exv4w2






EXHIBIT 4.2




UNITED COMMUNITY BANKS, INC.

TAX BENEFITS PRESERVATION PLAN

SUMMARY OF TERMS




	 	 	 
	Purpose

	 	The purpose of the Tax Benefits Preservation
Plan (the “Plan”) described in this summary of
terms is to preserve the value of certain
deferred tax assets (“Tax Benefits”) of United
Community Banks, Inc. (the “Company”) for U.S.
federal income tax purposes.
	 
	 	 
	Rights; Rights Certificates

	 	The Board of Directors of the Company (the
“Board”) would authorize and declare a
dividend of one preferred share purchase right
(a “Right”) in respect of each share of common
stock of the Company (the “Common Stock”)
outstanding at the close of business on the
date of the Plan (the “Record Date”) or to
become outstanding between the Record Date and
the earlier of the Distribution Date and the
Expiration Date (as such terms are defined
below).
	 
	 	 
	 

	 	Each Right represents the right to purchase,
upon the terms and subject to the conditions
in the Plan, one-hundredth of a share of
Junior Participating Preferred Stock, Series
E, $1.00 par value per share (“Preferred
Stock”; and such one-hundredth of a share of
Preferred Stock, a “Preferred Unit”).
	 
	 	 
	 

	 	Prior to the Distribution Date (as defined
below), the Rights would be evidenced by, and
trade with, the Common Stock and would not be
exercisable. After the Distribution Date, the
Company would cause the rights agent, to mail
rights certificates to shareholders and the
Rights would trade independently of the Common
Stock.
	 
	 	 
	Distribution Date;

Separation of Rights

	 	Rights would separate from the Common Stock
and become exercisable following the close of
business on the tenth (10th) business day
following the earlier of a Shares Acquisition
Date and a Tender Offer Date (as such terms
are defined below) (the “Distribution Date”).
	 
	 	 
	 

	 	“Shares Acquisition Date” means the date of
the first public announcement by the Company
in a press release expressly referring to the
Plan indicating that a person has become an
Acquiring Person (as defined below).
	 
	 	 
	 

	 	“Tender Offer Date” means 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.
	 
	 	 
	 

	 	“Acquiring Person” means any person who or
which, together with its affiliates,
beneficially owns 4.99% or more of the Common
Stock, other than (i) the U.S. government;
(ii) the Company or any subsidiary or employee
benefit plan or compensation arrangement of
the Company; (iii) any person who or which,
together with its affiliates, was on the
Record Date, the beneficial owner of 4.99% or
more of the






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	 	Common Stock; (iv) subject to the
Plan, Fletcher International, Ltd. and certain
of its assignees, (v) any person who or which
would beneficially own 4.99% or more of shares
of Common Stock as a result of a reduction in
outstanding Common Stock by the Company; (vi)
any person that has become a 4.99% 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; 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 will
become an Acquired Person if such person later
becomes the beneficial owner of any additional
shares of Common Stock unless the acquisition
of such Common Stock is solely as a result of
a reduction in outstanding Common Stock by the
Company.
	 
	 	 
	 

	 	“Approved Acquisition” mean (i) any
acquisition of Company Securities that causes
a person to qualify as a Threshold Holder and
is approved in advance by the Board or (ii) a
conversion (or other exchange) of common stock
or any other interest that would be treated as
“stock” of the Company for purposes of Section
382 of the Internal Revenue Code of 1986, as
amended, for other common stock or interests
that would be treated as “stock” of the
Company for purposes of Section 382 of the
Internal Revenue Code of 1986, as amended,
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 Internal Revenue Code of 1986, as
amended.
	 
	 	 
	Exercise of Rights

	 	On or after the Distribution Date, each Right
would initially entitle the holder to purchase
Preferred Units for $8.00 per Preferred Unit
(the “Purchase Price”).
	 
	 	 
	 

	 	The Preferred Stock is designated so that each
Preferred Unit has economic and voting terms
similar to those of one whole share of Common
Stock. Specifically:







	 	•	 	The Preferred Shares would participate
in any dividends on the Common Stock with each
whole Preferred Share being entitled to 100
times the dividend per share of Common Stock.
	 
	 	•	 	The Preferred Shares would vote with
the Common Stock with each whole Preferred
Share being entitled to 100 votes.
	 
	 	•	 	The liquidation and merger
consideration preference for each whole
Preferred Share would equal 100 times the
liquidation or merger consideration amount per
share of Common Stock.




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	Trigger

	 	Following a Shares Acquisition Date, (i)
Rights owned by the Acquiring Person or its
transferees would automatically be void; and
(ii) each other Right will automatically
become a Right to buy, for the Purchase Price,
that number of Preferred Units determined by
dividing the aggregate Purchase Price by 50%
of the current market value of the Common
stock.
	 
	 	 
	 

	 	Example:







	 	•	 	A holder of a Right has the right to
purchase 100,000 Preferred Units as a result
of his ownership of 100,000 shares of Common
Stock.
	 
	 	•	 	The Purchase Price for each Right is
$10. His aggregate Purchase Price for all of
his Rights is $1,000,000.
	 
	 	•	 	Following a Shares Acquisition Date
when the Common Stock is trading at $3.00, the
Rights are adjusted to become the right to
purchase 666,667 Preferred Units
($1,000,000/$1.50) for $1,000,000. Because
each Preferred Unit is equivalent to one share
of Common Stock, an Acquiring Person would be
so severely diluted that he would not have an
incentive to purchase and trigger such Rights.





	 	 	 

	Exchange

	 	At any time after the Shares Acquisition Date,
the Board may, at its option, exchange all or
part of the then outstanding and exercisable
Rights for Preferred Stock or Common Stock at
an exchange ratio of one Preferred Unit or one
share of Common Stock per Right, subject to
adjustments and limitations described in the
Plan and a reduction in the shares issuable to
pay the deemed Purchase Price. The Board may
enter into a trust agreement pursuant to which
the Company would deposit into a trust such
securities that would be distributable to
shareholders (excluding the Acquiring Person)
in the event the exchange is implemented.



The provision is provides a cashless way for
the dilutive issuance to occur.
	 
	 	 
	Redemption

	 	The Board may, at its option, redeem all, but
not fewer than all, of the then outstanding
Rights at a redemption price of $0.001 per
Right at any time prior to a Shares
Acquisition Date.
	 
	 	 
	Amendments

	 	The Company may from time to time before the
Shares Acquisition Date supplement or amend
the Plan without the approval of any holders
of Rights (or, prior to the Distribution Date,
the holders of Common Stock).
	 
	 	 
	 

	 	After the Shares Acquisition Date, the Plan
shall not be amended in any manner which would
adversely affect the interests of the holders
of Rights.






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	Expiration

	 	The Rights will expire on the earlier of (i)
the close of business on the date that is the
fifth (5th) anniversary of the
Plan, (ii) the time at which all Rights are
redeemed, (iii) the time at which all Rights
are exchanged, (iv) such date as 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 as the Board determines, in
its sole discretion, that the or that the
Rights and the Plan are no longer in the best
interests of the Company and its shareholders.







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