EX-10.9 CHANGE OF CONTROL SEVERANCE AGREEMENT



 







Exhibit 10.9




UNITED COMMUNITY BANKS, INC.

CHANGE IN CONTROL SEVERANCE AGREEMENT




     THIS AGREEMENT (the “Agreement”), made and entered into as of this 28 day of February 2006, by
and between UNITED COMMUNITY BANKS, INC., a Georgia Corporation (the “Company”), and GUY W. FREEMAN
(“Executive”).



W I T N E S S E T H:




     WHEREAS, Executive is a key employee of the Company and an integral part of the Company’s
management; and



     WHEREAS, the Company desires to assure both itself and its key employees of continuity of
management and objective judgment in the event of any Change in Control of the Company, and to
induce its key employees to remain employed by the Company; and



     WHEREAS, the Company desires to provide certain compensation and benefits to Executive in the
event of the termination of his employment under certain circumstances; and



     WHEREAS, the Company and Executive have determined it is in their mutual best interests to
enter into this Agreement;



     NOW, THEREFORE, the parties hereby agree as follows:


1. TERM OF AGREEMENT.




     This Agreement shall commence on the date hereof and shall terminate on the earlier of
Executive’s termination of employment without entitlement to any benefits hereunder or the date
Executive attains age 75; provided, however, the Agreement may be terminated prior to such time by
mutual written agreement of Executive and the Company. This Agreement shall not be considered an
employment agreement and in no way guarantees Executive the right to continue in the employment of
the Company or its affiliates. Executive’s employment is considered employment at will, subject to
Executive’s right to receive payments and benefits upon certain terminations of employment as
provided below.


2. DEFINITIONS. For purposes of this Agreement, the following terms shall have the
meanings specified below:




     2.1 “Base Salary.” Executive’s annual salary in effect on his Date of Termination or,
if greater, Executive’s highest rate of annual salary in effect during the six-month period prior
to his Date of Termination.



     2.2 “Board” or “Board of Directors.” The Board of Directors of the Company,
or its successor.



 









 





     2.3 “Cause.” The involuntary termination of Executive by the Company for the
following reasons shall constitute a termination for Cause:



          (a) If termination shall have been the result of an act or acts by Executive which have been
found in an applicable court of law to constitute a felony (other than traffic-related offenses);




          (b) If termination shall have been the result of an act or acts by Executive which are in the
good faith judgment of the Board determined to be in violation of law or of policies of the Company
and which result in demonstrably material injury to the Company;




          (c) If termination shall have been the result of an act or acts of proven or undenied
dishonesty by Executive resulting or intended to result directly or indirectly in significant gain
or personal enrichment to Executive at the expense of the Company; or




          (d) Upon the willful and continued failure by Executive substantially to perform his duties
with the Company (other than any such failure resulting from incapacity due to mental or physical
illness not constituting a Disability, as defined herein), after a demand in writing for
substantial performance is delivered by the Board or President, which demand specifically
identifies the manner in which the Board or President believes that Executive has not substantially
performed his duties, and such failure results in demonstrably material injury to the Company.




          With respect to clauses (b), (c) or (d) above of this Section, Executive shall not be deemed
to have been involuntarily terminated for Cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of
the entire membership of the Board at a meeting of the Board (after reasonable notice to Executive
and an opportunity for him, together with his counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, Executive was guilty of conduct set forth above in clauses
(b), (c) or (d) and specifying the particulars thereof in detail. For purposes of this Agreement,
no act or failure to act by Executive shall be deemed to be “willful” unless done or omitted to be
done by Executive not in good faith and without reasonable belief that Executive’s action or
omission was in the best interests of the Company.




     2.4 “Change in Control.” A Change in Control of the Company means any one of the
following events:




     (a) The acquisition (other than from the Company) by any Person of Beneficial Ownership
of twenty percent (20%) or more of the combined voting power of the Company’s then
outstanding voting securities; provided, however, that for purposes of this definition,
Person shall not include any person who on June 1, 2001 owned ten percent (10%) or more of
the Company’s outstanding securities, and a Change in Control shall not be deemed to occur
solely because twenty percent (20%) or more of the combined voting power of the Company’s
then outstanding securities is acquired by (i) a trustee or other fiduciary holding
securities under one (1) or more employee benefit plans maintained by the Company or any of
its subsidiaries, or (ii) any corporation, which, immediately prior to



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such acquisition, is owned directly or indirectly by the shareholders of the Company in the
same proportion as their ownership of stock in the Company immediately prior to such
acquisition.




     (b) Approval by shareholders of the Company of (1) a merger or consolidation involving
the Company if the shareholders of the Company, immediately before such merger or
consolidation do not, as a result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the combined voting power of the
voting securities of the Company outstanding immediately before such merger or
consolidation, or (2) a complete liquidation or dissolution of the Company or an agreement
for the sale or other disposition of all or substantially all of the assets of the Company.




     (c) A change in the composition of the Board such that the individuals who, as of June
1, 2001, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, for purposes of this definition that any individual who becomes a member of the
Board subsequent to June 1, 2001 whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were a member of the
Incumbent Board; but, provided, further, that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest, or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board, shall not be so considered as a member of the Incumbent Board.



     2.5 “CIC Severance Period.” A period equal to the lesser of (i) 36 months from
Executive’s Date of Termination or (ii) the number of months (rounded to the nearest month) from
Executive’s Date of Termination until the date he attains age 75.



     2.6 “Code.” The Internal Revenue Code of 1986, as it may be amended from time to
time.



     2.7 “Company.” United Community Banks, Inc., a Georgia corporation, or any successor
to its business and/or assets.



     2.8 “Date of Termination.” The date specified in the Notice of Termination (which,
unless otherwise required by this Agreement, may be immediate) as the date upon which the
Executive’s employment with the Company is to cease. In the case of termination by Executive for
Good Reason, the Date of Termination shall not be less than thirty (30) days nor more than sixty
(60) days from the date the notice of termination is given.



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     2.9 “Disability.” Disability shall have the meaning ascribed to such term in the
Company’s long-term disability plan covering the Executive, or in the absence of such plan, a
meaning consistent with Section 22(e)(3) of the Code.



     2.10 “Good Reason.” A Good Reason for termination by Executive of Executive’s
employment shall mean the occurrence (without the Executive’s express written consent) during the
6-month period prior to, or within the eighteen (18) month period following, the date of a Change
in Control of any one of the following acts by the Company, or failures by the Company to act,
unless, in the case of any act or failure to act described in paragraphs (a), (c), or (d) below,
such act or failure to act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof (the date 6 months prior to the date of the Change in Control
is referred to in this Section 2.10 as the “Change in Control Date”):



          (a) the substantial adverse change in Executive’s responsibilities at the Company from those
in effect immediately prior to the Change in Control Date; or




          (b) the required relocation of Executive to a location outside of the market area of the
Company on the Change in Control Date; or




          (c) a material reduction from those in effect on the Change in Control Date in the levels of
coverage of Executive under the Company’s director and officer liability insurance policy or
indemnification commitments; or




          (d) after the Change in Control Date, a reduction in Executive’s Base Salary, a reduction in
his incentive compensation or the failure by the Company to continue to provide Executive with
benefits substantially similar to those enjoyed by Executive under any of the Company’s pension,
deferred compensation, life insurance, medical, health and accident or disability plans in which
Executive was participating at the Change in Control Date, the taking of any action by the Company
which would directly or indirectly reduce any of such benefits or deprive Executive of any material
fringe benefit enjoyed by Executive at the Change in Control Date.




     Executive’s right to terminate the Executive’s employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness, except for a Disability
as defined in Section 2.9 above. Executive’s continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting Good Reason
hereunder.



     2.11 “Notice of Termination”. A written notice from one party to the other party
specifying the Date of Termination and which sets forth in reasonable detail the facts and
circumstances relating to the basis for termination of Executive’s employment.



     2.12 “Person”. Any individual, corporation, bank, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other entity.



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3. SCOPE OF AGREEMENT.




     This Agreement provides for the payment of compensation and benefits to Executive in the
event, in connection with a Change in Control, his employment is involuntarily terminated by the
Company without Cause or if the Executive terminates his employment for Good Reason. If
Executive is terminated by the Company for Cause, dies, incurs a Disability or voluntarily
terminates employment (other than for Good Reason), this Agreement shall terminate, and Executive
shall be entitled to no payments of compensation or benefits pursuant to the terms of this
Agreement; provided that in such events, Executive will be entitled to whatever benefits are
payable pursuant to the terms of any health, life insurance, disability, welfare, retirement,
deferred compensation, or other plan or program maintained by the Company. Executive agrees that
this Agreement supercedes and replaces any existing plan or arrangement of the Company, including
any employment agreement, which provides Executive severance benefits in the event of his
termination under the circumstances covered by this Agreement.



4. BENEFITS UPON TERMINATION IN CONNECTION WITH A CHANGE IN  CONTROL.




     If a Change in Control occurs during the term of this Agreement and Executive’s employment is
terminated within six (6) months prior to or eighteen (18) months following the date of the Change
in Control, and if such termination is an involuntary termination by the Company without Cause (and
does not arise as a result of death or Disability) or a termination by Executive for Good Reason
(as defined in Section 2.10 above), Executive shall be entitled to the compensation and benefits
described in Section 4.1 through 4.7 below. If Executive does not participate in a particular plan
or program at the Change in Control Date (or if the Company no longer maintains or offers such plan
or program at the Change in Control Date), the provisions of the section related to such plan,
program or award shall not apply to Executive.



     4.1 Base Salary. Executive shall continue to receive his Base Salary (subject to
withholding of all applicable taxes) for the entire CIC Severance Period (as defined in Section 2.5
above), provided that all such salary payments shall be made in a lump sum payment (determined by
taking the Present Value, as defined in Section 5.5, of such payments) no later than 30 days after
his Date of Termination.



     4.2 Annual Bonus. Executive shall be entitled to bonus payments from the Company as
follows:



          (a) Notwithstanding any terms of the plan to the contrary, for the fiscal year that ended
prior to Executive’s Date of Termination, but for which no annual bonus payments have been paid as
of his Date of Termination, Executive shall receive a bonus calculated using the actual results for
all performance criteria, provided that in no case shall the bonus under this subsection (a) be
less than the bonus Executive received for the fiscal year immediately preceding such fiscal year.
Such amount shall be payable at the time such bonus amounts are paid to other participants, or if
previously paid to other participants, no later than thirty (30) days after the Executive’s Date of
Termination.




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          (b) For the fiscal year during which Executive’s Date of Termination occurs, Executive shall
receive, within thirty (30) days following his Date of Termination, a prorated bonus (based on the
number of days that he was employed during such fiscal year), calculated as if
Executive’s target award level (including any personal performance component) under the Company’s
annual incentive had been achieved for such year.




          (c) In addition to the bonus payments payable under (a) and (b) above, Executive shall be
entitled to an additional bonus amount equal to the average of the bonuses paid to him with respect
to the two fiscal years in which bonuses were paid to him immediately preceding the year in which
his Date of Termination occurs, multiplied by two or, if less, multiplied by a number (which need
not be a whole number) equal to the number of months in the CIC Severance Period divided by twelve
(12). Such bonus amount shall be payable in a lump sum within 30 days following the Executive’s
Date of Termination.




    4.3 Health and Life Insurance Coverages.




          (a) The group health care (including any executive medical plan) and group term life insurance
benefits coverages provided to Executive at his Date of Termination shall be continued at the same
level as for active executives and in the same manner as if his employment under this Agreement had
not terminated, beginning on the Date of Termination and ending on the last day of the CIC
Severance Period. Any additional coverages Executive had at termination, including dependent
coverage, will also be continued for such period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs Executive was paying for such coverages at the time of
termination shall be paid by Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this Section, or the laws applicable to
such plan do not permit continued participation by Executive, then the Company will arrange for
other coverage(s) satisfactory to Executive at Company’s expense which provides substantially
similar benefits or, at Executive’s election, will pay Executive a lump sum amount equal to the
costs of such coverage(s) for the CIC Severance Period.




          (b) For purposes of any individual executive life insurance policy (or policies) maintained by
the Company for Executive, the Company shall continue to pay the premiums for such policy or
policies during the CIC Severance Period.




     4.4 Retiree Medical Coverage. If Executive has satisfied the requirements for
receiving Retiree Medical Coverage on his Date of Termination or will satisfy such requirements
prior to the last day of the CIC Severance Period, Executive (and his dependents) shall be covered
by, and receive benefits under, the Company’s Retiree Medical Coverage program for executives at
his level. Executive’s Retiree Medical Coverage shall commence on the date his group health care
coverage terminates under section 4.3 above, and shall continue for the life of the Executive
(i.e., the coverage shall be vested and may not be terminated), subject only to such changes in the
level of coverage that apply to executives at his level generally.



     4.5 Profit Sharing Plan. Executive will be entitled to continue to participate,
consistent with past practices, for the CIC Severance Period in the Profit Sharing Plan (or any
successor or replacement plan) as in effect as of his Date of Termination. Executive’s



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participation in such Profit Sharing Plan shall continue for the CIC Severance Period and the
compensation payable to Executive under Sections 4.1 and 4.2(c) above shall be treated (unless
otherwise excluded) as compensation under the plan as if it were paid on a monthly basis.
Executive will receive an
amount equal to the Company’s contributions to the Profit Sharing Plan, assuming Executive had
participated in such plan at the maximum permissible contributions level. If continued
participation in any plan is not permitted by the plan or by applicable law, the Company shall pay
to Executive or, if applicable, his beneficiary, a supplemental benefit equal to the Present Value
on the Date of Termination (calculated as provided in the plan) of the excess of (i) the benefit
Executive would have been paid under such plan if he had continued to be covered for the CIC
Severance Period (less any amounts Executive would have been required to contribute), over (ii) the
benefit actually payable under such plan. The Company shall pay such additional benefits in a lump
sum within thirty (30) days of his Date of Termination.




     4.6 Automobile, Club Dues. Executive shall be provided for the CIC Severance Period
at the Company’s expense with an automobile (and related automobile expenses) commensurate with the
practice in effect for executives at the date of the Change in Control, and payment of club dues
and assessments in accordance with the current practice.



     4.7 Other Benefits. Except as expressly provided herein, all other fringe benefits
provided to Executive as an active employee of the Company (e.g., long-term disability, AD&D,
etc.), shall cease on his Date of Termination, provided that any conversion or extension rights
applicable to such benefits shall be made available to Executive at his Date of Termination or when
such coverages otherwise cease at the end of the CIC Severance Period.



5. LIMITATION ON BENEFITS.




     5.1 Notwithstanding anything in this Agreement to the contrary, any benefits payable or to be
provided to Executive by the Company or its affiliates, whether pursuant to this Agreement or
otherwise, which are treated as Severance Payments shall, but only to the extent necessary, be
modified or reduced in the manner provided in 5.2 below so that the benefits payable or to be
provided to Executive under this Agreement that are treated as Severance Payments, as well as any
payments or benefits provided outside of this Agreement that are so treated, shall not cause the
Company to have paid an Excess Severance Payment. In computing such amount, the parties shall take
into account all provisions of Code Section 280G, and the regulations thereunder, including making
appropriate adjustments to such calculation for amounts established to be Reasonable Compensation.



     5.2 In the event that the amount of any Severance Payments which would be payable to or for
the benefit of Executive under this Agreement must be modified or reduced to comply with this
Section 5, Executive shall direct which Severance Payments are to be modified or reduced; provided,
however, that no increase in the amount of any payment or change in the timing of the payment shall
be made without the consent of the Company.



     5.3 This Section 5 shall be interpreted so as to avoid the imposition of excise taxes on
Executive under Section 4999 of the Code or the disallowance of a deduction to the Company



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pursuant to Section 280G(a) of the Code with respect to amounts payable under this Agreement or otherwise.
Notwithstanding the foregoing, in no event will any of the provisions of this Section 5
create, without the consent of Executive, an obligation on the part of Executive to refund any
amount to the Company following payment of such amount.




     5.4 In addition to the limits otherwise provided in this Section 5, to the extent permitted by
law, Executive may in his sole discretion elect to reduce any payments he may be eligible to
receive under this Agreement to prevent the imposition of excise taxes on Executive under Section
4999 of the Code.



     5.5 For purposes of this Section 5, the following definitions shall apply:



          (a) “Excess Severance Payment”. The term “Excess Severance Payment” shall have the
same meaning as the term “excess parachute payment” defined in Section 280G(b)(1) of the Code.




          (b) “Severance Payment”. The term “Severance Payment” shall have the same meaning as
the term “parachute payment” defined in Section 280G(b)(2) of the Code.




          (c) “Reasonable Compensation”. The term “Reasonable Compensation” shall have the same
meaning as provided in Section 280G(b)(4) of the Code. The parties acknowledge and agree that, in
the absence of a change in existing legal authorities or the issuance of contrary authorities,
amounts received by Executive as damages under or as a result of a breach of this Agreement shall
be considered Reasonable Compensation.




          (d) “Present Value”. The term “Present Value” shall have the same meaning as provided
in Section 280G(d)(4) of the Code.




6. MISCELLANEOUS.




     6.1 No Obligation to Mitigate. Executive shall not be required to mitigate the amount
of any payment provided for under this Agreement by seeking other employment, nor shall the amount
of any payment provided for under this Agreement be reduced by any compensation earned by Executive
as a result of employment by another employer after the Date of Termination or otherwise



     6.2 Contract Non-Assignable. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills and knowledge of Executive, and agree
that this Agreement may not be assigned or transferred by Executive.



     6.3 Successors; Binding Agreement.



          (a) In addition to any obligations imposed by law upon any successor to the Company, the
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the Company or that
acquires a controlling stock interest in the Company to expressly assume and


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agree to perform this Agreement, in the same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effective date of such succession shall be a
breach of this Agreement and shall entitle Executive to compensation and benefits from the Company
under Section 4 in the amount and on the same terms as Executive would be entitled to hereunder if
Executive were to terminate Executive’s employment for Good Reason.




          (b) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or
legal representative, executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive shall die while any amount is still payable to Executive hereunder (other
than amounts which, by their terms, terminate upon the death of Executive), all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of Executive’s estate.




     6.4 Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered
or seven days after mailing if mailed first class, certified mail, postage prepaid, addressed as
follows:



	 	 	 	 	 
	 

	 	If to the Company:
	 	United Community Banks, Inc.
	 

	 	 	 	Attention: Jimmy C. Tallent
	 

	 	 	 	P.O. Box 398
	 

	 	 	 	Blairsville, GA 30514
	 
	 

	 	If to Executive:
	 	Guy W. Freeman
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 




Any party may change the address to which notices, requests, demands and other communications shall
be delivered or mailed by giving notice thereof to the other party in the same manner provided
herein.




     6.5 Provisions Severable. If any provision or covenant, or any part thereof, of this
Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or
in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or
enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.



     6.6 Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of this Agreement shall
not be deemed a waiver or relinquishment of any right granted in this Agreement or the future
performance of any such term or condition or of any other term or condition of this Agreement,
unless such waiver is contained in a writing signed by the party making the waiver.



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     6.7 Amendments and Modifications. This Agreement may be amended or modified only by a
writing signed by both parties hereto, which makes specific reference to this Agreement.



     6.8 Governing Law. The validity and effect of this Agreement shall be governed by and
be construed and enforced in accordance with the laws of the State of Georgia.



     6.9 Disputes; Legal Fees; Indemnification.



          (a) Disputes. All claims by Executive for compensation and benefits under this
Agreement shall be in writing and shall be directed to and be determined by the Board. Any denial
by the Board of a claim for benefits under this Agreement shall be provided in writing to Executive
within thirty (30) days of such decision and shall set forth the specific reasons for the denial
and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to Executive for a review of its decision denying a claim and shall further allow
Executive to appeal in writing to the Board a decision of the Board within sixty (60) days after
notification by the Board that Executive’s claim has been denied. To the extent permitted by
applicable law, any further dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Atlanta, Georgia, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.




          (b) Legal Fees. If, in connection with a Change in Control, Executive terminates his
employment for Good Reason or if the Company involuntarily terminates Executive without Cause,
then, in the event Executive incurs legal fees and other expenses in seeking to obtain or to
enforce any rights or benefits provided by this Agreement and is successful, in whole or in part,
in obtaining or enforcing any such rights or benefits through settlement, mediation, arbitration or
otherwise, the Company shall promptly pay Executive’s reasonable legal fees and expenses and
related costs incurred in enforcing this Agreement including, without limitation, attorneys fees
and expenses, experts fees and expenses, investigative fees, and travel expenses. Except to the
extent provided in the preceding sentence, each party shall pay its own legal fees and other
expenses associated with any dispute under this Agreement.




          (c) Indemnification. During the Term of this Agreement and after Executive’s
termination, the Company shall indemnify Executive and hold Executive harmless from and against any
claim, performance as an officer, director or employee of the Company or any of its subsidiaries or
other affiliates or in any other capacity, including any fiduciary capacity, in which Executive
serves at the Company’s request, in each case to the maximum extent permitted by law and under the
Company’s Articles of Incorporation and By-Laws (the “Governing Documents”), provided that in no
event shall the protection afforded to Executive hereunder be less than that afforded under the
Governing Documents as in effect on the date of this Agreement except from changes mandated by law.




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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.



	 	 	 	 	 
	 	 	EXECUTIVE
	 
	 
	 	 	 	 
	 	 	 
	 	 	GUY W. FREEMAN
	 
	 	 	 	 
	 	 	UNITED COMMUNITY BANKS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	 

Secretary

	 	 	 	 
	(CORPORATE SEAL)
	 	 	 	 







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