exv4w1






EXHIBIT 4.1




UNITED COMMUNITY BANKS, INC.




AND



ILLINOIS STOCK TRANSFER COMPANY



TAX BENEFITS PRESERVATION PLAN



DATED AS OF FEBRUARY 22, 2011



 









 





TAX BENEFITS PRESERVATION PLAN




     This Tax Benefits Preservation Plan (this “Plan”), dated as of February 22, 2011 between
United Community Banks, Inc., a Georgia corporation (the “Company”), and Illinois Stock Transfer
Company, an Illinois corporation (the “Rights Agent”).



     WHEREAS, the Company and its Subsidiaries (as defined below) have generated certain Tax
Benefits (as defined below) for United States federal income tax purposes, and the Company desires
to avoid an “ownership change” within the meaning of Section 382 of the Code (as defined below) and
thereby preserve the Company’s ability to utilize such Tax Benefits;



     WHEREAS, the Board of Directors of the Company (the “Board”) has approved the execution of
this Agreement and has authorized and declared a dividend of one preferred share purchase right
(individually, a “Right,” and collectively the “Rights”) in respect of each share of common stock,
$1.00 par value per share, of the Company (the “Common Stock”) outstanding at the Close of Business
(as defined below) on February 23, 2011 (the “Record Date”), each such Right representing the right
to purchase one-hundredth of a share of Junior Participating Cumulative Preferred Stock, Series E,
$1.00 par value per share, of the Company having the terms set forth in the Company’s Restated
Articles of Incorporation, as amended by the Articles of Amendment attached hereto as Exhibit A
(the “Preferred Stock”; and each one-hundredth of a share of Preferred Stock, a “Preferred Unit”),
and has further authorized and directed the issuance of one Right in respect of each share of
Common Stock that shall become outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are defined below), all upon the terms and
subject to the conditions contained herein; and



     WHEREAS, the Company desires to appoint the Rights Agent to act on behalf of the Company, and
the Rights Agent is willing so to act, in connection with the issuance, transfer, exchange and
replacement of Right Certificates (as defined below), the exercise of Rights and other matters
referred to herein;



     NOW, THEREFORE, for and in consideration of the premises and the mutual agreements contained
herein, the parties hereto agree as follows:



     Section 1. Definitions. The following terms, as used herein, have the following meanings:



     (a) “Acquiring Person” shall mean any Threshold Holder (as defined below) except:




     (i) the U.S. Government;




     (ii) any Exempt Person;




     (iii) any Grandfathered Person (as defined below);




     (iv) Fletcher International, Ltd. to the extent it becomes a Beneficial Owner of
Company 382 Securities pursuant to that certain Securities Purchase Agreement, dated as of
April 1, 2010, by and between the Company and Fletcher International, Ltd. (the “Fletcher
SPA”) or those certain Warrants to Purchase Shares of Common Stock of United Community
Banks, Inc. dated as of April 5, 2010, (the “Fletcher Warrant”) and any Person who is a
permitted assignee of the Fletcher SPA or the Fletcher Warrant in compliance with the terms
thereof;



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     (v) any Person who or which would qualify as a Threshold Holder by reason of a
reduction in the number of issued and outstanding shares of Company 382 Securities by the
Company, by redemption or otherwise;




     (vi) any Person that has become a Threshold Holder if the Board in good faith
determines that the attainment of such status has not jeopardized or endangered the
Company’s utilization of the Tax Benefits; and




     (vii) any Person who or which would qualify as a Threshold Holder as a result of an
Approved Acquisition and, to the extent approved by the Board, any Person who or which
acquires Company 382 Securities from any such Person;


provided, however, that in the event that a Person is not an Acquiring Person by reason of clause
(iii), (vi) or (vii) above, such Person nonetheless shall become an Acquiring Person if such Person
thereafter becomes the Beneficial Owner of any additional (i) shares of Common Stock then
outstanding or (ii) shares of any class of Company 382 Securities (other than the Common Stock)
then outstanding, unless the acquisition of such Common Stock or Company 382 Securities is an
Approved Acquisition or unless such acquisition is solely as a result of a reduction in the number
of issued and outstanding shares of Company 382 Securities by the Company, by redemption or
otherwise.




     (b) “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended and in effect on the date of this Plan (the “Exchange
Act”), and to the extent not included within the foregoing, shall also include with respect to any
Person, any other Person whose common securities would be deemed to be (i) constructively owned by
such first Person, , or (ii) otherwise aggregated with shares owned by such first Person (other
than any aggregation solely by reason of such shares being part of the same “public group” as
defined under Treasury Regulation Section 1.382-2T(f)(13)), in each case pursuant to the provisions
of Section 382 of the Code, or any successor or replacement provision, and the Treasury Regulations
thereunder.



     (c) “Approved Acquisition” shall mean (i) any acquisition of Company 382 Securities that would
cause a Person to qualify as a Threshold Holder and that is approved in advance by the Board or
(ii) a conversion (or other exchange) of Company 382 Securities for other Company 382 Securities
where such conversion (or other exchange) does not increase the Beneficial Ownership in the Company
by any Person for purposes of Section 382 of the Code.



     (d) A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “Beneficially
Own,” and shall have “Beneficial Ownership” of any securities which such Person:




     (i) directly owns, or




     (ii) would be deemed to own constructively pursuant to Section 382 of the Code and the
Treasury Regulations promulgated thereunder (including as a result of the deemed exercise
of an “option” pursuant to Treasury Regulation Section 1.382-4(d) and including, without
duplication, Company 382 Securities, as applicable, owned by any Affiliate of such Person);


provided that a Person shall not be treated as “Beneficially Owning” Company 382 Securities
pursuant to clause (i) above to the extent that such Person does not have the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the sale of, such Company
382 Securities.




     (e) “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which banks
in Georgia are authorized or obligated by law or executive order to close.



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     (f) “Close of Business” on any given date shall mean 5:00 p.m., Blairsville, Georgia time, on
such date; provided, however, that if such date is not a Business Day it shall mean 5:00 p.m.,
Blairsville, Georgia time, on the next succeeding Business Day.



     (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
comparable successor statute.



     (h) “Company 382 Securities” shall mean the Common Stock and any other interest that would be
treated as “stock” of the Company for purposes of Section 382 of the Code (including pursuant to
Treasury Regulation Section 1.382-2T(f)(18)).



     (i) “Distribution Date” shall mean the earlier of the Close of Business on the tenth (10)
Business Day after a (1) a Shares Acquisition Date, and (2) a Tender Offer Date.



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



     (k) “Exempt Person” shall mean the Company, any Subsidiary, any employee benefit plan or
compensation arrangement of the Company or any Subsidiary, or any entity or trustee holding Company
382 Securities to the extent organized, appointed or established by the Company or any Subsidiary
for or pursuant to the terms of any such employee benefit plan or compensation arrangement.



     (l) “Expiration Date” shall mean the earliest of:




     (i) the Final Expiration Date,




     (ii) the Redemption Date,




     (iii) the time at which all Rights are exchanged as provided in Section 24,




     (iv) such date on which the Board determines, in its sole discretion, that the Rights
and the Plan are no longer necessary for the preservation of existence of the Tax Benefits,
and




     (v) such date prior to a Shares Acquisition Date on which the Board determines, in its
sole discretion, that the Rights and the Plan are no longer in the best interests of the
Company and its shareholders.



     (m) “Final Expiration Date” shall mean the Close of Business on the date that is the fifth
(5th) anniversary of the date of this Plan; provided that if a Shares Acquisition Date
occurs fewer than thirty (30) days prior to such date, then the Final Expiration Date shall be the
date that is thirty (30) days after the Shares Acquisition Date.



     (n) “Grandfathered Person” shall mean any Person who or which, together with all Affiliates of
such Person, was on the Record Date, the Beneficial Owner of 4.99% or more of the Company 382
Securities outstanding on such date. Any Grandfathered Person who, together with all of its
Affiliates, subsequently becomes the Beneficial Owner of less than 4.99% of the Company 382
Securities shall cease to be a Grandfathered Person.



     (o) “Person” shall mean any individual, firm, corporation, partnership, bank or savings
association, trust association, limited liability company, limited liability partnership,
governmental entity, or other entity or organization, or any group of Persons making a “coordinated
acquisition” of Company



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382 Securities or otherwise treated as an entity within the meaning of Treasury Regulation
Section 1.382-3(a)(1)(i), and shall include any successor (by merger or otherwise) of any such
entity.




     (p) “Purchase Price” shall mean the price (subject to adjustment as provided herein) at which
a holder of a Right may purchase a Preferred Unit (subject to adjustment as provided herein) upon
exercise of a Right, which price shall initially be $8.00.



     (q) “Redemption Date” shall mean the time at which the Rights are redeemed as provided in
Section 23 hereof.



     (r) “Section 382” shall mean Section 382 of the Code, or any comparable successor provision.



     (s) “Securities Act” shall mean the Securities Act of 1933, as amended.



     (t) “Share Acquisition Date” shall mean the date of the first public announcement by the
Company in a press release expressly referring to this Plan indicating that a Person has become an
Acquiring Person.



     (u) “Subsidiary” of any Person shall mean any Person of which a majority of the voting power
of the voting equity securities or equity interest is owned, directly or indirectly, by such first
Person.



     (v) “Tax Benefits” shall mean the net operating loss carryovers, capital loss carryovers,
general business credit carryovers, alternative minimum tax credit carryovers and foreign tax
credit carryovers, as well as any loss or deduction attributable to a “net unrealized built-in
loss” within the meaning of Section 382 and the Treasury Regulations promulgated thereunder, of the
Company or any Subsidiary.



     (w) “Tender Offer Date” shall mean the date of the commencement of a tender or exchange offer
by any Person if, upon consummation thereof, such Person would or could be an Acquiring Person.



     (x) “Threshold Holder” shall mean any Person who or which, together with all Affiliates of
such Person, is the Beneficial Owner of 4.99% or more of (i) the shares of Common Stock then
outstanding or (ii) the shares of any class of Company 382 Securities (other than the Common Stock)
then outstanding.



     (y) “Trading Day” shall mean a day on Nasdaq or, if the Company is no longer listed on Nasdaq,
the principal national securities exchange or over-the-counter market on which the Common Stock is
listed or admitted to trading is open for the transaction of business or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or over-the-counter market, a
Business Day.



     (z) “Treasury Regulation” shall mean any final, proposed or temporary regulation of the
Department of Treasury under the Code and any comparable successor regulation.



     (aa) “U.S. Government” shall mean any of (i) the federal government of the United States of
America, (ii) any instrumentality or agency of the federal government of the United States of
America and (iii) any Person wholly-owned by, or the sole beneficiary of which is, the federal
government of the United States or any instrumentality or agency thereof.



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     Section 2. Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and
“hereunder” and words of like import used in this Plan shall refer to this Plan as a whole and not
to any particular provision of this Plan. The captions and headings herein are included for
convenience of reference only and shall be ignored in the construction or interpretation hereof.
References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and
Schedules of this Plan unless otherwise specified. All Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Plan as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein,
shall have the meaning as defined in this Plan. Any singular term in this Plan shall be deemed to
include the plural, and any plural term the singular. Whenever the words “include”, “includes” or
“including” are used in this Plan, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words of like import.
References to any agreement or contract are to that agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof. References to any
Person include the successors and permitted assigns of that Person.



     Section 3. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act
as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable and, upon acceptance of such appointment by a co-Rights
Agent, the provisions of this Plan applicable to the Rights Agent shall be deemed also to apply to
such co-Rights Agent.



     Section 4. Issuance of Right Certificates.



     (a) Prior to the Distribution Date, (i) the Rights will be evidenced (subject to Section
4(b) hereof) by the certificates for shares of Common Stock registered in the names of the
holders thereof (or, if shares of Common Stock are uncertificated, the registration of such shares
of Common Stock on the stock transfer books of the Company) and not by separate Right Certificates,
and the registered holders of the Common Stock shall be deemed to be the registered holders of the
associated Rights, and (ii) the Rights will be transferable only in connection with the transfer of
the underlying shares of Common Stock.



     (b) As soon as practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, postage-prepaid mail, to each record holder of
shares of Common Stock as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a “Right Certificate”), evidencing one Right (subject to adjustment as
provided herein) for each share of Common Stock so held. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.



     (c) Rights shall be issued in respect of all shares of Common Stock that become outstanding
(on original issuance or out of treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates (or registrations in uncertificated book
entry form on the books of the Company) for the Common Stock that become outstanding or shall be
transferred or exchanged after the Record Date but prior to the earlier of the Distribution Date
and the Expiration Date shall also be deemed to be certificates (or registrations in uncertificated
book entry form on the books of the Company) for Rights, and registered holders of Common Stock
shall also be deemed to be the registered holders of the associated Rights.



     (d) Until the earlier of the Distribution Date and the Expiration Date, the surrender for



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transfer of any certificate for shares of Common Stock (or, if shares of Common Stock are
uncertificated, the transfer on the stock transfer books of the Company of such shares of Common
Stock) outstanding on the Record Date or that become outstanding (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution Date and the
Expiration Date shall also constitute the transfer of the Rights associated with the shares of
Common Stock represented thereby.




     (e) In the event that the Company purchases or acquires any Common Stock after the Record Date
but prior to the Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any Rights associated
with the shares of Common Stock which are no longer outstanding.



     Section 5. Form of Right Certificates. The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be substantially the same as
Exhibit B hereto and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Plan, or as may be required to comply with any applicable
law, rule or regulation or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to custom and common usage. Except as otherwise
provided herein, the Right Certificates shall entitle the holders thereof to purchase such number
of Preferred Units as shall be set forth therein at the Purchase Price, but the number of such
Preferred Units and the Purchase Price shall be subject to adjustment as provided herein.



     Section 6. Countersignature and Registration.



     (a) The Right Certificates shall be executed on behalf of the Company by its President, Chief
Executive Officer, Chief Financial Officer or any of its Executive Vice Presidents, either manually
or by facsimile signature, shall have affixed thereto the Company’s seal or a facsimile thereof,
and shall be attested by the Secretary or any Assistant Secretary of the Company, either manually
or by facsimile signature. The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless countersigned.



     (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated as the appropriate place for surrender of Right Certificates upon exercise,
transfer or exchange, books for registration and transfer of the Right Certificates. Such books
shall show the names and addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right
Certificates.



     Section 7. Transfer, Split Up, Combination and Exchange of Right Certificates, Mutilated,
Destroyed, Lost, or Stolen Right Certificates.



     (a) Subject to Section 14 hereof, at any time after the Close of Business on the
earlier of the Distribution Date and the Expiration Date, any Right Certificate (other than Right
Certificates representing Rights that have become void pursuant to Section 8(e) hereof or
that have been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate, entitling the registered holder to purchase a
like number of Preferred Units as the Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be transferred, split up, combined or exchanged at the office of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder of the Right Certificate has complied with the requirements
of



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Section 8(f). Upon satisfaction of the foregoing requirements, the Rights Agent
shall, subject to Sections 8(e), 8(f), 14 and 24, countersign and
deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.




     (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will issue and deliver a new Right Certificate of like tenor
to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.



     Section 8. Exercise of Rights; Purchase Price; Expiration Date of Rights.



     (a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the Distribution Date
and prior to the Expiration Date, upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office
of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase
Price for the total number of Preferred Units to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in accordance with
Section 10 hereof.



     (b) The Purchase Price shall be payable in lawful money of the United States of America by
certified check, cashier’s check, or money order payable to the order of the Company.



     (c) Upon an exercise of Rights pursuant hereto, the Rights Agent shall thereupon promptly:




     (i) (A) requisition from any transfer agent of the Preferred Stock a certificate for
the number of Preferred Units to be purchased (or, if the Preferred Stock is uncertificated,
request from such transfer agent a statement setting forth such number of Preferred Units to
be purchased for which registration will be made on the stock transfer books of the Company)
and the Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the Preferred Units issuable
upon exercise of the Rights with a depositary agent, requisition from the depositary agent a
depositary receipt representing such number of Preferred Units as are to be purchased (in
which case either (1) certificates for the Preferred Units represented by such receipts
shall be deposited by the transfer agent with the depositary agent, or (2) registrations in
the depositary agent’s name in uncertificated book entry form on the books of the Company
shall be made by the transfer agent), and the Company hereby directs the depositary agent to
comply with such request,




     (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of
issuance of fractional shares in accordance with Section 14, and




     (iii) after receipt of such certificate, statement or receipt and cash, cause the same
to be delivered to or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder.



     (d) If the registered holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, then a new Right Certificate evidencing Rights equivalent to the Rights
remaining



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unexercised shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such person’s duly authorized assigns, subject to Section 14 hereof.




     (e) Notwithstanding anything in this Plan to the contrary, any Rights Beneficially Owned by:




     (i) an Acquiring Person from and after the date on which the Person becomes an
Acquiring Person or




     (ii) a transferee of Rights Beneficially Owned by an Acquiring Person who:




     (A) becomes a transferee after a public announcement relating to a Shares
Acquisition Date with respect to an Acquiring Person who was identified on the
Shares Acquisition Date, or




     (B) becomes a transferee with respect to an Acquiring Person (or an Affiliate
thereof) and receives such Rights:




     (I) with actual knowledge that the transferor is or was an Acquiring
Person (or an Affiliate of an Acquiring Person), or




     (II) pursuant to either (x) a transfer (whether or not for
consideration) from the Acquiring Person (or an Affiliate thereof) to
holders of equity interests in such Acquiring Person (or in such Affiliate
thereof) or to any Person with whom the Acquiring Person (or an Affiliate
thereof) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (y) a transfer which the Board
determines in good faith is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section
8(e);


shall become null and void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under this Plan or otherwise. The Company
shall use all reasonable efforts to ensure that this Section 8(e) is complied with, but
shall have no liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or any transferee of an
Acquiring Person hereunder. No Right Certificate shall be issued pursuant to Section 4
that represents Rights beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Affiliate thereof; no Right Certificate shall be issued
at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Affiliate thereof or to any nominees of such Acquiring
Person or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence shall be canceled.




     (f) Notwithstanding anything in this Plan to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to any purported transfer pursuant
to Section 7 or exercise pursuant to this Section 8 unless the registered holder of
the applicable Rights (i) shall have completed and signed the certificate contained in the form of
assignment or election to purchase, as the case may be, set forth on the reverse side of the Right
Certificate surrendered for such transfer or exercise, as the case may be, and (ii) shall have
provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) thereof as the Company shall reasonably request.



     (g) The Company hereby waives application of each standstill or other similar provision



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relating to Company 382 Securities by which a registered holder of Rights is bound as of the
date of this Plan to the extent necessary to permit such registered holder to exercise such Rights
in accordance with this Plan.




     Section 9. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly permitted by this
Plan. The Company shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. Subject to applicable law, rule and regulation,
the Rights Agent shall maintain records of all cancelled or destroyed stock certificates which have
been canceled or destroyed by the Rights Agent. The Rights Agent shall maintain such records for
the time period required by applicable law, rule and regulation. Upon written request of the
Company (and at the expense of the Company), the Rights Agent shall provide to the Company or its
designee copies of such records relating to Right Certificates cancelled or destroyed by the Rights
Agent.



     Section 10. Availability of Shares of Preferred Stock.



     (a) The Company covenants and agrees that it will use commercially reasonable efforts to cause
to be reserved and kept available out of its authorized and unissued shares of Preferred Stock or
any shares of Preferred Stock held in its treasury, the number of shares of Preferred Stock that
will be sufficient to permit the exercise in full of all outstanding Rights as provided in this
Agreement. The Company covenants and agrees that it will take all such action as may be necessary
to ensure that all Preferred Units delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Preferred Units (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully-paid and nonassessable shares, or fractions thereof.



     (b) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Units upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery
of certificates (or, if uncertificated, the registration on the stock transfer books of the
Company) or depositary receipts for the Preferred Units in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates (or, if uncertificated, to register on the stock transfer books of
the Company) or depositary receipts for Preferred Units upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the Company’s reasonable satisfaction
that no such tax is due.



     Section 11. Preferred Stock Record Date. Each Person in whose name any certificate for
Preferred Units (or registration in uncertificated book entry form on the books of the Company) is
issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Units represented thereby on, and such certificate (or registration in
uncertificated book entry form on the books of the Company) shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and such certificate (or
registration in uncertificated book entry form on the books of the Company) shall be dated, the
next succeeding Business Day on which the Preferred



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Stock transfer books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Units for which the Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company, except as provided
herein.




     Section 12. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase
Price, the number of Preferred Units covered by each Right, and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 12.



     (a) In the event the Company shall at any time after the date of this Plan (i) declare a
dividend on the Preferred Stock payable in shares of Preferred Stock, (ii) subdivide the
outstanding Preferred Stock, (iii) combine the outstanding Preferred Stock into a smaller number of
shares or effect a reverse split of the outstanding Preferred Stock, or (iv) issue any shares of
its capital stock in a reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as provided in this Section 12(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such person would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or reclassification.



     (b) Subject to Section 24 hereof, following a Shares Acquisition Date, each holder of
a Right (other than Rights which have become void pursuant to Section 8(e)), shall be
entitled to receive, upon exercise of a Right in accordance with the terms of this Plan and payment
of the Purchase Price, the number of Preferred Units equal to the result obtained by (i)
multiplying the then current Purchase Price by the then number of Preferred Units for which for
which such Right was exercisable immediately prior to the Shares Acquisition Date, and (ii)
dividing that product by 50% of the current market price per share of the Common Stock (determined
pursuant to Section 12(f)) on the Shares Acquisition Date.



     (c) In the event that there shall not be sufficient shares of Preferred Stock authorized but
unissued to permit the exercise in full of the Rights in accordance with subsection (b) above, the
Company may substitute, for each Preferred Unit that would otherwise be issuable upon exercise of a
Right, one (1) share of Common Stock.



     (d) If the Company shall fix a record date for the issuance of rights, options, or warrants to
all holders of Preferred Stock entitling such holders (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase shares of Preferred Stock or securities
convertible into Preferred Stock at a price per share (or having a conversion price per share, if a
security convertible into Preferred Stock) less than the then current per share market price of the
Preferred Stock (as defined in Section 12(f)) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying (i) the Purchase Price in
effect immediately prior to such record date by (ii) a fraction, (x) the numerator of which shall
be the number of shares of Preferred Stock outstanding on such record date plus the number of
shares of Preferred Stock which the aggregate offering price of the total number of shares of
Preferred Stock so to be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market price and (y) the
denominator of which shall be the number of shares of Preferred Stock outstanding on such record
date plus the number of additional shares of Preferred Stock to be offered for subscription or
purchase (or into



10









 




which the convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company issuable upon exercise
of one Right. In case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as determined in good
faith by the Board, whose determination shall be described in a statement filed with the Rights
Agent. Preferred Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and if such rights, options, or warrants are not so issued,
the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.




     (e) If the Company shall fix a record date for the making of a distribution to all holders of
the Preferred Stock (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in
shares of Preferred Stock) or subscription rights or warrants (excluding those referred to in
Section 12(b) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying (i) the Purchase Price in effect immediately prior to such record date by
(ii) a fraction, (x) the numerator of which shall be the then current per share market price of the
Preferred Stock on such record date, less the fair market value (as determined in good faith by the
Board, whose determination shall be described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one (1) share of Preferred Stock and (y) the denominator of which
shall be such current per share market price of the Preferred Stock; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a record date is fixed, and if such
distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.



     (f) For the purpose of any computation hereunder, the “current per share market price” of any
security (a “Security” for the purpose of this Section 12(f)) on any date shall be deemed
to be the average of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to such date; provided, however, that in the event that
the current per share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (i) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares, or (ii) any
subdivision, split, combination, reverse stock split or reclassification of such Security and prior
to the expiration of thirty (30) Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, split, combination, reverse stock split or
reclassification, then, and in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on Nasdaq or, if the Security is not listed or admitted to trading on Nasdaq, as
reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any national securities
exchange the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by such system then in use, or, if on any such
date the Security is not quoted by any such system, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Security selected by the Board.
If the Preferred Stock is not publicly held or so listed or traded, current per share market price
shall be



11









 




conclusively deemed to be the current per share market price of the shares of Common Stock as
determined pursuant to the foregoing provisions of this Section 12(f) (appropriately
adjusted to reflect any stock split, stock dividend, or similar transaction occurring after the
date hereof), multiplied by one hundred. If neither the shares of Common Stock nor the shares of
Preferred Stock are publicly held or so listed or traded, current per share market price shall mean
the fair value per share as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent.




     (g) No adjustment in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that
any adjustments which by reason of this Section 12(g) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All calculations under this
Section 12 shall be made to the nearest cent or to the nearest one-hundredth of a share of
Preferred Stock or to the nearest one-hundredth of any other share of capital stock, as the case
may be.



     (h) If at any time as a result of an adjustment made pursuant to Section 12(a) hereof,
the holder of any Right at any time shall become entitled to receive any shares of capital stock of
the Company other than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock
contained in this Section 12, and Sections 8, 10 and 11 with
respect to the Preferred Stock shall apply on like terms to any such other shares.



     (i) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price then
in effect, the number of Preferred Units and other capital stock of the Company issuable from time
to time hereunder upon exercise of the Rights, all subject to further adjustment as provided
herein.



     (j) Unless the Company shall have exercised its election as provided in Section 12(k),
upon each adjustment of the Purchase Price as a result of the calculations made in Sections
12(b) and (c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of Preferred Units obtained by (i) multiplying (x) the number of Preferred Units for which
such Right was exercisable immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.



     (k) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of Preferred Units issuable
upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of Preferred Units for which such Right was
exercisable immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights (calculated to the nearest
one-hundredth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Right Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 12(k), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of Right Certificates on
such record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which



12









 




such holders shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date specified in the public
announcement.




     (l) Irrespective of any adjustment or change in the Purchase Price or the number of Preferred
Units issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of Preferred Units which was
expressed in the initial Right Certificates issued hereunder but nevertheless shall represent the
Rights as so adjusted.



     (m) Before taking any action that would cause an adjustment reducing the Purchase Price below
one-hundredth of the then par value, if any, of the Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully-paid and nonassessable
shares of Preferred Stock, or fractions thereof, at such adjusted Purchase Price.



     (n) In any case in which this Section 12 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event the issuing to the holder of any Right exercised after
such record date of the Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Stockl and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.



     (o) Anything in this Section 12 to the contrary notwithstanding, the Company shall be
entitled to make such further adjustments in the number of Preferred Units which may be acquired
upon exercise of the Rights, and such adjustments in the Purchase Price therefor, in addition to
those adjustments expressly required by this Section 12, as and to the extent that the
Board in its sole discretion, shall determine to be necessary or advisable in order for the holders
of the Rights in such event to be treated equitably and in accordance with the purpose and intent
of this Agreement or in order that any such event shall not, but for such adjustment, in the
opinion of counsel to the Company, result in the shareholders of the Company being subject to any
United States federal income tax liability by reason thereof.



     (p) In the event that at any time after the date of this Plan and prior to the Distribution
Date, the Company shall (i) declare or pay any dividend on the shares of Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision, combination or consolidation of the shares of
Common Stock (by reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in any such case the number
of Preferred Units purchasable after such event upon proper exercise of each Right shall be
determined by multiplying (1) the number of Preferred Units so purchasable immediately prior to
such event by (2) a fraction, (x) the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and (y) the denominator of which is the number of shares
of Common Stock outstanding immediately after such event. The adjustments provided for in this
Section 12(p) shall be made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.



13









 





     Section 13. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 12 hereof, the Company shall promptly (a) prepare
a certificate setting forth such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Stock or the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25 hereof.



     Section 14. Fractional Rights and Fractional Shares.



     (a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of any such fractional Rights, such number
of Rights or Right Certificates shall be rounded to the nearest whole number and thereafter such
whole number of Rights or Right Certificates, as applicable, shall be issued or distributed.



     (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred
Stock (or, if uncertificated, register fractional shares of Preferred Stock on its stock transfer
books, other than, in either case, fractions which are integral multiples of one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of
one-hundredth of a share may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary selected by it; provided,
that such agreement shall provide that the holders of such depositary receipts shall have all the
rights, privileges, and preferences to which they are entitled as beneficial owners of the
Preferred Stock represented by such depositary receipts. In lieu of fractional shares of Preferred
Stock that are not integral multiples of one-hundredth of a share, the Company shall round the
shares of Preferred Stock to the nearest one-hundredth of a share.



     (c) The Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional shares of Common
Stock (or, if uncertificated, register fractional shares of Common Stock on its stock transfer
books). In lieu of fractional shares of Common Stock, the Company shall round the number of shares
of Common Stock to the nearest whole number of shares.



     (d) The holder of a Right by the acceptance of the Right expressly waives such Person’s right
to receive any fractional Rights or any fractional shares upon exercise of a Right (except as
provided above).



     Section 15. Rights of Action. All rights of action in respect of this Plan, excepting the
rights of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of any Common Stock), and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of any Common Stock), without the consent of the Rights Agent or of
the holder of any other Right Certificate (or, prior to the Distribution Date, of any Common
Stock), may, in such Person’s own behalf and for such Person’s own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the Company to enforce, or otherwise
act in respect of, such Person’s right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Plan. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of this Plan and will be
entitled to specific performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this Plan.



14









 





     Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:



     (a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of Common Stock;



     (b) after the Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer;



     (c) the Company and the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Stock) is registered as the
absolute owner of such certificate and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated Common Stock
certificate (or registration in uncertificated book-entry form on the books of the Company) made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary; and



     (d) notwithstanding anything in this Plan to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Plan by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental authority prohibiting or
otherwise restraining performance of such obligation; provided, however, that the Company must use
its commercially reasonable efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as reasonably practicable.



     Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends, or be deemed for any purpose the
holder of the Preferred Stock, Common Stock or any other capital stock of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.



     Section 18. Concerning the Rights Agent.



     (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration and execution of
this Plan and the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, claim or
expense (“Loss”) incurred without gross negligence, bad faith or willful misconduct on the part of
the Rights Agent in connection with its duties under this Plan, including the costs and expenses of
defending itself against any Loss.



15









 





     (b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration of this Plan in
reliance upon any Right Certificate or certificate (or registration in uncertificated book-entry
form on the books of the Company) for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or
Persons.



     Section 19. Merger or Consolidation of Rights Agent. Any Person into which the Rights Agent
or any successor Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the stock transfer or corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this
Plan without the execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such Person would be eligible for appointment as a successor Rights
Agent under Section 21 hereof.



     Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations
imposed by this Plan upon the following terms and conditions, by all of which the Company and the
holders of Right Certificates, by their acceptance thereof, shall be bound:



     (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with
such opinion.



     (b) Whenever in the performance of its duties under this Plan the Rights Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the President, Chief Executive Officer, Chief Financial Officer or any
Executive Vice President of the Company, in the manner specified in Section 6, and
delivered to the Rights Agent. Any such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions of this Plan in
reliance upon such certificate.



     (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct. In no case will the Rights Agent be
liable for special, indirect, incidental or consequential loss or damages of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been advised of the
possibility of such damages.



     (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Plan or in the Right Certificates (except its countersignature thereof)
or be required to verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.



     (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Plan or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any covenant or condition
contained in this Plan or in any Right Certificate; nor shall it be responsible for any change in
the exercisability of the Rights (including the Rights becoming void pursuant to Section
8(e) hereof) or any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 4, 12, 23, or 24, or the
ascertaining of the existence of facts that would require any such change or adjustment (except
with



16









 




respect to the exercise of Rights evidenced by Right Certificates after actual notice that
such change or adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Preferred Stock to be
issued pursuant to this Plan or any Right Certificate or as to whether any Preferred Stock will,
when issued, be validly authorized and issued, fully-paid and non assessable.




     (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments, and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Plan.



     (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the President, Chief Executive Officer, Chief
Financial Officer or any Executive Vice President of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable for any action
taken or suffered by it in good faith in accordance with instructions of any such officer.



     (h) The Rights Agent and any shareholder, director, officer, or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not the Rights Agent
under this Plan. Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or any other Person.



     (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect, or misconduct of
any such attorneys or agents or for any loss to the Company or to any holder of Rights resulting
from any such act, default, neglect, or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.



     (j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has not been completed or have been completed erroneously, the Rights Agent shall
not take any further action with respect to such requested exercise or transfer without first
consulting with the Company.



     Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Plan upon thirty (30) days written notice mailed to
the Company and to each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and after a Distribution Date, to the holders of the Right Certificates by first
class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30)
days written notice, mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Stock or Preferred Stock by registered or certified mail, and
to the holders of the Right Certificates by first class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit such holder’s Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. After



17









 




appointment, the successor Rights Agent shall be vested with the same powers, rights, duties,
and responsibilities as if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock or Preferred Stock, and after a Distribution Date, mail a
notice thereof in writing to the registered holders of the Right Certificates by first class mail.
Failure to give any notice provided for in this Section 21, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.




     Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this
Plan or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by the Board to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions of this Plan.



     Section 23. Redemption.



     (a) The Board may, at its option, at any time prior to a Shares Acquisition Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction occurring after the date hereof (the “Redemption Price”), and the Company may, at its
option, pay the Redemption Price in shares of Common Stock (based on the current per share market
price of the shares of Common Stock at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board. The redemption of the Rights by the Board may be
made effective at such time on such basis and with such conditions as the Board in its sole
discretion may establish.



     (c) Immediately upon the action of the Board electing to redeem the Rights pursuant to
subsection (a) above and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public notice of any such
redemption. Within ten (10) days after such action of the Board ordering the redemption of the
Rights pursuant to subsection (b), the Company shall mail a notice of redemption to all the holders
of the then outstanding Rights at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent
for the shares of Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made. The failure to give,
or any defect in, any notice provided for in this subsection shall not affect the validity of such
redemption.



     Section 24. Exchange.



     (a) The Board may, at its option, at any time following a Shares Acquisition Date, exchange
all or part of the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to Section 8(e) hereof) for either (i) shares of Common Stock at
an exchange ratio of one (1) share of Common Stock per Right, or (ii) shares of Preferred Stock at
an exchange ratio of one-hundredth of a share of Preferred Stock per Right, in each case,
appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”);
provided, however, that in connection with any exchange effected pursuant to this Section
24, the number of shares of Common Stock or Preferred Units



18









 




to otherwise be issued shall be reduced by the number of such shares of capital stock that
have an aggregate value equal to the Purchase Price for the Rights, determined based on the current
per share market value of such capital stock; provided further, that in connection with any
exchange effected pursuant to this Section 24, no holder of Rights shall be entitled to
receive shares of Common Stock (or other shares of capital stock of the Company) that would result
in such holder, together with such holder’s Affiliates, becoming the Beneficial Owner of more than
4.99% of the then-outstanding Common Stock. If a holder would, but for the previous sentence, be
entitled to receive a number of shares that would otherwise result in such holder, together with
such holder’s Affiliates, becoming the Beneficial Owner of in excess of 4.99% of the
then-outstanding Common Stock (such shares, the “Excess Exchange Shares”), in lieu of receiving
such Excess Exchange Shares and to the extent permitted by law or orders applicable to the Company,
such holder will be entitled to receive an amount in cash equal to current per share market price
of a share of Common Stock at the Close of Business on the Trading Day following the date the Board
effects the forgoing exchange multiplied by the number of Excess Exchange Shares that would
otherwise have been issuable to such holder.




     (b) The exchange of the Rights by the Board may be made effective at such time, on such basis
and with such conditions as the Board in its sole discretion may establish. Promptly after the
action of the Board electing to exchange the Rights, the Company shall give notice thereof
(specifying the steps to be taken to receive shares of capital stock in exchange for Rights) to the
Rights Agent and the holders of the Rights (other than Rights that have become null and void
pursuant to Section 8(e)) outstanding immediately prior thereto by mailing such notice in
accordance with Section 26.



     (c) Before effecting an exchange pursuant to this Section 24, the Board may direct the
Company to enter into a Trust Agreement in such form and with such terms as the Board shall then
approve (the “Trust Agreement”). If the Board so directs, the Company shall enter into the Trust
Agreement and shall issue to the trust created by such agreement (the “Trust”) all or some (as
designated by the Board) of the shares of capital stock issuable pursuant to the exchange, and all
or some (as designated by the Board) holders of Rights entitled to receive shares pursuant to the
exchange shall be entitled to receive such shares (and any dividends paid or distributions made
thereon after the date on which such shares are deposited in the Trust) only from the Trust and
solely upon compliance with the relevant terms and provisions of the Trust Agreement.



     (d) Prior to effecting an exchange and registering shares of capital stock in any Person’s
name, including any nominee or transferee of a Person, the Company may require (or cause the
trustee of the Trust to require), as a condition thereof, that any holder of Rights provide
evidence, including, without limitation, the identity of the Beneficial Owners thereof and their
Affiliates (or former Beneficial Owners thereof and their Affiliates) as the Company shall
reasonably request in order to determine if such Rights are null and void. If any Person shall
fail to comply with such request, the Company shall be entitled conclusively to deem the Rights
formerly held by such Person to be null and void pursuant to Section 8(e) and not
transferable or exerciseable or exchangeable in connection herewith.



     (e) Any shares of capital stock issued at the direction of the Board in connection herewith
shall be validly issued, fully paid and nonassessable shares of such capital stock, and the Company
shall be deemed to have received as consideration for such issuance a benefit having a value that
is at least equal to the aggregate par value of the shares so issued. Approval by the Board of
this Agreement shall constitute a determination by the Board that such consideration is adequate.



     (f) Immediately upon the effective date of the action of the Board electing the exchange of
any Rights pursuant to this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of capital stock as set forth in
subsection (a) above. The Company shall



19









 




promptly give public notice of any such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent on the effective date of said action of the Board ordering
the exchange of Rights. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to Section 8(e) hereof)
held by each holder of Rights.




     (g) In the event that there shall not be sufficient shares of capital stock authorized but
unissued to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company may substitute, for each Preferred Unit that would otherwise be issuable upon
exercise of a Right, one (1) share of Common Stock or, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, one (1) Preferred Unit.



     (h) The failure to give, or any defect in, any notice provided for in this Section 24
shall not affect the validity of such exchange



     Section 25. Notice of Certain Events.



     (a) If the Company shall propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Stock or to make any other distribution to the holders of its Preferred
Stock (other than a regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock
or stock of any class or any other securities, rights, or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Stock payable in shares of Common Stock or to effect a subdivision,
combination, or consolidation of the Common Stock (by reclassification or otherwise than by payment
of dividends in shares of Common Stock) then, in each such case, the Company shall give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purpose of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock or Common Stock, as the case
may be, if any such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least ten (10) days prior to the record date for
determining holders of the shares of Preferred Stock or Common Stock, as the case may be, for
purposes of such action, and in the case of any such other action, at least ten (10) days prior to
the date of the taking of such proposed action or the date of participation therein by the holders
of the shares of Preferred Stock or Common Stock, as the case may be. The failure to give notice
required by this Section 25, or any defect therein, shall not affect the legality or
validity of the action taken by the Company or the vote upon any such action.



     (b) In case any of the events set forth in Section 12 hereof shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such events which notice
shall describe such event and the consequences of such event to holders of Rights under Section
12 hereof.



20









 





     Section 26. Notices. Notices or demands authorized by this Plan to be given or made by the
Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage-prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:


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




     Subject to Section 21 hereof, any notice or demand authorized by this Plan to be given
or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage-prepaid, addressed (until another
address is filed in writing with the Company) as follows:


Illinois Stock Transfer Company

209 W. Jackson Boulevard

Suite 903

Chicago, Illinois 60606

Attention: Robert G. Pearson, President and Chief Executive Officer

Facsimile: (312) 427-2879




     Notices or demands authorized by this Plan to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company (or the Rights Agent on and after the Distribution Date).



     Section 27. Supplements and Amendments. The Company may from time to time supplement or amend
this Plan without the approval of any holders of Right Certificates (or, prior to the Distribution
Date, the Common Stock) to make any provision with respect to the Rights which the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent whether or not it would adversely affect the holders of Right
Certificates; provided, however, that from and after a Shares Acquisition Date, this Plan shall not
be amended in any manner which would materially and adversely affect the interests of the holders
of Rights. Notwithstanding the foregoing, the Company may at any time prior to the Shares
Acquisition Date amend this Plan to lower the thresholds set forth in Section 1(x).



     Section 28. Determinations and Actions by the Board. For all purposes of this Plan, the Board
shall have the exclusive power and authority to administer this Plan and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Plan, including the right and power to (a) interpret the provisions of
this Plan, and (b) make all determinations deemed necessary or advisable for the administration of
this Plan (including a determination to redeem or exchange or not to redeem or exchange the Rights
or to amend this Plan). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the
Board to any liability to the holders of the Rights.



     Section 29. Successors. All the covenants and provisions of this Plan by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and



21









 




assigns hereunder.




     Section 30. Benefits of this Agreement. Nothing in this Plan shall be construed to give to
any Person other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right,
remedy, or claim under this Plan; but this Plan shall be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock).



     Section 31. Severability. If any term, provision, covenant, or restriction of this Plan is
held by a court of competent jurisdiction or other authority to be invalid, void, or unenforceable,
the remainder of the terms, provisions, covenants, and restrictions of this Plan shall remain in
full force and effect and shall in no way be affected, impaired, or invalidated; provided, however,
that, notwithstanding anything in this Plan to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid, void or unenforceable and the
Board determines in its good faith judgment that severing the invalid language from this Plan would
adversely affect the purpose or effect of this Plan, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the Close of Business on
the tenth day following the date of such determination by the Board.



     Section 32. Governing Law. This Plan and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Georgia and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable to contracts to be
made and performed entirely within such State, without regard to any conflicts of laws principles
thereof.



     Section 33. Counterparts. This Plan may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original and all such counterparts
shall together constitute but one and the same instrument.




22











 





     IN WITNESS WHEREOF, the parties hereto have caused this Plan to be duly executed and
attested, all as of the date first above written.



	 	 	 	 	 
	 	UNITED COMMUNITY BANKS, INC.

 	 
	 	By:  	/s/ Rex S. Schuette
 	 
	 	 	Name:  	Rex S. Schuette  	 
	 	 	Title:  	Executive Vice President & Chief Financial Officer 	 
	 
	 	ILLINOIS STOCK TRANSFER COMPANY

 	 
	 	By:  	/s/ Robert G. Pearson
 	 
	 	 	Name:  	Robert G. Pearson  	 
	 	 	Title:  	President & Chief Executive Officer 	 



23









 






	 	 	 	 	 



EXHIBIT A




CERTIFICATE OF DESIGNATION

OF

JUNIOR PARTICIPATING PREFERRED STOCK, SERIES E

OF

UNITED COMMUNITY BANKS, INC.




     Section 1. Designation And Amount. The shares of such series shall be designated as “Junior
Participating Preferred Stock, Series E,” $1.00 par value per share (the “Series E Preferred
Stock”), and the number of shares constituting the Series E Preferred Stock shall be 1,000,000.
Such number of shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series E Preferred stock to a
number less than the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights, or warrants or upon the conversion of
any outstanding securities issued by the Company convertible into Series E Preferred Stock.



     Section 2. Dividends And Distributions.



     (a) Subject to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series E Preferred Stock with respect to
dividends, the holders of shares of Series E Preferred Stock shall be entitled to receive, when,
as, and if declared by the Board of Directors out of funds legally available for the purpose,
dividends in an amount per share (rounded to the nearest cent) equal to 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock. In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of shares of Series E
Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to such event.



     (b) Dividends paid on the shares of Series E Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of shares of Series E Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the payment thereof.



     Section 3. Voting Rights. In addition to any other voting rights required by law, the holders
of shares of Series E Preferred Stock shall have the following voting rights:



     (a) Subject to the provision for adjustment hereinafter set forth, each share of Series E



 









 




Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a
vote of the shareholders of the Company. In the event the Company shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per share to which holders of
shares of Series E Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.




     (b) Except as otherwise provided herein, in any other Certificate of Designations creating a
series of Preferred Stock or any similar Stock, or by law, the holders of shares of Series E
Preferred Stock and the holders of shares of Common Stock and any other capital stock of the
Company having general voting rights shall vote together as one class on all matters submitted to a
vote of shareholders of the Company.



     (c) Except as set forth herein, or as otherwise provided by law, holders of Series E Preferred
Stock shall have no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any
corporate action.



     Section 4. Reacquired Shares. Any shares of Series E Preferred Stock purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of the Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the Articles, or in any
other Certificate of Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.



     Section 5. Liquidation, Dissolution Or Winding Up. Upon any liquidation, dissolution or
winding up of the Company, no distribution shall be made (a) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the
Series E Preferred Stock unless, prior thereto, the holders of shares of Series E Preferred Stock
shall have received $100 per share, and any such additional amount such that the holders of shares
of Series E Preferred Stock shall be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (b) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series E Preferred Stock, except distributions made ratable on the Series E Preferred
Stock and all such parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the event the Company
shall at any time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series E Preferred Stock were entitled immediately prior to
such event under the proviso in clause (a) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.



     Section 6. Consolidation, Merger, Etc. In case the Company shall enter into any
consolidation, merger, combination, or other transaction in which the shares of Common Stock are



 









 




exchanged for or changed into other stock or securities, cash, and/or any other property, then
in any such case each share of Series E Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash, and/or any other
property (payable in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Company shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series E Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.




     Section 7. No Redemption. The shares of Series E Preferred Stock shall not be redeemable.



     Section 8. Rank. The Series E Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other class of the Company’s
Preferred Stock and shall rank senior to the Common Stock as to such matters.



     Section 9. Amendment. The Articles shall not be amended in any manner which would materially
alter or change the powers, preferences, or special rights of the Series E Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least a majority of the
outstanding shares of Series E Preferred Stock, voting together as a single class.



 









 





EXHIBIT B




UNITED COMMUNITY BANKS, INC.

FORM OF RIGHT CERTIFICATE



Certificate No. R-______



NOT EXERCISABLE AFTER THE FINAL EXPIRATION DATE (AS DEFINED IN THE PLAN) OR EARLIER IF REDEMPTION,
EXCHANGE OR OTHER EXPIRATION EVENT OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AND EXCHANGE ON THE
TERMS SET FORTH IN THE PLAN. AS SET FORTH IN THE PLAN, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON
WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED IN
THE PLAN), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY
BE NULL AND VOID.




     This Right Certificate certifies that __________________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which entitles the holder
thereof, subject to the terms, provisions and conditions of the Tax Benefits Preservation Plan,
dated as of February 22, 2011 (the “Plan”), between United Community Banks, Inc., a Georgia
corporation (the “Company”), and Illinois Stock Transfer Company, an Illinois corporation (the
“Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term
is defined in the Plan) and prior to the Expiration Date, at the designated office of the Rights
Agent, or at the office of its successor as Rights Agent, one-hundredth of a share of the Company’s
Junior Participating Preferred Stock, Series E, $1.00 par value per share (the “Preferred Stock”;
and each one-hundredth of a shares of Preferred Stock, a “Preferred Unit”), of the Company, at a
purchase price of $8.00 per Preferred Unit (the “Purchase Price”), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of Preferred Units which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of February 22, 2011. As provided in the Plan, the Purchase Price and
the number of Preferred Units which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the happening of certain
events.



     This Right Certificate is subject to all of the terms, provisions, and conditions of the Plan,
which terms, provisions and conditions are hereby incorporated herein by reference and made a part
hereof and to which Plan reference is hereby made for a full description of the rights, limitations
of rights, obligations, duties, and immunities hereunder of the Rights Agent, the Company, and the
holders of the Right Certificates. Copies of the Plan are available upon written request to the
Company or the Rights Agent.



     This Right Certificate, with or without other Right Certificates, upon surrender at the
designated office of the Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Units as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not exercised.



     Subject to the provisions of the Plan, the Rights evidenced by this Certificate (i) may be



 









 




redeemed by the Company at a redemption price of $0.001 per Right or (ii) may be exchanged in
whole or in part for Preferred Units or shares of Common Stock.




     No holder of this Right Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Units or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the Plan
or herein be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings of other actions affecting shareholders (except as
provided in the Plan), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the
Plan.



     This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.



     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal by its authorized officers dated as of ____________, ___.



	 	 	 	 	 
	 	UNITED COMMUNITY BANKS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 


(SEAL)



Attest:



_________________________________________

Secretary



Countersigned:



_____________________, as Rights Agent




	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Authorized Signature 	 	 
	 	 	 	 
	 




 











 





Form of Reverse Side of Right Certificate




FORM OF ASSIGNMENT


(To be executed by the registered holder if such holder desires to transfer the Right Certificate.)




     FOR VALUE RECEIVED
 




hereby sells, assigns and transfers unto
 





 


(Please print name and address of transferee)
 


this Right Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint
                   
             
                  
      
attorney, to transfer this Right Certificate on the books of the
within-named Company, with full power of substitution.




     The undersigned hereby certifies that:



     (1) the Rights evidenced by this Right Certificate are not being assigned by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate of any such Acquiring Person (as such
terms are defined in the Plan); and



     (2) after due inquiry and to the best knowledge of the undersigned, it did not acquire the
Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate of an Acquiring Person.



	 	 	 	 	 
	 	 	 
	Dated:
             
                   
             
           
                 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title, if any:  	 	 
	 



Signature Medallion Guaranteed:





     Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.



 









 





Form of Reverse Side of Certificate — continued




FORM OF ELECTION TO PURCHASE


(To be executed if holder desires to exercise the Rights represented by the Right Certificate.)




     The undersigned hereby irrevocably elects to exercise ______________ Rights represented by
this Right Certificate to purchase Preferred Units issuable upon the exercise of the Rights (or
such other securities of the Company or of any other Person which may be issuable upon the exercise
of the Rights) and requests that certificates (or registrations in uncertificated book-entry form
on the books of the Company) for such securities be issued in the name of and delivered to:


Please print name, address and social security or tax identification number:
 


 





 






     If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a
new Right Certificate for the balance of such Rights shall be registered in the name of and
delivered to:


Please print name, address and social security or tax identification number:
 


 



 




	 	 	 	 	 
	 	 	 
	Dated:
              
                  
               
         
                 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title, if any:  	 	 
	 




Signature Medallion Guaranteed:





     Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.



 









 





Form of Reverse Side of Certificate — continued




NOTICE



     The signature in the foregoing Forms of Assignment and Election must conform to the name
written upon the face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.



     In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, United Community Banks, Inc. and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to be
an Acquiring Person or an Affiliate thereof (as defined in the Plan) and such Assignment or
Election to Purchase will not be honored.