Prepared by Kilpatrick Stockton EDGAR Services


EXHIBIT 10.16


Prepared
7/8/99     





©1999 Bank Compensation
Strategies


This document is provided to assist your legal counsel in documenting
your specific arrangement. It is not a form to be signed, nor is it to be construed as legal advice. Failure to accurately document
your arrangement could result in significant losses, whether from claims of those participating in the arrangement, from the heirs
and beneficiaries of participants, or from regulatory agencies such as the Internal Revenue Service and the Department of Labor.
License is hereby granted to your legal counsel to use these materials in documenting solely your arrangement.





PEOPLES BANK OF FANNIN COUNTY

EXECUTIVE REVENUE NEUTRAL RETIREMENT
AGREEMENT




            THIS
AGREEMENT is made this 2nd day of August, 1999, by and between the PEOPLES BANK OF FANNIN COUNTY, located in Blue Ridge, Georgia
(the “Bank”), and THOMAS C. GILLILAND (the “Executive”).  This agreement shall be effective as of
January 1, 1999.


INTRODUCTION


            To
attract, retain and reward quality management, and to provide a potentially higher level of retirement income, the Bank is willing
to provide the Executive with this Executive Revenue Neutral Retirement Agreement.  The Bank will pay the benefits from its
general assets.


AGREEMENT


            The
Executive and the Bank agree as follows:




Article 1

Definitions




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




           
1.1            “Adjustment Rate” shall mean the figure
equal to one minus the Bank’s highest marginal Federal and State Income tax rate for the current calendar year.




           
1.2            “Change of Control” shall mean any of the
following:




(A)            any
person (as such term is used in Sections 13d and 14d-2 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), other than the Corporation, a subsidiary of the Corporation, an employee benefit plan (or related trust) of the
Corporation or a direct or indirect subsidiary of the Corporation, or affiliates of the Corporation (as defined in Rule 12b-2 under
the Exchange Act), becomes the beneficial owner (as determined pursuant to Rule 13d-3 under the Exchange Act), directly or




 




   





indirectly, of securities of the Corporation representing more than 25% of the combined voting power of the Corporation's then
outstanding securities (other than a person owning 10% or more of the voting power of stock on the date hereof) or announces a
tender offer or exchange offer for securities of the Corporation representing more than 25% of the combined voting power of the
Corporation's then outstanding securities; or




(B)            the
liquidation or dissolution of the Corporation or the Bank or the occurrence of, or execution of an agreement providing for a sale
of all or substantially all of the assets of the Corporation or the Bank to an entity which is not a direct or indirect subsidiary
of the Corporation; or




(C)            the
occurrence of, or execution of an agreement providing for a reorganization, merger, consolidation or other similar transaction or
connected series of transactions of the Corporation as a result of which either (a) the Corporation does not survive or (b)
pursuant to which shares of the Corporation common stock (“Common Stock”) would be converted into cash, securities or
other property, unless, in case of either (a) or (b), the holders of the Corporation
Common Stock immediately prior to such transaction will, following the consummation of the transaction, beneficially own, directly
or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in
the election of directors of the corporation surviving, continuing or resulting from such transaction; or




(D)            the
occurrence of, or execution of an agreement providing for a reorganization, merger, consolidation or similar transaction of the
Corporation, or before any connected series of such transactions, if upon consummation of such transaction or transactions, the
persons who are members of the Board of Directors of the Corporation immediately before such transaction cease or, in the case of
the execution of an agreement for such transaction or transactions, it is contemplated in such agreement that upon consummation
such persons would cease to constitute a majority of the Board of Directors of the Corporation or, in the case where the
Corporation does not survive in such transaction, of the corporation surviving, continuing or resulting from such transaction or
transactions; or




(E)            any
other event which is at any time designated as a “Change of Control” for purposes of this Agreement by a resolution
adopted by the Board of Directors of the Corporation with the affirmative vote of a majority of the non-employee directors in
office at the time the resolution is adopted; in the event any such resolution is adopted, the Change of Control event specified
thereby shall be deemed incorporated herein by reference and thereafter may not be amended, modified or revoked without the written
agreement of the Executive.




           
Notwithstanding anything else to the contrary set forth in this Agreement, if (i) an agreement is executed by the Corporation or
the Bank providing for any of the transactions or events constituting a Change of Control as defined herein, and the agreement
subsequently expires or is terminated without the transaction or event being consummated, and (ii) Executive’s employment did
not terminate during the period after the agreement and prior to such expiration




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or termination, for purposes of this Agreement it
shall be as though such agreement was never executed and no Change of Control event shall be deemed to have occurred as a result of
the execution of such agreement.




           
1.3            “Corporation” means United Community
Banks, Inc.




           
1.4            “Employment Date” means the date which the
Executive was first employed on a full-time basis by the Bank or the Corporation, or any subsidiary of the Bank or
Corporation.




           
1.5            “Excess Benefit Payment” means the
additional annual payment amount as a result of crediting interest to the Retirement Account as determined under Section 2.3 during
the post retirement years.  Interest shall be credited at the rate of 7% per annum compounded monthly.  This rate may be
changed prospectively upon approval by the Board of Directors of the Corporation.  For example, the annual payment on a
$100,000 Retirement Account, paid over 10 years without interest, would be $10,000. The annual payment with interest crested at 7
percent would equal $13,933, resulting in an Excess Benefit Payment of $3,933.




           
1.6            “Normal Retirement Benefits” means the
benefit described in Article 3.




           
1.7            “Normal Retirement Age” means the
Executive's 55th birthday.




           
1.8            “Normal Retirement Date” means the later
of the Normal Retirement Age or Termination of Employment.




           
1.9            “Plan Year” means each calendar year from
January 1 through December 31.  In the year of implementation, it shall commence with the effective date of this Agreement and
end on December 31, 1999.




           
1.10            “Retirement Account” means the account
maintained on the books of the Bank as described in Section 2.3.




           
1.11            “Simulated Investments” mean investments
specified by the Bank for use its measuring the Retirement Benefit.  Subject to Article 2, the Bank can change the Simulated
Investments only with the Executive's written agreement.  The Simulated Investments shall be of equal initial
amounts.




           
1.12            “Termination of Employment” means the
Executive ceases to be employed by the Bank or the Corporation or any subsidiary of the Bank or Corporation or their successor for
any reason other than death.




Article 2

Retirement Account


           
2.1            Simulated Investments.  The Bank shall establish
two simulated investments as of _____________, 1999 as follows:




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2.1.1           
Simulated Investment Number One shall track the cash surrender value of a portfolio of life insurance policies with an aggregate
single premium investment of $8,060,000 as detailed in Appendix A.  After tax earnings shall be based on the annual growth in
the cash surrender value (“CSV”) of these policies.  The annual growth in such CSV is calculated as
follows:




Total portfolio CSV at the end of the Plan Year

minus

Total portfolio CSV at the beginning of the Plan
Year


The following example will illustrate this calculation:

 


  



	
Portfolio CSV –12/31/99

	
$1,050,000


	
Portfolio CSV –12/31/98

	
$1,000,000


	
Simulated Investment Number One

            growth in
CSV for 1999


	
$50,000







  





For purposes of this calculation, if an individual covered by a simulated
life insurance policy as described in Appendix A dies during a Plan Year, the policy cash surrender value will be excluded from the
calculation of both the beginning of year and end of year portfolio cash, surrender values.




2.1.2           
Simulated Investment Number Two shall track the value of a simulated investment account comprised of both principal and accumulated
net after-tax interest earnings. Principal contributions to this account will be equal to premium contributions made to Simulated
Investment Number One and credited at the same time as premium contributions. Pre-tax interest earnings shall, be based on the
Federal Funds Rate. This rate shall be adjusted quarterly. Simulated Investment Number Two assumes the income tax rate to be the
Bank’s highest marginal tax rate for the current calendar year, and assumes that interest (net of tax) shall be compounded on
an annual basis at the end of each Plan Year.  The annual growth is calculated as follows:




Total account value at the end of the Plan Year

minus

Total account value at the beginning of the Plan
Year


The following example will illustrate this calculation:


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Account value – 12/31/99

	
$1,027,000


	
Account value – 12/31/98

	
$1,000,000


	
Simulated Investment Number Two

            Growth
for 1999


	
$27,000







  





            *Assumes
4.5 percent Federal Funds Rate and 40 percent tax bracket.




For purposes of this calculation, if an individual covered by a simulated life insurance policy as described in. Appendix A dies during a plan Year, the
principal and cumulative interest earnings associated with the premium, contributions from that policy will be excluded from the
calculation of both the beginning of year and end of year account values.




           
2.2            Allocated Earnings.  The earnings allocated to
the Executive’s Retirement Account shall equal the growth for the applicable Plan Year of Simulated Investment Number One
under Section 2.1.1 minus the growth for the applicable Plan Year of Simulated Investment Number Two under Section 2.1.2. 
This amount shall then be divided by the Adjustment Rate as defined in Section 1.1 and then multiplied by the allocation percentage
from Appendix B.  If the growth of Simulated Investment Number Two exceeds the growth of Simulated Investment Number One
(earnings deficit) for any Plan Year, no amount is allocated to the Executive's Retirement Account for that year.  In
addition, subsequent Allocated Earnings must first be reduced by the Executive’s allocated portion of the cumulative
remaining earnings deficit from prior years before allocation to the Executive's Retirement Account.




           
2.3            Retirement Account.  The Bank shall establish a
Retirement Account on its books far the Executive, which shall be equal to the cumulative Allocated Earnings (as determined under
Section 2.2) as of the end of the applicable Plan Year.




           
2.4            Statement of Accounts.  The Bank or its successor
shall provide to the Executive, within one hundred twenty (120) days after each Plan Year, a statement setting forth the Retirement
Account balance, as well as copies of all supporting documentation requested by the Executive showing the manner in which such
Retirement Account balance is calculated.




           
2.5            Accounting Device Only.  The Retirement Account
and Simulated Investments are solely devices far measuring amounts to be paid under this Agreement.  They are not a trust fund
of any kind.  The Executive is a general unsecured creditor of the Bank for the payment of benefits.  The benefits
represent the mere Bank promise to pay such benefits.  The Executive's rights are not subject in any manner to anticipation.
alienation, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive's creditors.




Article 3

Normal Retirement


           
3.1            Normal Retirement Benefit.  Subject to the
general limitations of Article 9, upon reaching the Normal Retirement Age while in full-time employment with the Bank, the




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Executive shall be entitled to both the primary and secondary retirement benefits described in Sections 3.1.1 and 3.1.2.




3.1.1           
Primary Normal Retirement
Benefit.  Commencing within one hundred twenty (120) days after the end of the Plan Year following the Executive's Normal
Retirement Date, the Bank shall pay the Primary Normal Retirement Benefit to the Executive which is equal to the Executive's
Retirement Account balance as of the end of the Plan Year immediately preceding the Executive’s Normal Retirement Date. The
Primary Normal Retirement Benefit: shall be paid over a fifteen (15) year period in equal annual installments.




3.1.2           
Secondary Normal Retirement Benefit.  Commencing within one hundred twenty (120) days following the end of the Plan
Year following the Executive's Normal Retirement Date, and continuing until the Executive's death, the Bank shall pay the Secondary
Normal Retirement Benefit to the Executive. The Secondary Normal Retirement Benefit shall be paid annually in an amount calculated
as follows:




(After-tax earnings for the Plan Year on Simulated Investment
Number One

minus

After-tax earnings for the Plan Year on Simulated Investment
Number Two)

divided

by the Adjustment Rate

multiplied

by the Allocation Percentage as determined by Appendix
B

minus

Excess Benefit Payment as defined in section 1.5




If
the after-tax earnings on Simulated Investment Number Two exceed the
after-tax earnings on Simulated Investment Number one (earnings deficit) for any Plan Year following the Executive's Normal
Retirement Date, no payment will be made under this section. In addition, subsequent payment under this section must first be
reduced by the cumulative remaining earnings deficit from prior years. Earnings shall be determined pursuant to the method set
forth in Section 2.1 hereof.




Article 4

Early Termination of Employment


            If the
Executive's Termination of Employment occurs prior to Normal Retirement Age, the Bank shall pay to the Executive the Primary Normal
Retirement Benefit as described in Section 3.1.1 and Secondary Normal Retirement Benefit as described in Section 3.1.2, subject to
the following vesting schedule:





  



	
Plan Years

	
Vested Percentage


	
0-4 years

	
0%


	
5 or more years

	
100%







  



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Payment of the Primary Normal Retirement Benefit shall be based on the
Executive’s Retirement Account balance as of the end of the Plan Year immediately preceding the Executive's Normal Retirement
Age, including any Allocated Earnings after the Executive's Termination of Employment.  Payments shall be made in 15 equal
annual installments commencing within one hundred twenty (120) days After the end of the Plan Year following the Executive's Normal
Retirement Age.  The Secondary Normal Retirement Benefit shall be paid annually as described in Section 3.1.2 commencing
within one hundred twenty (120) days after the end of the Plan Year following the Executive's Normal Retirement Age.




Article 5

Competition After Termination of Employment


            The
Executive shall forfeit his right to any further Primary Normal Retirement Benefit or Secondary Normal Retirement Benefit under
this Agreement if the Executive, after termination of employment, without the prior written consent of the Bank, engages in,
becomes interested in, directly or indirectly, as a sole proprietor, as a partner in a partnership, or as a substantial shareholder
in a corporation, or becomes associated with, in the capacity of an employee, director, officer, principal, agent, trustee or in
any other capacity whatsoever with any business enterprise providing services similar to those the Executive provides to the Bank
or its affiliates, or with any business enterprise providing or offering goods or services identical to or reasonably substitutable
for the corporation conducted in the trading area (a 50 mile radius) of the Bank.




Article 6

Change of Control


           
6.1            If the Executive is in full-tune employment with the Bank at
the date of a Change of Control, the Bank shall pay the Primary Normal Retirement Benefit and the Secondary Normal Retirement
Benefit described in Section 3.1.1 and 3.1.2 calculated as if the Executive has reached the Executive's Normal Retirement Age with
the Bank.  Payments of the Executive's Primary Normal Retirement Benefit shall be made in 15 equal annual installments
commencing with the Executive's Normal Retirement Date.  Payments of the Executive's Secondary Normal Retirement Benefit shall
be made in annual installments payable over the number of years from the Executive's Normal Retirement Date until the Executive's
expected mortality age of 85. Upon a Change of Control, no additional participants shall be added to the plan and to further
changes shall be made to the allocations set forth on Appendix B, except upon the death of an existing participant.




           
6.2            Notwithstanding the provisions of Section 6.1, the Bank shall
have the option to elect to pay to the Executive, in lieu of any of the benefits under this Agreement, a lump sum cash benefit
equal to 110% of the sum of (a) the Retirement Account Balance at the date of the Change of Control, and (b) the present value of
the Secondary Normal Retirement Benefit from the date of the Change of Control through the Executive's age 85.  This benefit
will be calculated using (1) the policy crediting rates and mortality rates in effect for Simulated Investment Number One at the
date of the Change of Control, (2) the Federal Funds Rate in effect for Simulated Investment Number Two at the date of the Change
of Control, and (3) the Bank's highest marginal tax rate for the calendar year preceding the date of the Change of Control. 
The




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discount rate fox purposes of calculating this present value shall be the bank's prime rate of interest.




Article 7

Death Benefits


            Upon the
Executive's death, the Bank shall pay to the Executive's beneficiary the Executive's Retirement Account balance as of the end of
the Plan Year immediately preceding the Executive's death.  The Bank shall pay the death benefit as calculated above to the
beneficiary in a lump sum within one hundred twenty (120) days following the Executive's death.




Article 8

Beneficiaries


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




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




Article 9

General Limitations


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




(a)            Gross
negligence or gross neglect of duties;




(b)           
Conviction of a felony or a gross misdemeanor involving moral turpitude; or




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(c)            Fraud,
disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executive's
employment and resulting in an adverse material effect on the Bank.




            With
respect to clauses (a) and (c) above, the Executive shall not be considered Terminated for Cause until the Bank has delivered
notice to the Executive specifying the conduct deemed to constitute cause and allowed a reasonable time (not less than 30 days)
within which the Executive may take corrective action.




           
9.2            Suicide or Misstatement.  Notwithstanding any
provision of this Agreement to the contrary, the Bank shall not pay any benefit under this Agreement if the Executive commits
suicide within two years after the date of this Agreement, or if the Executive has made any material misstatement of fact on any
application for life insurance purchased by the Bank.




Article 10

Claims and Review Procedures


           
10.1            Claims Procedure.  The Bank shall notify any
person or entity that makes a claim against the Agreement (the “Claimant”) in writing, within ninety (90) days of
Claimant's written application for benefits, of his or her eligibility or non-eligibility for benefits under the Agreement. 
If the Bank determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific
reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) a
description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of
why it is needed, and (4) an explanation of the Agreement's claims review procedure and other appropriate information as to the
steps to be taken if the Claimant wishes to have the claim reviewed.  If the Bank determines that there are special
circumstances requiring additional time to make a decision, the Bank shall notify the Claimant of the special circumstances and the
date by which a decision is expected to be made, and may extend the time for up to an additional ninety (90) days.




           
10.2            Review Procedure.  If the Claimant is determined
by the Bank not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different
benefits, the Claimant shall have the opportunity to have such claim reviewed by the Bank by filing a petition for review with the
Bank within sixty (60) days after receipt of the notice issued by the Bank. Said petition shall state the specific reasons which
the Claimant believes entitles him or her to benefits or to greater or different benefits.  Within sixty (60) days after
receipt by the Bank of the petition, the Bank shall afford the Claimant (and counsel, if any) as opportunity to present his or her
position to the Bank verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent
documents.  The Bank shall notify the Claimant of its decision in writing within the 60-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the Claimant and the specific provisions of the Agreement
on which the decision is based.  If, because of the need for a hearing, the 60 day period is not sufficient, the decision may
be deferred for up to another sixty (60) days at the election of the Bank, but notice of this deferral shall be given to the
Claimant.




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Article 11

Amendments and Termination


            This
Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive.




Article 12

Administration


           
12.1            Administration.  Unless otherwise determined by
the Bank's Board of Directors (“Board”), the Board or its designee shall be the named fiduciary and shall act far the
Bank under this Agreement.




           
12.2            Powers of the Bank.  The Bank shall have all
powers necessary to administer this Agreement, including, without limitation, powers:




(a)            to
interpret the provisions of the Agreement; and




(b)            to
establish rules for the administration of the Agreement and to prescribe any forms required to administer the Agreement.




           
12.5            Actions of the Bank.  All determinations,
interpretations, rules and decisions of the Bank shall be conclusive and binding upon all persons having or claiming to have any
interest or right under this Agreement.




Article 13

Miscellaneous


           
13.1            Binding Effect.  This Agreement shall bind the
Executive and the Bank, and their beneficiaries, survivors, executors, administrators and transferees.




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




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




           
13.4            Applicable Law.  The Agreement and all rights
hereunder shall be governed by the laws of the State of Georgia, except to the extent preempted by the laws of the United States of
America.




           
13.5            Unfunded Arrangement.  The Executive is a
general unsecured creditor of the Bank for the payment of benefits under this Agreement.  The benefits represent the mere
promise by the Bank to pay such benefits. The rights to benefits are not subject is any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life or any
other asset held in




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connection with this Agreement is a general asset of the Bank to which the Executive has no preferred or
secured claim.




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




		



BANK:

PEOPLES BANK OF FANNIN COUNTY




By     
/s/ Jane W. Callihan                                




Title        
EVP                                                   






EXECUTIVE:




 /s/ Thomas C. Gilliland                                   

  Thomas C. Gilliland


    







 

 

 


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Appendix A

Simulated Policy Data



  

	
Insured

	
Insurer

	
Policy No.

	
Product Type

	
Issue Date

	
Classification


	
Gilliland, Thomas C.

	
GW

	
86000151

	
BCSULI

	
12/31/98

	
Standard NS







  





GW = Great-West Life & Annuity Insurance Company






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Appendix B



  

	
Executives

	
Initial Points

	
Initial Allocation Percent*


			
	
Thomas C. Gilliland

	
13.75

	
13.75%


	
Other Participants

	
86.25

	
86.25%


			
	
Total

	
100.00

	
100.00%







  





*If an Executive included in the numbers above dies during a Plan Year, the
Points allocated to that person shall be eliminated and the allocated percentages shall be recalculated for that Plan Year and all
subsequent Plan Years.




For example, assume the following Executives are in the plan with the
following Points and Initial Allocation Percent:





  



	
Executives

	
Points

	
Initial Allocation Percent


	
Executive A

	
50

	
50%


	
Executive B

	
30

	
30%


	
Executive C

	
20

	
20%


			
	
Total

	
100

	
100%







  





Executive A dies, the Points remain the same, but the Allocation Percent
changes, as follows:





  



	
Executives

	
Points

	
Revised Allocation Percent


	
Executive B

	
30

	
60% (390 ÷ 50)


	
Executive C

	
20

	
40% (20 ÷ 50)


			
	
Total

	
50

	
100%










  


 

 


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