Company
to register the Registrable Securities granted pursuant to Section 4.06(a) may
be assigned or otherwise conveyed, in a transaction which complies with the
requirements of the Securities Act and all applicable state securities laws, by
a Holder to a transferee or assignee of the Warrants or twenty-five percent
(25%) or more of the Series D Preferred Shares or Warrant Shares.
 
(f)          Rule 144. With a view to making available to the Shareholders and
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its commercially reasonable efforts to:
 
  (i)          make and keep public information available, as those terms are
understood and defined in Rule 144(c)(1) or any similar or analogous rule
promulgated under the Securities Act, at all times after the date of this
Agreement;
 
  (ii)          (A) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and (B) if at any time the Company is not required
to file such reports, make available, upon the request of any Holder, such
information necessary to permit sales pursuant to Rule 144A under the Securities
Act (including the information required by Rule 144A(d)(4) under the Securities
Act);
 
  (iii)          so long as any Shareholder or a Holder owns any Registrable
Securities, furnish to the Shareholders or such Holder forthwith upon request:
(A) a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 under the Securities Act, and of the Exchange Act;
(B) a copy of the most recent annual or quarterly report of the Company; and
(C) such other reports and documents as any Shareholder or Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities to the public without registration; and
 
  (iv)          take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act.
 
(g)          Definitions.  As used in this Section 4.06, the following terms
shall have the following respective meanings:
 
  (i)          “Holder” means the Shareholders and any other holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement.
 
 
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  (ii)          “Holders’ Counsel” means one counsel for the selling Holders
chosen by Holders holding a majority interest in the Registrable Securities
being registered.
 
  (iii)          “Registrable Securities” means (A) all Series D Preferred
Shares, (B) the Warrants and (C) any equity securities issued or issuable
directly or indirectly with respect to the securities referred to in the
foregoing clauses (A) or (B) by way of conversion, exercise or exchange thereof,
including the Warrant Shares, or share dividend or share split or in connection
with a combination of shares, recapitalization, reclassification, merger,
consolidation, statutory share exchange or similar transaction, provided that,
once issued, such securities will not be Registrable Securities when (1) they
are sold pursuant to an effective registration statement under the Securities
Act, (2) they may be sold pursuant to Rule 144 under the Securities Act without
limitation thereunder on volume or manner of sale, (3) they shall have ceased to
be outstanding or (4) they have been sold in a private transaction in which the
transferor’s rights under this Agreement are not assigned to the transferee of
the securities. No Registrable Securities may be registered under more than one
registration statement at any one time.
 
  (iv)          “Registration Expenses” mean all expenses incurred by the
Company in effecting any registration pursuant to this Agreement (whether or not
any registration or prospectus becomes effective or final) or otherwise
complying with its obligations under this Section 4.06, including all
registration, filing and listing fees, printing expenses, fees and disbursements
of counsel for the Company, blue sky fees and expenses, expenses incurred in
connection with any “road show”, the reasonable fees and disbursements of
Holders’ Counsel, and expenses of the Company’s independent accountants in
connection with any regular or special reviews or audits incident to or required
by any such registration, but shall not include Selling Expenses.
 
  (v)          “Selling Expenses” mean all discounts, selling commissions and
stock transfer taxes applicable to the sale of Registrable Securities and fees
and disbursements of counsel for any Holder (other than the fees and
disbursements of Holders’ Counsel included in Registration Expenses).
 
(h)          Liquidated Damages.  If: (i) a Shelf Registration Statement or
Demand Registration Statement (collectively, a “Registration Statement”) is not
filed on or prior to such filing deadlines as are set forth in Section 4.06(a)
covering the Registrable Securities required under this Agreement to be included
therein, (ii) a Registration Statement is not declared effective by the SEC on
or prior to such effectiveness deadlines as are set forth in Section 4.06(a)
(each, an “Effective Date”) or if by the business day immediately following the
such Effective Date, the Company shall not have filed a “final” prospectus for
the Registration Statement with the SEC under Rule 424(b) in accordance with the
terms hereof (whether or not such a prospectus is technically required by such
rule), or (iii) after its Effective Date, without regard for the reason
thereunder or efforts therefor, such Registration Statement ceases for any
reason to be effective and available to the Shareholders and the Holders as to
all Registrable Securities to which it is required to cover at any time prior to
the expiration of its Effectiveness Period for more than an aggregate of 20
trading days (any such failure or breach being referred to as an “Event,” and
for purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 20 trading day-period is exceeded,
being referred to as “Event Date”), then in addition to any other rights the
Shareholders and/or Holders may have hereunder or under applicable law, on each
such Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to the Shareholders and/or Holders pro
rata an aggregate amount in cash, as partial liquidated damages and not as a
penalty, equal to 1.0% of an amount equal to the product of (x) the number of
Series D Preferred Shares, and (y) $1,000 (the “Exchange Amount”).  The parties
agree that the maximum aggregate liquidated damages payable to the Shareholders
and/or Holders under this Agreement shall be ten percent (10%) of the aggregate
Exchange Amount.  The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to the
cure of an Event (except in the case of the first Event Date), and shall cease
to accrue (unless earlier cured) upon the expiration of the Effectiveness
Period.  For the purposes of this Section 4.06(h), “Effectiveness Period” shall
means the period commencing on the Effective Date of the Registration Statement
and ending on the earliest to occur of (a) the second anniversary of such
Effective Date, (b) such time as all of the Registrable Securities covered by
such Registration Statement have been publicly sold by the Holders of the
Registrable Securities included therein, or (c) such time as all of the
Registrable Securities covered by such Registration Statement may be sold by the
Holders without volume restrictions pursuant to Rule 144, in each case as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders.
 
 
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(i)           Indemnification.  The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents, investment advisors, partners, members and
employees of each of them, each person who controls any such Holder (within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act) and the
officers, directors, agents and employees of each such controlling person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, any prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved by such Holder expressly for
use in the Registration Statement, such prospectus or such form of prospectus or
in any amendment or supplement thereto or (2) the use by such Holder of an
outdated or defective prospectus after the Company has notified such Holder in
writing that the prospectus is outdated or defective and prior to the receipt by
such Holder of an amended or supplemented prospectus, but only if and to the
extent that following the receipt of the amended or supplemented prospectus the
misstatement or omission giving rise to such Loss would have been
corrected.  The Company shall notify the Holders promptly of the institution,
threat or assertion of any proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.  If any
proceeding shall be brought or asserted against any person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify
the person from whom indemnity is sought (the “Indemnifying Party”) in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement.   An Indemnified Party shall have the right to employ separate
counsel in any such proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless: (1) the Indemnifying Party has agreed in writing to
pay such fees and expenses; (2) the Indemnifying Party shall have failed
promptly to assume the defense of such proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such proceeding; or (3)
the named parties to any such proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such proceeding.  All
fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section) shall be
paid to the Indemnified Party, as incurred, within ten business days of written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
 
 
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4.07.        Termination of NDA.  The Company and the Shareholders agree that
the Non-Disclosure Letter Agreement shall terminate in all respects upon the
signing of this Agreement.
 
4.08.        Indemnification.
 
(a)          Each Shareholder shall severally, and not jointly, indemnify and
hold harmless the Company, any corporation or entity affiliated therewith, any
officers, directors, and employees of any of the foregoing, and any professional
advisors to any of the foregoing, from and against any and all loss, damage,
liability, or expense, including costs and reasonable attorney fees, to which
they may become subject, or which they may incur by reason of or in connection
with any misrepresentation made by such Shareholder herein, any breach of such
Shareholder’s representations and warranties made herein, such Shareholder’s
failure to fulfill any of his covenants or agreements set forth herein and such
Shareholder’s failure to comply with applicable law in connection with the
transactions set forth herein.
 
4.09.        (b)          The Company shall indemnify and hold harmless each
Shareholder, any corporation or entity affiliated therewith, any officers,
directors, and employees of any of the foregoing, and any professional advisors
to any of the foregoing, from and against any and all loss, damage, liability,
or expense, including costs and reasonable attorney fees, to which they may
become subject, or which they may incur by reason of or in connection with any
misrepresentation made by the Company herein, any breach of the Company’s
representations and warranties made herein, the Company’s failure to fulfill any
of his covenants or agreements set forth herein and the Company’s failure to
comply with applicable law in connection with the transactions set forth herein.
 
ARTICLE V.
MISCELLANEOUS
 
5.01.        Notices.  All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c)
five (5) business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) business day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt.  The addresses of the parties
for purposes of this Agreement are as follows:
 
 
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  (a)  If to the Company:           United Community Banks, Inc.     P.O. Box
398     Blairsville, Georgia 30514     Attention: Rex S. Schuette, Executive
Vice President     and Chief Financial Officer     Facsimile: (706) 745-9046    
      With a copy to:           Kilpatrick Townsend & Stockton LLP     1100
Peachtree Street, Suite 2800     Atlanta, Georgia 30309     Attention: James W.
Stevens     Facsimile: (404) 541-3400         (b) If to the Shareholders:      
    Elm Ridge Capital Management, LLC     W. Main Street     Irvington, New York
10533     Attention: Stephen L. Cohen     Facsimile: (914) 250-1005          
With a copy to:           Seward & Kissel LLP     One Battery Park Plaza     New
York, NY 10004     Attention: Patricia Poglinco and Robert Lustrin    
Facsimile: (212) 480-8421

 
5.02.        Expenses.  Unless otherwise provided in this Agreement or the
Warrant, each of the parties hereto will bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
under this Agreement and the Warrant, including fees and expenses of its own
financial or other consultants and counsel; provided, however, that the Company
shall reimburse the Shareholders for their legal expenses incurred in connection
with this Agreement and the transactions contemplated hereby in an amount not to
exceed $15,000 in the aggregate.
 
5.03.        Governing Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of Georgia, but without reference to the
conflicts of law rules of such state.
 
5.04.        Survival.  The representations, warranties, covenants and
agreements made by the parties herein shall survive the execution and delivery
of this Agreement and the Closing and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Shareholders or the Company.
 
 
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5.05.        Successors and Assigns.  Except as otherwise provided herein, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the respective successors and assigns of the parties hereto.  Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successor and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.  The Shareholders may freely
assign any of the Shareholders’ rights or interests in and under this Agreement
to any transferees of the Series D Preferred Shares, the Warrants and/or the
Warrant Shares upon notice to the Company.
 
5.06.        Entire Agreement.  This Agreement and the documents referred to
herein constitute the entire agreement between the parties with respect to the
matters addressed hereby, and this Agreement supersedes and renders null and
void any and all other prior oral or written agreements, understandings, or
commitments pertaining to the subject matter hereof.
 
5.07.        Amendment and Waiver.  Any term of this Agreement may be amended or
waived only with the written consent of the Company and each Shareholder.
 
5.08.        Further Assurances.  Each party hereto agrees to execute and
deliver, by the proper exercise of its corporate or limited liability company,
all such other and additional instruments and documents and do all such other
acts and things as may be necessary to more fully effectuate this Agreement.
 
5.09.        Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which taken
together, shall constitute one and the same instrument.  Signatures transmitted
electronically by facsimile shall be binding for all purposes hereof.
 
5.10.        Delays and Omissions.  No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring, nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.  Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing.  All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
 
[Signature Page Follows]
 
 
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     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the date first above written.
 
 

  UNITED COMMUNITY BANKS, INC.                         By: /s/Rex. S. Schuette  
      Name:   Rex S. Schuette       Title: Executive Vice President and Chief
Financial Officer                         ELM RIDGE OFFSHORE MASTER FUND, LTD.  
  By:   ELM RIDGE MANAGEMENT, LLC, its Investment Advisor                      
  By: /s/ Stephen L. Cohen         Name: Stephen L. Cohen       Title: Chief
Operating Officer                                      ELM RIDGE VALUE PARTNERS,
L.P.     By:   ELM RIDGE MANAGEMENT, LLC, its Investment Advisor                
        By: /s/ Stephen L. Cohen       Name: Stephen L. Cohen       Title: Chief
Operating Officer                                

 
 
 

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SCHEDULE A
 
 
OWNERSHIP PERCENTAGES OF THE SHAREHOLDERS
 

 
Elm Ridge Offshore Master Fund, Ltd.: 7,546,900 (97.31%)*

Elm Ridge Value Partners, L.P.:  208,731 (2.69%)*

*rounded to the nearest one-hundredth of one percent

 
 

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EXHIBIT A
 

ARTICLES OF AMENDMENT
OF
UNITED COMMUNITY BANKS, INC.

 
1.
 
The name of the corporation is United Community Banks, Inc.
 
2.
 
The Restated Articles of Incorporation, as amended, of the corporation are
amended by adding the powers, rights, and preferences, and the qualifications,
limitations, and restrictions thereof, of the Cumulative Perpetual Preferred
Stock, Series D as set forth in Exhibit A attached hereto.
 
3.
 
The amendment was adopted by the board of directors of the corporation at a
meeting duly convened and held on January 17, 2011.  Pursuant to O.C.G.A.
§ 14-2-602 and Article V of the Restated Articles of Incorporation, as amended,
of the corporation, shareholder consent was not required.
 
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment to
the Restated Articles of Incorporation, as amended, of United Community Banks,
Inc. this 22nd day of February, 2011.
 

 

  UNITED COMMUNITY BANKS, INC.                   By:        Name:       Title:  

 
 
 

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Exhibit A
 
DESIGNATIONS, POWERS, PREFERENCES,
LIMITATIONS, RESTRICTIONS, AND RELATIVE RIGHTS
OF
CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES D
OF
UNITED COMMUNITY BANKS, INC.
 
 
Pursuant to the authority vested in the board of directors (the “Board of
Directors”) by the Restated Articles of Incorporation of United Community Banks,
Inc. (the “Corporation”), as amended (the “Articles of Incorporation”), the
Board of Directors does hereby designate, create, authorize and provide for the
issue of a series of preferred stock, which shall be designated as Cumulative
Perpetual Preferred Stock, Series D (the “Series D Preferred Stock”), consisting
of 25,000 shares having the following powers, preferences, participation and
other special rights, qualifications, limitations, restrictions and other
designations:
 
Section 1. General Matters.  Each share of the Series D Preferred Stock shall be
identical in all respects to every other share of the Series D Preferred
Stock.  The Series D Preferred Stock shall be perpetual, subject to the
provisions of Section 5 of this Certificate of Designation.  The Series D
Preferred Stock shall rank at least equally with all Parity Stock outstanding as
of the date hereof (except for any senior series that may be issued following
the date hereof with the requisite consent of the holders of the Series D
Preferred Stock and any other class or series whose vote is required) and shall
rank senior to Junior Stock with respect to the payment of dividends and the
distribution of assets in the event of liquidation, dissolution or winding up of
the Corporation.
 
Section 2. Definitions.
 
(a)  “Applicable Dividend Rate” means a rate per annum equal to (i) the sum of
10.00% minus the three-month United States Dollar London Interbank Offered Rate,
(“LIBOR”), as announced and published on February 22, 2011 in The Wall Street
Journal plus (ii) the most recently published LIBOR, as announced and published
from time to time in The Wall Street Journal, and in effect on the last day of
the month preceding the applicable Dividend Period; provided, however, that the
initial Applicable Dividend Rate shall be 10.00% and shall continue in effect
until May 15, 2011.  In the event that more than one LIBOR is published in The
Wall Street Journal as of the last day of the month preceding any Dividend
Period, the highest LIBOR published will be used.
 
(b)  “Articles of Incorporation” has the meaning set forth in the preamble.
 
(c)  “Business Day” means any day except Saturday, Sunday and any day on which
banking institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.
 
(d)  “Bylaws” means the Amended and Restated Bylaws of the Corporation, as they
may be further amended from time to time.
 
(e)  “Certificate of Designation” means this Certificate of Designation or
comparable instrument relating to the Series D Preferred Stock, as it may be
amended from time to time.
 
(f)       “Closing Date” means the date on which the closing of the issuances
occurs.
 
 
 

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(g)  “Common Stock” means the common stock, $1.00 par value per share, of the
Corporation.
 
(h)  “Corporation” has the meaning set forth in the preamble.
 
(i)       “Dividend Payment Date” means February 15, May 15, August 15 and
November 15 of each year.
 
(j)       “Dividend Period” has the meaning set forth in Section 3(a).
 
(k)      “Dividend Record Date” has the meaning set forth in Section 3(a).
 
(l)       “Junior Stock” means Common Stock and any other class or series of
stock of the Corporation the terms of which expressly provide that it ranks
junior to the Series D Preferred Stock as to dividend rights and/or as to rights
on liquidation, dissolution or winding up of the Corporation.
 
(m)  “Liquidation Amount” means $1,000.00 per share of the Series D Preferred
Stock.
 
(n)       “Liquidation Preference” has the meaning set forth in Section 4(a).
 
(o)      “Parity Stock” means any class of capital stock or series of stock of
the Corporation (other than the Series D Preferred Stock) the terms of which
expressly provide that such class or series will rank on senior or junior to the
Series D Preferred Stock as to dividend rights and/or as to rights upon the
liquidation, dissolution or winding up of the Corporation (in each case without
regard to whether dividends accrue cumulatively or non-cumulatively).
 
(p)  “Preferred Stock” means any and all series of preferred stock of the
Corporation, including the Series D Preferred Stock.
 
(q)  “Share Dilution Amount” has the meaning set forth in Section 3(b).
 
Section 3. Dividends.
 
(a)       Rate.  Holders of the Series D Preferred Stock shall be entitled to
receive, on each share of the Series D Preferred Stock if, as and when declared
by the Board of Directors or any duly authorized committee of the Board of
Directors, but only out of assets legally available therefor, cumulative cash
dividends with respect to each Dividend Period (as defined below) at the
Applicable Dividend Rate on (i) the Liquidation Amount per share of the Series D
Preferred Stock and (ii) the amount of accrued and unpaid dividends for any
prior Dividend Period on such share of the Series D Preferred Stock, if
any.  Dividends shall begin to accrue and be cumulative from the Closing Date
and shall compound on each subsequent Dividend Payment Date (i.e., no dividends
shall accrue on other dividends unless and until the first Dividend Payment Date
for such other dividends has passed without such other dividends having been
paid on such date), in each case whether or not declared, and shall be payable
quarterly in arrears on each Dividend Payment Date, commencing May 15, 2011.  In
the event that any Dividend Payment Date would otherwise fall on a day that is
not a Business Day, the dividend payment due on that date will be postponed to
the next day that is a Business Day and no additional dividends will accrue as a
result of that postponement.  The period from and including any Dividend Payment
Date to, but excluding, the next Dividend Payment Date is a “Dividend Period,”
provided that the initial Dividend Period shall be the period from and including
the Closing Date to, but excluding, May 15, 2011.
 
 
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Dividends that are payable on the Series D Preferred Stock in respect of any
Dividend Period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months.  The amount of dividends payable on the Series D Preferred
Stock on any date prior to the end of a Dividend Period, and for the initial
Dividend Period, shall be computed on the basis of a 360-day year consisting of
twelve 30-day months, and actual days elapsed over a 30-day month.
 
Dividends that are payable on the Series D Preferred Stock on any Dividend
Payment Date will be payable to holders of record of the Series D Preferred
Stock as they appear on the stock register of the Corporation on the applicable
record date, which shall be the 15th calendar day immediately preceding such
Dividend Payment Date (each, a “Dividend Record Date”).  Any such day that is a
Dividend Record Date shall be a Dividend Record Date whether or not such day is
a Business Day.
 
Holders of the Series D Preferred Stock shall not be entitled to any dividends,
whether payable in cash, securities or other property, other than dividends (if
any) declared and payable on the Series D Preferred Stock as specified in this
Section 3 (subject to the other provisions of this Certificate of Designation).
 
(b)       Priority of Dividends.  So long as any share of the Series D Preferred
Stock remains outstanding, no dividend or distribution shall be declared or paid
on Common Stock or any other shares of Junior Stock (other than dividends
payable solely in shares of Common Stock) or Parity Stock, subject to the
immediately following paragraph in the case of Parity Stock, and no Common
Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased,
redeemed or otherwise acquired for consideration by the Corporation or any of
its subsidiaries unless all accrued and unpaid dividends for all past Dividend
Periods, including the latest completed Dividend Period (including, if
applicable as provided in Section 3(a) above, dividends on such amount), on all
outstanding shares of the Series D Preferred Stock have been or are
contemporaneously declared and paid in full (or have been declared and a sum
sufficient for the payment thereof has been set aside for the benefit of the
holders of shares of the Series D Preferred Stock on the applicable record
date).  The foregoing limitation shall not apply to (i) redemptions, purchases
or other acquisitions of shares of Common Stock or other Junior Stock in
connection with the administration of any employee benefit plan in the ordinary
course of business (including purchases to offset the Share Dilution Amount (as
defined below) pursuant to a publicly announced repurchase plan) and consistent
with past practice, provided that any purchases to offset the Share Dilution
Amount shall in no event exceed the Share Dilution Amount; (ii) purchases or
other acquisitions by a broker-dealer subsidiary of the Corporation solely for
the purpose of market-making, stabilization or customer facilitation
transactions in Junior Stock or Parity Stock in the ordinary course of its
business; (iii) purchases by a broker-dealer subsidiary of the Corporation of
capital stock of the Corporation for resale pursuant to an offering by the
Corporation of such capital stock underwritten by such broker-dealer subsidiary;
(iv) any dividends or distributions of rights or Junior Stock in connection with
a stockholders’ rights plan or any redemption or repurchase of rights pursuant
to any stockholders’ rights plan; (v) the acquisition by the Corporation or any
of its subsidiaries of record ownership in Junior Stock or Parity Stock for the
beneficial ownership of any other persons (other than the Corporation or any of
its subsidiaries), including as trustees or custodians; and (vi) the exchange or
conversion of Junior Stock for or into other Junior Stock or of Parity Stock for
or into other Parity Stock (with the same or lesser aggregate liquidation
amount) or Junior Stock, in each case, solely to the extent required pursuant to
binding contractual agreements entered into prior to the Closing Date or any
subsequent agreement for the accelerated exercise, settlement or exchange
thereof for Common Stock.  “Share Dilution Amount” means the increase in the
number of diluted shares outstanding (determined in accordance with generally
accepted accounting principles in the United States, and as measured from the
date of the Corporation’s consolidated financial statements most recently filed
with the Securities and Exchange Commission prior to the Closing Date) resulting
from the grant, vesting or exercise of equity-based compensation to employees
and equitably adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.
 
 
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When dividends are not paid (or declared and a sum sufficient for payment
thereof set aside for the benefit of the holders thereof on the applicable
record date) on any Dividend Payment Date (or, in the case of Parity Stock
having dividend payment dates different from the Dividend Payment Dates, on a
dividend payment date falling within a Dividend Period related to such Dividend
Payment Date) in full upon the Series D Preferred Stock and any shares of Parity
Stock, all dividends declared on the Series D Preferred Stock and/or all such
Parity Stock and payable on such Dividend Payment Date (or, in the case of
Parity Stock having dividend payment dates different from the Dividend Payment
Dates, on a dividend payment date falling within the Dividend Period related to
such Dividend Payment Date) shall be declared pro rata so that the respective
amounts of such dividends declared shall bear the same ratio to each other as
all accrued and unpaid dividends per share on the shares of the Series D
Preferred Stock (including, if applicable as provided in Section 3(a) above,
dividends on such amount) and all Parity Stock payable on such Dividend Payment
Date (or, in the case of Parity Stock having dividend payment dates different
from the Dividend Payment Dates, on a dividend payment date falling within the
Dividend Period related to such Dividend Payment Date) (subject to their having
been declared by the Board of Directors or a duly authorized committee of the
Board of Directors out of legally available funds and including, in the case of
Parity Stock that bears cumulative dividends, all accrued but unpaid dividends)
bear to each other.
 
Subject to the foregoing, and not otherwise, such dividends (payable in cash,
securities or other property) as may be determined by the Board of Directors or
any duly authorized committee of the Board of Directors may be declared and paid
on any securities, including Common Stock and other Junior Stock, from time to
time out of any funds legally available for such payment, and holders of the
Series D Preferred Stock shall not be entitled to participate in any such
dividends.
 
Section 4. Liquidation Rights.
 
(a)        Voluntary or Involuntary Liquidation.  In the event of any
liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, holders of the Series D Preferred Stock shall
be entitled to receive for each share of the Series D Preferred Stock, out of
the assets of the Corporation or proceeds thereof (whether capital or surplus)
available for distribution to stockholders of the Corporation, subject to the
rights of any creditors of the Corporation, before any distribution of such
assets or proceeds is made to or set aside for the holders of Common Stock and
any other stock of the Corporation ranking junior to the Series D Preferred
Stock as to such distribution, payment in full in an amount equal to the sum of
(i) the Liquidation Amount per share and (ii) the amount of any accrued and
unpaid dividends (including, if applicable as provided in Section 3(a) above,
dividends on such amount), whether or not declared, to the date of payment (such
amounts collectively, the “Liquidation Preference”).
 
(b)        Partial Payment.  If in any distribution described in Section 4(a)
above the assets of the Corporation or proceeds thereof are not sufficient to
pay in full the amounts payable with respect to all outstanding shares of the
Series D Preferred Stock and the corresponding amounts payable with respect of
any other stock of the Corporation ranking equally with the Series D Preferred
Stock as to such distribution, holders of the Series D Preferred Stock and the
holders of such other stock shall share ratably in any such distribution in
proportion to the full respective distributions to which they are entitled.
 
(c)        Residual Distributions.  If the Liquidation Preference has been paid
in full to all holders of the Series D Preferred Stock and the corresponding
amounts payable with respect of any other stock of the Corporation ranking
equally with the Series D Preferred Stock as to such distribution has been paid
in full, the holders of other stock of the Corporation shall be entitled to
receive all remaining assets of the Corporation (or proceeds thereof) according
to their respective rights and preferences.
 
 
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(d)        Merger, Consolidation and Sale of Assets Not Liquidation.  For
purposes of this Section 4, the merger or consolidation of the Corporation with
any other corporation or other entity, including a merger or consolidation in
which the holders of the Series D Preferred Stock receive cash, securities or
other property for their shares, or the sale, lease or exchange (for cash,
securities or other property) of all or substantially all of the assets of the
Corporation, shall not constitute a liquidation, dissolution or winding up of
the Corporation, but only to the extent that the holders of the Series D
Preferred Stock receive in such transaction an amount equal to at least the sum
of (i) the Liquidation Amount per share and (ii) except as otherwise provided
below, any accrued and unpaid dividends (including, if applicable as provided in
Section 3(a) above, dividends on such amount).
 
Section 5. Redemption.
 
(a)        Optional Redemption.  The Series D Preferred Stock may not be
redeemed prior to either (i) the third anniversary of the Closing Date or
(ii) September 30, 2014, as determined by the Board of Directors in its sole
discretion (the “Optional Redemption Date”).  On or after the Optional
Redemption Date, the Corporation, at its option may redeem, in whole but not in
part, at any time, out of funds legally available therefor, shares of the Series
D Preferred Stock at the time outstanding, upon notice given as provided in
Section 5(c) below, at a redemption price equal to the sum of (i) the
Liquidation Amount per share and (ii) except as otherwise provided below, any
accrued and unpaid dividends (including, if applicable as provided in Section
3(a) above, dividends on such amount) (regardless of whether dividends are
actually declared) to, but excluding, the date fixed for redemption.
 
The redemption price for any shares of the Series D Preferred Stock shall be
payable on the redemption date to the holder of such shares against surrender of
the certificate(s) evidencing such shares to the Corporation or its agent, or
for uncertificated shares that are issued in book-entry form on the books of the
Corporation, against surrender on the books of the Corporation in accordance
with the Corporation’s applicable direct registration system.  Any declared but
unpaid dividends payable on a redemption date that occurs subsequent to the
Dividend Record Date for a Dividend Period shall not be paid to the holder
entitled to receive the redemption price on the redemption date, but rather
shall be paid to the holder of record of the redeemed shares on such Dividend
Record Date relating to the Dividend Payment Date as provided in Section 3
above.
 
(b)        No Sinking Fund.  The Series D Preferred Stock will not be subject to
any mandatory redemption, sinking fund or other similar provisions.  Holders of
the Series D Preferred Stock will have no right to require redemption or
repurchase of any shares of the Series D Preferred Stock.
 
(c)        Notice of Redemption.  Notice of every redemption of shares of the
Series D Preferred Stock shall be given by first class mail, postage prepaid,
addressed to the holders of record of the shares to be redeemed at their
respective last addresses appearing on the books of the Corporation.  Such
mailing shall be at least 30 days and not more than 60 days before the date
fixed for redemption.  Any notice mailed as provided in this Subsection shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice, but failure duly to give such notice by mail, or any
defect in such notice or in the mailing thereof, to any holder of shares of the
Series D Preferred Stock designated for redemption shall not affect the validity
of the proceedings for the redemption of any other shares of the Series D
Preferred Stock.  Notwithstanding the foregoing, if shares of the Series D
Preferred Stock are issued in book-entry form through The Depository Trust
Company or any other similar facility, notice of redemption may be given to the
holders of the Series D Preferred Stock at such time and in any manner permitted
by such facility.  Each notice of redemption given to a holder shall state: (1)
the redemption date; (2) the number of shares of the Series D Preferred Stock to
be redeemed; (3) the redemption price; and (4) the place or places where
certificates for any such shares issued in certificated form are to be
surrendered for payment of the redemption price.
 
 
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(d)        Effectiveness of Redemption.  If notice of redemption has been duly
given and if on or before the redemption date specified in the notice all funds
necessary for the redemption have been deposited by the Corporation, in trust
for the pro rata benefit of the holders of the shares called for redemption,
with a bank or trust company selected by the Board of Directors, so as to be and
continue to be available solely therefor, then, notwithstanding that any
certificate for any share so called for redemption has not been surrendered for
cancellation, on and after the redemption date dividends shall cease to accrue
on all shares so called for redemption, all shares so called for redemption
shall no longer be deemed outstanding and all rights with respect to such shares
shall forthwith on such redemption date cease and terminate, except only the
right of the holders thereof to receive the amount payable on such redemption
from such bank or trust company, without interest.  Any funds unclaimed at the
end of three years from the redemption date shall, to the extent permitted by
law, be released to the Corporation, after which time the holders of the shares
so called for redemption shall look only to the Corporation for payment of the
redemption price of such shares.
 
(e)        Status of Redeemed Shares.  Shares of the Series D Preferred Stock
that are redeemed, repurchased or otherwise acquired by the Corporation shall
revert to authorized but unissued shares of Preferred Stock (provided that any
such cancelled shares of the Series D Preferred Stock may be reissued only as
shares of any series of Preferred Stock other than the Series D Preferred
Stock).
 
Section 6. Conversion.  Holders of the Series D Preferred Stock shares shall
have no right to exchange or convert such shares into any other securities.
 
Section 7. Voting Rights.
 
(a)        General.  The holders of the Series D Preferred Stock shall not have
any voting rights except as set forth below or as otherwise from time to time
required by law.  In exercising the voting rights set forth below, each holder
shall be entitled to one vote for each share of the Series D Preferred Stock
held by such holder.
 
(b)        Class Voting Rights as to Particular Matters.  So long as any shares
of the Series D Preferred Stock are outstanding, in addition to any other vote
or consent of stockholders required by law or by the Articles of Incorporation,
the vote or consent of the holders of at least a majority of the shares of the
Series D Preferred Stock at the time outstanding, voting as a separate class,
given in person or by proxy, either in writing without a meeting or by vote at
any meeting called for the purpose, shall be necessary for effecting or
validating:
 
 (i)  Authorization of Senior Stock.  Any amendment or alteration of the
Certificate of Designation for the Series D Preferred Stock or the Articles of
Incorporation to authorize or create or increase the authorized amount of, or
any issuance of, any shares of, or any securities convertible into or
exchangeable or exercisable for shares of, any class or series of capital stock
of the Corporation ranking senior to the Series D Preferred Stock with respect
to either or both the payment of dividends and/or the distribution of assets on
any liquidation, dissolution or winding up of the Corporation;
 
 
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 (ii)  Amendment of the Series D Preferred Stock.  Any amendment, alteration or
repeal of any provision of the Certificate of Designations for the Series D
Preferred Stock or the Articles of Incorporation (including, unless no vote on
such merger or consolidation is required by Section 7(b)(iii) below, any
amendment, alteration or repeal by means of a merger, consolidation or
otherwise) so as to materially and adversely affect the rights, preferences,
privileges or voting powers of the Series D Preferred Stock; or
 
 (iii)     Share Exchanges, Reclassifications, Mergers and Consolidations.  Any
consummation of a binding share exchange or reclassification involving the
Series D Preferred Stock, or of a merger or consolidation of the Corporation
with another corporation or other entity, unless in each case (x) the shares of
the Series D Preferred Stock remain outstanding (and there shall not have been
any adverse effect to the rights, privileges, preferences or otherwise of such
Series D Preferred Stock) or, in the case of any such merger or consolidation
with respect to which the Corporation is not the surviving or resulting entity,
are converted into or exchanged for preference securities of the surviving or
resulting entity or its ultimate parent, and (y) such shares remaining
outstanding or such preference securities, as the case may be, are securities in
an issuer with a credit rating of at least as high a quality as the credit
rating of the Corporation on the date immediately prior to the consummation of
such transaction and further have such rights, preferences, privileges and
voting powers, and limitations and restrictions thereof, taken as a whole, as
are at least as favorable to the holders thereof than the rights, preferences,
privileges and voting powers, and limitations and restrictions thereof, of the
Series D Preferred Stock immediately prior to such consummation, taken as a
whole;
 
provided, however, that for all purposes of this Section 7(b), any increase in
the amount of the authorized Preferred Stock, or the creation and issuance, or
an increase in the authorized or issued amount, whether pursuant to preemptive
or similar rights or otherwise, of any other series of Preferred Stock, or any
securities convertible into or exchangeable or exercisable for any other series
of Preferred Stock, ranking equally with and/or junior to the Series D Preferred
Stock with respect to the payment of dividends (whether such dividends are
cumulative or non-cumulative) and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation will not be deemed to adversely
affect the rights, preferences, privileges or voting powers, and shall not
require the affirmative vote or consent of, the holders of outstanding shares of
the Series D Preferred Stock.
 
(c)        Changes after Provision for Redemption.  No vote or consent of the
holders of the Series D Preferred Stock shall be required pursuant to Section
7(b) above if, at or prior to the time when any such vote or consent would
otherwise be required pursuant to such Section, all outstanding shares of the
Series D Preferred Stock shall have been redeemed, or shall have been called for
redemption upon proper notice and sufficient funds shall have been deposited in
trust for such redemption, in each case pursuant to Section 5 above.
 
(d)        Procedures for Voting and Consents.  The rules and procedures for
calling and conducting any meeting of the holders of the Series D Preferred
Stock (including, without limitation, the fixing of a record date in connection
therewith), the solicitation and use of proxies at such a meeting, the obtaining
of written consents and any other aspect or matter with regard to such a meeting
or such consents shall be governed by any rules of the Board of Directors or any
duly authorized committee of the Board of Directors, in its discretion, may
adopt from time to time, which rules and procedures shall conform to the
requirements of the Articles of Incorporation, the Bylaws, and applicable law
and the rules of any national securities exchange or other trading facility on
which the Series D Preferred Stock is listed or traded at the time.
 
Section 8. Record Holders.  To the fullest extent permitted by applicable law,
the Corporation and the transfer agent for the Series D Preferred Stock may deem
and treat the record holder of any share of the Series D Preferred Stock as the
true and lawful owner thereof for all purposes, and neither the Corporation nor
such transfer agent shall be affected by any notice to the contrary.
 
 
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Section 9. Notices.  All notices or communications in respect of the Series D
Preferred Stock shall be sufficiently given if given in writing and delivered in
person or by first class mail, postage prepaid, or recognized courier service,
if given by electronic mail or if given in such other manner as may be permitted
in this Certificate of Designations, in the Articles of Incorporation or Bylaws
or by applicable law.  Notwithstanding the foregoing, if shares of the Series D
Preferred Stock are issued in book-entry form through The Depository Trust
Corporation or any similar facility, such notices may be given to the holders of
the Series D Preferred Stock in any manner permitted by such facility.
 
Section 10. No Preemptive Rights.  No share of the Series D Preferred Stock
shall have any rights of preemption whatsoever as to any securities of the
Corporation, or any warrants, rights or options issued or granted with respect
thereto, regardless of how such securities, or such warrants, rights or options,
may be designated, issued or granted.
 
Section 11. Replacement Certificates.  The Corporation shall replace any
mutilated certificate at the holder’s expense upon surrender of that certificate
to the Corporation.  The Corporation shall replace certificates that become
destroyed, stolen or lost at the holder’s expense upon delivery to the
Corporation of reasonably satisfactory evidence that the certificate has been
destroyed, stolen or lost, together with any indemnity that may be reasonably
required by the Corporation.
 
Section 12. Other Rights.  The shares of the Series D Preferred Stock shall not
have any rights, preferences, privileges or voting powers or relative,
participating, optional or other special rights, or qualifications, limitations
or restrictions thereof, other than as set forth herein or in the Articles of
Incorporation or as provided by applicable law.
 
 
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EXHIBIT B

 
 
FORM OF WARRANT TO PURCHASE COMMON STOCK

 
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.
 

 
WARRANT
to purchase
7,755,631
Shares of Common Stock
of United Community Banks, Inc.

 
Issue Date:  February 22, 2011
 
ARTICLE VI. Definitions.  Unless the context otherwise requires, when used
herein the following terms shall have the meanings indicated.
 
“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, such other Person.  For
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlled by” and “under common control with”) when used with
respect to any Person, means the possession, directly or indirectly, of the
power to cause the direction of management and/or policies of such Person,
whether through the ownership of voting securities by contract or otherwise.
 
“Articles of Incorporation” means the Restated Articles of Incorporation of the
Company, as amended.
 
“Board of Directors” means the board of directors of the Company, including any
duly authorized committee thereof.
 
“Business Combination” means a merger, consolidation, statutory share exchange
or similar transaction that requires the approval of the Company’s shareholders.
 
“business day” means any day except Saturday, Sunday and any day on which
banking institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.
 
“Common Stock” means the common stock, $1.00 par value per share, of the
Company.
 
“Company” means United Community Banks, Inc., a Georgia corporation, and its
successors.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
 
 
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“Exchange Agreement” means the Share Exchange Agreement, entered into February
22, 2011, as amended from time to time, between the Company and Elm Ridge
Capital Management LLC, including all annexes, exhibits and schedules thereto.
 
“Exercise Price” means $2.50 per share of Common Stock.
 
“Expiration Time” has the meaning set forth in Section 3.
 
“Fair Market Value” means, with respect to any security or other property, the
fair market value of such security or other property as determined by the Board
of Directors, acting in good faith.
 
“Issue Date” means the date set forth on the first page hereof.
 
“Market Price” means, with respect to a particular security, on any given day,
the last reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the last closing bid and ask prices regular
way, in either case on the principal national securities exchange on which the
applicable securities are listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and ask prices as furnished by two members of the Financial Industry
Regulatory Authority, Inc. selected from time to time by the Company for that
purpose.  “Market Price” shall be determined without reference to after hours or
extended hours trading.  If such security is not listed and traded in a manner
that the quotations referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall be deemed to be the
fair market value per share of such security as determined in good faith by the
Board of Directors in reliance on an opinion of a nationally recognized
independent investment banking corporation retained by the Company for this
purpose and certified in a resolution to the Warrantholder.  For the purposes of
determining the Market Price of the Common Stock on the “trading day” preceding,
on or following the occurrence of an event, (i) that trading day shall be deemed
to commence immediately after the regular scheduled closing time of trading on
the Nasdaq Global Select Market or, if trading is closed at an earlier time,
such earlier time and (ii) that trading day shall end at the next regular
scheduled closing time, or if trading is closed at an earlier time, such earlier
time (for the avoidance of doubt, and as an example, if the Market Price is to
be determined as of the last trading day preceding a specified event and the
closing time of trading on a particular day is 4:00 p.m. and the specified event
occurs at 5:00 p.m. on that day, the Market Price would be determined by
reference to such 4:00 p.m. closing price).
 
“Ordinary Cash Dividends” means a cash dividend on shares of Common Stock out of
surplus or net profits legally available therefor (determined in accordance with
generally accepted accounting principles in effect from time to time).
 
“Person” means a natural person, company, government, or political subdivision,
agency, or instrumentality of a government.
 
“Per Share Fair Market Value” has the meaning set forth in Section 13(B).
 
“Pro Rata Repurchases” means any purchase of shares of Common Stock by the
Company or any Affiliate thereof pursuant to (A) any tender offer or exchange
offer subject to Section 13(e) or 14(e) of the Exchange Act or Regulation 14E
promulgated thereunder or (B) any other offer available to substantially all
holders of Common Stock, in the case of both (A) or (B), whether for cash,
shares of capital stock of the Company, other securities of the Company,
evidences of indebtedness of the Company or any other Person or any other
property (including, without limitation, shares of capital stock, other
securities or evidences of indebtedness of a subsidiary), or any combination
thereof, effected while this Warrant is outstanding.  The “Effective Date” of a
Pro Rata Repurchase shall mean the date of acceptance of shares for purchase or
exchange by the Company under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata Repurchase that
is not a tender or exchange offer.
 
 
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“Regulatory Approvals” means all authorizations, approvals or permits, if any,
of any federal or state governmental authority or regulatory body that are
required in order for the Warrantholder to exercise this Warrant for shares of
Common Stock and to own such Common Stock without the Warrantholder being in
violation of applicable law, rule or regulation.
 
“SEC” means the Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.
 
“trading day” means (A) if the shares of Common Stock are not traded on any
national or regional securities exchange or association or over-the-counter
market, a business day or (B) if the shares of Common Stock are traded on any
national or regional securities exchange or association or over-the-counter
market, a business day on which such relevant exchange or quotation system is
scheduled to be open for business and on which the shares of Common Stock (i)
are not suspended from trading on any national or regional securities exchange
or association or over-the-counter market for any period or periods aggregating
one half hour or longer; and (ii) have traded at least once on the national or
regional securities exchange or association or over-the-counter market that is
the primary market for the trading of the shares of Common Stock.
 
“Warrant” means this Warrant, issued pursuant to the Exchange Agreement.
 
“Warrantholder” has the meaning set forth in Section 2.
 
“Warrant Shares” has the meaning set forth in Section 2.
 
ARTICLE VII. Number of Warrant Shares; Exercise Price.  This certifies that, for
value received, Elm Ridge Capital Management LLC or its permitted assigns (the
“Warrantholder”) is entitled, upon the terms and subject to the conditions
hereinafter set forth, to acquire from the Company, in whole or in part, after
the receipt of all applicable Regulatory Approvals, if any, up to an aggregate
of 7,775,631 of fully paid and nonassessable shares of Common Stock, at a
purchase price per share of Common Stock equal to the Exercise Price.  The
number of shares of Common Stock (the “Warrant Shares”) and the Exercise Price
are subject to adjustment as provided herein, and all references to “Common
Stock,” “Warrant Shares” and “Exercise Price” herein shall be deemed to include
any such adjustment or series of adjustments.
 
ARTICLE VIII. Exercise of Warrant; Term.  Subject to Section 2, to the extent
permitted by applicable law, rule and regulation, the right to purchase the
Warrant Shares represented by this Warrant is exercisable, in whole or in part
by the Warrantholder, at any time or from time to time after September 30, 2012,
but in no event later than 5:00 p.m., New York City time on August 22, 2013 (the
“Expiration Time”), by (A) the surrender of this Warrant and Notice of Exercise
annexed hereto, duly completed and executed on behalf of the Warrantholder, at
the principal executive office of the Company located at the address set forth
in Section 20 (or such other office or agency of the Company in the United
States as it may designate by notice in writing to the Warrantholder at the
address of the Warrantholder appearing on the books of the Company), and (B)
payment of the Exercise Price for the Warrant Shares thereby purchased by
tendering in cash, by certified or cashier’s check payable to the order of the
Company, or by wire transfer of immediately available funds to an account
designated by the Company.  Notwithstanding anything to the contrary in this
Warrant, in the event that the Company consummates any Business Combination, a
sale of all or substantially all of its assets or any similar transaction, the
Company shall notify the Warrantholder of such event no less than ten (10)
business days prior to the effective date of such transaction and this Warrant
shall become exercisable without limitation prior to such transaction in such
manner as may be necessary to afford the Warrantholder the right to exercise the
Warrant prior to such transaction and participate in such transaction as a
holder of the exercised portion of the Warrant Shares.
 
 
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If the Warrantholder does not exercise this Warrant in its entirety, the
Warrantholder will be entitled to receive from the Company within a reasonable
time, and in any event not exceeding three business days, a new warrant in
substantially identical form for the purchase of that number of Warrant Shares
equal to the difference between the number of Warrant Shares subject to this
Warrant and the number of Warrant Shares as to which this Warrant is so
exercised.  Notwithstanding anything in this Warrant to the contrary, the
Warrantholder hereby acknowledges and agrees that its exercise of this Warrant
for the Warrant Shares is subject to the condition that the Warrantholder will
have first received any applicable Regulatory Approvals.
 
ARTICLE IX. Issuance of Warrant Shares; Authorization; Listing.  Certificates
for the Warrant Shares issued upon exercise of this Warrant will be issued in
such name or names as the Warrantholder may designate and will be delivered to
such named Person or Persons within a reasonable time, not to exceed three
business days after the date on which this Warrant has been duly exercised in
accordance with the terms of this Warrant.  The Company hereby represents and
warrants that any Warrant Shares issued upon the exercise of this Warrant in
accordance with the provisions of Section 3 will be duly and validly authorized
and issued, fully paid and nonassessable and free from all taxes, liens and
charges (other than liens or charges created by the Warrantholder, income and
franchise taxes incurred in connection with the exercise of the Warrant or taxes
in respect of any transfer occurring contemporaneously therewith).  The Company
agrees that the Warrant Shares so issued will be deemed to have been issued to
the Warrantholder as of the close of business on the date on which this Warrant
and payment of the Exercise Price are delivered to the Company in accordance
with the terms of this Warrant, notwithstanding that the stock transfer books of
the Company may then be closed or certificates representing such Warrant Shares
may not be actually delivered on such date.  The Company will at all times
reserve and keep available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this Warrant, the
aggregate number of Warrant Shares then issuable upon exercise of this Warrant
at any time.  The Company will (A) procure, at its sole expense, the listing of
the Warrant Shares issuable upon exercise of this Warrant at any time, subject
to issuance or notice of issuance, on all principal stock exchanges on which the
Common Stock is then listed or traded and (B) maintain such listings of such
Warrant Shares at all times after issuance.  The Company will use commercially
reasonable efforts to ensure that the Warrant Shares may be issued without
violation of any applicable law or regulation or of any requirement of any
securities exchange on which the Warrant Shares are listed or traded.
 
ARTICLE X. No Fractional Warrant Shares or Scrip.  No fractional Warrant Shares
or scrip representing fractional Warrant Shares shall be issued upon any
exercise of this Warrant.  In lieu of any fractional Warrant Share to which the
Warrantholder would otherwise be entitled, the Warrantholder shall be entitled
to receive a cash payment equal to the Market Price of the Common Stock on the
last trading day preceding the date of exercise less the pro-rated Exercise
Price for such fractional share.
 
ARTICLE XI. No Rights as Shareholders; Transfer Books.  This Warrant does not
entitle the Warrantholder to any voting rights or other rights as a shareholder
of the Company prior to the date of exercise hereof.  The Company will at no
time close its transfer books against transfer of this Warrant in any manner
which interferes with the timely exercise of this Warrant.
 
 
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ARTICLE XII. Charges, Taxes and Expenses.  Issuance of certificates for the
Warrant Shares to the Warrantholder upon the exercise of this Warrant shall be
made without charge to the Warrantholder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company.
 
ARTICLE XIII. Transfer/Assignment.  Subject to the following paragraph, this
Warrant and all rights hereunder are transferable, in whole or in part, on the
books of the Company by the registered holder hereof in person or by duly
authorized attorney, and a new warrant shall be made and delivered by the
Company, of the same tenor and date as this Warrant but registered in the name
of one or more transferees, upon surrender of this Warrant, duly endorsed, to
the office or agency of the Company described in Section 3.  All expenses (other
than stock transfer taxes) and other charges payable in connection with the
preparation, execution and delivery of the new warrants pursuant to this Section
8 shall be paid by the Company.
 
The Warrant and the Warrant Shares have not been registered under the Securities
Act or under any state securities laws.  The Warrantholder is (A) acquiring the
Warrant pursuant to an exemption from registration under the Securities Act and
(B) shall not sell or otherwise dispose of the Warrant or the Warrant Shares,
except in compliance with the registration requirements or exemption provisions
of the Securities Act and any applicable United States securities laws.
 
 
All certificates or other instruments representing the Warrant and the Warrant
Shares will bear a legend substantially to the following effect:
 
 
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER ANY APPLICABLE STATE
SECURITIES LAW.  THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,
IF REQUESTED, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”
 
 
In the event that any of the Warrant or the Warrant Shares become registered
under the Securities Act or are eligible to be transferred without restriction
in accordance with Rule 144 or another exemption from registration under the
Securities Act, any new such warrant or warrants, or other instruments
representing this Warrant or the Warrant Shares, shall be issued without the
legend in this Section 8; provided that the Warrantholder surrenders to the
Company this Warrant or any other previously issued certificates or other
instruments in compliance with Section 9.
 
ARTICLE XIV. Exchange and Registry of Warrant.  This Warrant is exchangeable,
upon the surrender hereof by the Warrantholder to the Company, for a new warrant
or warrants of like tenor and representing the right to purchase the same
aggregate number of Warrant Shares.  The Company shall maintain a registry
showing the name and address of the Warrantholder as the registered holder of
this Warrant.  This Warrant may be surrendered for exchange or exercise in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
 
 
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ARTICLE XV. Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of a bond, indemnity or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
Warrant Shares as provided for in such lost, stolen, destroyed or mutilated
Warrant.
 
ARTICLE XVI. Non-Business Days.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a business day, then such action may be taken or such right may be exercised
on the next succeeding day that is a business day.
 
ARTICLE XVII. Rule 144 Information.  The Company covenants that it will use its
commercially reasonable efforts to timely file all reports and other documents
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations promulgated by the SEC thereunder (or, if the Company is
not required to file such reports, it will, upon the request of any
Warrantholder, make publicly available such information as necessary to permit
sales pursuant to Rule 144 under the Securities Act), and it will use
commercially reasonable efforts to take such further action as any Warrantholder
may reasonably request, in each case to the extent required from time to time to
enable such holder to, if permitted by the terms of this Warrant and the
Exchange Agreement, sell this Warrant without registration under the Securities
Act within the limitation of the exemptions provided by (A) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (B) any
successor rule or regulation hereafter adopted by the SEC.  Upon the written
request of any Warrantholder, the Company will deliver to such Warrantholder a
written statement that it has complied with such requirements.
 
ARTICLE XVIII. Adjustments and Other Rights.  The Exercise Price and the number
of Warrant Shares issuable upon exercise of this Warrant shall be subject to
adjustment from time to time as follows; provided, that if more than one
subsection of this Section 13 is applicable to a single event, the subsection
shall be applied that produces the largest adjustment and no single event shall
cause an adjustment under more than one subsection of this Section 13 so as to
result in duplication:
 
(a)           Stock Splits, Subdivisions, Reclassifications or Combinations.  If
the Company shall (i) declare and pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of
shares,  (iii) combine or reclassify the outstanding shares of Common Stock into
a smaller number of shares, or (iv) complete any similar transaction, the number
of Warrant Shares issuable upon exercise of this Warrant at the time of the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the Warrantholder after such date shall be entitled to purchase the
number of shares of Common Stock which such holder would have owned or been
entitled to receive in respect of the shares of Common Stock subject to this
Warrant after such date had this Warrant been exercised immediately prior to
such date.  In such event, the Exercise Price in effect at the time of the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to the number
obtained by dividing (x) the product of (1) the number of Warrant Shares
issuable upon the exercise of this Warrant before such adjustment and (2) the
Exercise Price in effect immediately prior to the record or effective date, as
the case may be, for the dividend, distribution, subdivision, combination or
reclassification giving rise to this adjustment by (y) the new number of Warrant
Shares issuable upon exercise of the Warrant determined pursuant to the
immediately preceding sentence.  In the event that the Company makes an
extraordinary dividend (e.g., a dividend of cash, stock or other assets of the
Company other than as contemplated in this Section 13(A) and/or other than in
the ordinary course of the Company’s business and consistent with the Company’s
past dividend practices, which, for the avoidance of doubt, shall not include
any cash dividends to the extent the aggregate per share dividends paid on the
outstanding Common Stock in any quarter exceeds $0.089 per share, as adjusted
for any stock split, stock dividend, reverse stock split, reclassification or
similar transaction), the Exercise Price then in effect shall be reduced
proportionately; provided, that, for the avoidance of doubt, any dividend that
is required to be made pursuant to the applicable certificate of designation of
any preferred securities of the Company shall not be considered an
“extraordinary dividend”.
 
 
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(b)           Business Combinations.  In case of any Business Combination or
reclassification of Common Stock (other than a reclassification of Common Stock
referred to in Section 13(A)), the Warrantholder’ s right to receive Warrant
Shares upon exercise of this Warrant shall be converted into the right to
exercise this Warrant to acquire the number of shares of stock or other
securities or property (including cash) which the Common Stock issuable (at the
time of such Business Combination or reclassification) upon exercise of this
Warrant immediately prior to such Business Combination or reclassification would
have been entitled to receive upon consummation of such Business Combination or
reclassification; and in any such case, if necessary, the provisions set forth
herein with respect to the rights and interests thereafter of the Warrantholder
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to the Warrantholder’ s right to exercise this Warrant in
exchange for any shares of stock or other securities or property pursuant to
this paragraph.  In determining the kind and amount of stock, securities or the
property receivable upon exercise of this Warrant following the consummation of
such Business Combination, if the holders of Common Stock have the right to
elect the kind or amount of consideration receivable upon consummation of such
Business Combination, then the consideration that the Warrantholder shall be
entitled to receive upon exercise shall be deemed to be the types and amounts of
consideration received by the majority of all holders of the shares of common
stock that affirmatively make an election (or of all such holders if none make
an election).
 
(c)           Rounding of Calculations; Minimum Adjustments.  All calculations
under this Section 13 shall be made to the nearest one-tenth (1/10th) of a cent
or to the nearest one-hundredth (1/100th) of a share, as the case may be.  Any
provision of this Section 13 to the contrary notwithstanding, no adjustment in
the Exercise Price or the number of Warrant Shares into which this Warrant is
exercisable shall be made if the amount of such adjustment would be less than
$0.01 or one-tenth (1/10th) of a share of Common Stock, but any such amount
shall be carried forward and an adjustment with respect thereto shall be made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
$0.01 or 1/10th of a share of Common Stock, or more.
 
(d)           Timing of Issuance of Additional Common Stock Upon Certain
Adjustments.  In any case in which the provisions of this Section 13 shall
require that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event (i)
issuing to the Warrantholder of this Warrant exercised after such record date
and before the occurrence of such event the additional shares of Common Stock
issuable upon such exercise by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such exercise before
giving effect to such adjustment and (ii) paying to such Warrantholder any
amount of cash in lieu of a fractional share of Common Stock; provided, however,
that the Company upon request shall deliver to such Warrantholder a due bill or
other appropriate instrument evidencing such Warrantholder’s right to receive
such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.
 
 
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(e)           Other Events.  For so long as Elm Ridge Value Partners, L.P., Elm
Ridge Offshore Master Fund, Ltd. or any of their Affiliates or permitted
transferees holds this Warrant or any portion thereof, if any event occurs as to
which the provisions of this Section 13 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly and adequately protect the purchase rights of
the Warrant in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make such adjustments in the
application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith opinion of the
Board of Directors, to protect such purchase rights as aforesaid.  The Exercise
Price or the number of Warrant Shares into which this Warrant is exercisable
shall not be adjusted in the event of a change in the par value of the Common
Stock, a change in the jurisdiction of incorporation of the Company or an
issuance of Common Stock by the Company at a price below the Exercise Price.
 
(f)            Statement Regarding Adjustments.  Whenever the Exercise Price or
the number of Warrant Shares into which this Warrant is exercisable shall be
adjusted as provided in this Section 13, the Company shall forthwith file at the
principal office of the Company a statement showing in reasonable detail the
facts requiring such adjustment and the Exercise Price that shall be in effect
and the number of Warrant Shares into which this Warrant shall be exercisable
after such adjustment, and the Company shall also cause a copy of such statement
to be sent by mail, first class postage prepaid, to each Warrantholder at the
address appearing in the Company’s records.
 
(g)           Proceedings Prior to Any Action Requiring Adjustment.  As a
condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 13, the Company shall take any action which
may be necessary, including obtaining regulatory, New York Stock Exchange,
Nasdaq Global Select Market or other applicable national securities exchange or
shareholder approvals or exemptions, in order that the Company may thereafter
validly and legally issue as fully paid and nonassessable all shares of Common
Stock that the Warrantholder is entitled to receive upon exercise of this
Warrant pursuant to this Section 13.
 
(h)          Adjustment Rules.  Any adjustments pursuant to this Section 13
shall be made successively whenever an event referred to herein shall occur.  If
an adjustment in Exercise Price made hereunder would reduce the Exercise Price
to an amount below par value of the Common Stock, then such adjustment in
Exercise Price made hereunder shall reduce the Exercise Price to the par value
of the Common Stock.
 
ARTICLE XIX. No Impairment.  The Company will not, by amendment of its Articles
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in taking of all such action as may be necessary or appropriate in
order to protect the rights of the Warrantholder.
 
ARTICLE XX. Governing Law. This Warrant will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.  To the extent permitted by
applicable law, each of the Company and the Warrantholder hereby unconditionally
waives trial by jury in any civil legal action or proceeding relating to the
Warrant or the transactions contemplated hereby or thereby.
 
ARTICLE XXI. Binding Effect.  This Warrant shall be binding upon any successors
or assigns of the Company.
 
ARTICLE XXII. Amendments.  This Warrant may be amended and the observance of any
term of this Warrant may be waived only with the written consent of the Company
and the Warrantholder.
 
 
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ARTICLE XXIII. Prohibited Actions.  The Company agrees that it will not take any
action which would entitle the Warrantholder to an adjustment of the Exercise
Price if the total number of shares of Common Stock issuable after such action
upon exercise of this Warrant, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon the exercise of
all outstanding options, warrants, conversion and other rights, would exceed the
total number of shares of Common Stock then authorized by its Articles of
Incorporation.
 
ARTICLE XXIV. Notices.  Any notice, request, instruction or other document to be
given hereunder by any party to the other will be in writing and will be deemed
to have been duly given (a) on the date of delivery if delivered personally, or
by facsimile, upon confirmation of receipt, or (b) on the second business day
following the date of dispatch if delivered by a recognized next day courier
service.  All notices hereunder shall be delivered in accordance with the
information provided below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice.
 
If to the Company:
 

 
United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia  30514
Attention: Rex S. Schuette, EVP and Chief Financial Officer
Phone: (706) 781-2265
Facsimile: (706) 745-9046

If to the Warrantholder, at the address of such Warrantholder as listed in the
registry maintained by the Company pursuant to Section 9, or to such other
address as the Warrantholder shall have designated by notice given to the
Company.

 
ARTICLE XXV. Entire Agreement.  This Warrant, the forms attached hereto and the
Exchange Agreement (including all documents incorporated therein), contain the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or undertakings with
respect thereto.
 
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Form of Notice of Exercise

Date: __________ __, 20__
 
TO:          United Community Banks, Inc.
 
RE:           Election to Purchase Common Stock
 
The undersigned, pursuant to the provisions set forth in the attached Warrant,
hereby agrees to subscribe for and purchase the number of shares of the Common
Stock set forth below covered by such Warrant.  The undersigned, in accordance
with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise Price
for such shares of Common Stock in the manner set forth below.  A new warrant
evidencing the remaining shares of Common Stock covered by such Warrant, but not
yet subscribed for and purchased, if any, should be issued in the name set forth
below.
 

 
1.  Number of Shares of Common Stock:
     
 
2.  Method of Payment of Exercise Price:
 
 
3.  Aggregate Exercise Price:
 

 
 
 

  Holder:                  By:     Name:      Title:  

 
 
 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly
authorized officer and delivered effective as of the date first above written.
 
 
 

    UNITED COMMUNITY BANKS, INC.                     By:          Name:        
Title: