Document:

ex4-1.htm

    
      

    

    Exhibit 4.1

     

    CERTIFICATE
OF DESIGNATION

     OF

     COMMON
STOCK EQUIVALENT JUNIOR PREFERRED STOCK

     OF

    UNITED
COMMUNITY BANKS, INC.

     

    Pursuant
to Section 14-2-602 of
the

    Georgia
Business Corporation Code

     

    United
Community Banks, Inc., a corporation organized under the laws of the State of
Georgia (the “Corporation”),
does hereby certify that:

     

    1. At a
meeting duly convened and held on March 26, 2010, the Board of Directors of the
Corporation (the “Board”)
duly adopted the following resolutions authorizing the issuance and sale by the
Corporation of a series of the Corporation’s preferred stock, $1.00 par value
per share, to be known as the Common Stock Equivalent Junior Preferred
Stock:

     

    “RESOLVED,
that the powers, preferences, participation and other special rights,
qualifications, limitations, restrictions and other designations of the
Corporation’s Common Stock Equivalent Junior Preferred Stock, including those
established by the Board and the number of authorized shares thereof, are
authorized and approved as set forth in the Certificate of Designation attached
hereto as Exhibit
A, which is incorporated herein and made a part of these resolutions by
reference.”

     

    2. Attached hereto, and
thereby made a part hereof, is such Exhibit
A from the Board’s resolution designating the Common Stock Equivalent
Junior Preferred Stock.

     

    IN
WITNESS WHEREOF, this Certificate of Designation is executed on behalf of
the Corporation by its duly authorized officer this 31st day
of March, 2010.

     

    
      
        	 	UNITED COMMUNITY BANKS,
      INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      Rex S. Schuette	 
	 	Name:
      Rex S. Schuette 	 
	 	Title:  Executive
      Vice President & CFO	 

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        

      

    

    Exhibit
A

     

    CERTIFICATE
OF DESIGNATION

    OF

    COMMON
STOCK EQUIVALENT

    JUNIOR
PREFERRED STOCK

    OF

    UNITED
COMMUNITY BANKS, INC.

     

    Pursuant
to the authority vested in the Board of Directors (the “Board”)
by the Restated Articles of Incorporation of United Community Banks, Inc. (the
“Corporation”),
as amended (the “Articles
of Incorporation”), the Board does hereby designate, create, authorize
and provide for the issue of a series of preferred stock, $1.00 par value per
share, which shall be designated as “Common Stock Equivalent Junior Preferred
Stock” (the “Junior
Preferred Stock”), consisting of 1,000,000 shares having the
following  powers, preferences, participation and other special
rights, qualifications, limitations, restrictions and other
designations:

     

    Section
I.                Definitions

     

    “Acquiring
Person” has the meaning specified in Section VI(c).

     

    “Applicable
Conversion Rate” means the Initial Conversion Rate, subject to adjustment
pursuant to Section II(b), as applicable, for any such event occurring
subsequent to the initial determination of such rate.

     

    “Board”
has the meaning specified in the preamble.

     

    “Articles
of Incorporation” has the meaning specified in the preamble.

     

    “Capacity
Amendment” means an amendment to the Articles of Incorporation increasing
the number of shares of Common Stock that the Corporation is authorized to issue
to more than 100,000,000.

     

    “Change
of Control” has the meaning specified in Section VI(b).

     

    “Common
Dividend Equivalent Amount” has the meaning specified in Section
III(a).

     

    “Common
Stock” means the Common Stock, $1.00 par value per share, of the
Corporation.

     

    “Conversion
Date” means, with respect to a share of Junior Preferred Stock, the date
on which such share is converted into Common Stock.

     

    “Convertible
Holder” means a Holder, other than the initial Holder or an affiliate
thereof, who acquires one or more shares of Junior Preferred Stock following a
Permitted Transfer.

     

    “Conversion
Notice” shall mean the notice given by a Convertible Holder to the
Corporation, specifying the number of shares of Junior Preferred Stock to be
converted into Common Stock and certifying that such Person is a Convertible
Holder.

     

    “Corporation”
has the meaning specified in the preamble.

     

    
      
         

      

      
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    “Exchange
Property” has the meaning specified in Section VI(a).

     

    “Holder”
means a Person in whose name any shares of Junior Preferred Stock are
registered, which may be treated by the Corporation as the absolute owner of
such shares for all purposes.

     

    “Initial
Conversion Rate” means, for each share of Junior Preferred Stock, one
hundred (100) shares of Common Stock.

     

    “Issue
Date” means the date that the Junior Preferred Stock is first
issued.

     

    “Junior
Preferred Stock” has the meaning specified in the preamble.

     

    “Junior
Stock” shall mean any class of capital stock or series of Preferred Stock
of the Corporation established by the Board after the Issue Date, the terms of
which do not expressly provide that such class or series ranks senior to or on
parity with the Junior Preferred Stock as to dividend rights or rights upon the
liquidation, winding-up or dissolution of the Corporation.

     

    “Liquidation
Event” has the meaning specified in Section V(a).

     

    “Parity
Stock” shall mean any class of capital stock or series of Preferred Stock
established by the Board after the Issue Date, the terms of which expressly
provide that such class or series will rank on parity with the Junior Preferred
Stock as to dividend rights or rights upon the liquidation, winding-up or
dissolution of the Corporation.

     

    “Permitted
Transfer” means a sale or other transfer (i) to an affiliate of the
initial Holder or to the Corporation; (ii) in a widespread public distribution;
(iii) in transfer in which no transferee (or group of associated transferees)
would receive 2 percent or more of any class of voting securities of the
Corporation; or (iv) to a transferee that would control more than 50 percent of
the voting securities of the Corporation without any transfer from the initial
Holder.

     

    “Person”
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company or trust.

     

    “Record
Date” means, with respect to any dividend, distribution or other
transaction or event in which the holders of the Common Stock (or other
applicable security) have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or other
property, the date fixed for determination of holders of the Common Stock (or
other applicable security) entitled to receive such cash, securities or other
property (whether such date is fixed by the Board or a duly authorized committee
of the Board or by statute, contract or otherwise).

     

    “Senior
Stock” shall mean each class of capital stock or series of Preferred
Stock established by the Board after the Issue Date, the terms of which
expressly provide that such class or series will rank senior to the Junior
Preferred Stock as to dividend rights or rights upon the liquidation, winding-up
or dissolution of the Corporation.

     

    “Stockholder
Approval” means the requisite approval by the stockholders of the
Corporation of the Capacity Amendment.

     

    “Transfer
Agent” shall mean the Corporation’s duly appointed transfer agent,
registrar, redemption, conversion and dividend disbursing agent for the Junior
Preferred Stock and transfer agent and registrar for any Common Stock issued
upon conversion of the Junior Preferred Stock, or any successor duly appointed
by the Corporation.

     

    
      
         

      

      
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    Section
II.             
Conversion

     

    (a)           No
share of Junior Preferred Stock (or fraction thereof) may be converted into
Common Stock unless held by a Convertible Holder.  Each share of
Junior Preferred Stock (or fraction thereof) held by a Convertible Holder shall
be convertible at any time following the Stockholder Approval into a number of
shares of Common Stock equal to the product of (i) the fraction of a share of
Junior Preferred Stock converted and (ii) the Applicable Conversion Rate in
effect on the Conversion Date, plus cash in lieu of any fractional shares of
Common Stock pursuant to Section II(c)(iv).  For all purposes with
respect to the conversion of Junior Preferred Stock, references herein to
“Common Stock” shall include and mean any cash, securities or other property
(including payments of cash in lieu of fractional shares of Common Stock) that
may be due upon such conversion and references to “Junior Preferred Stock” shall
include and mean any fractional shares thereof.

     

    (b)           Adjustments
to Conversion Rate.  If, at any time while Junior Preferred Stock
remains outstanding, (i) the Corporation issues to holders of the Common Stock
as a class shares of Common Stock or other securities of the Corporation as a
dividend or distribution on the Common Stock, or (ii) the Corporation effects a
share split or share combination of the Common Stock, (each, an “Adjustment
Event”), then the Corporation shall adjust the Initial Conversion Rate or
Applicable Conversion Rate, as applicable, or other terms of the Junior
Preferred Stock in effect immediately prior to such event so that each Holder of
shares of Junior Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of  shares of Common Stock that such
Holder would have owned or would have been entitled to receive upon or by reason
of any of the events described above, had such shares of the Junior Preferred
Stock been converted into shares of Common Stock immediately prior to the
occurrence of such event.  An adjustment made pursuant to this Section
II(b) shall become effective retroactively (x) in the case of any such dividend
or distribution, to the day immediately following the close of business on the
Record Date for the determination of holders of Common Stock entitled to receive
such dividend or distribution or (y) in the case of any such subdivision, split,
combination or reclassification, to the close of business on the day upon which
such corporate action becomes effective.

     

    (c)           Shares
of Junior Preferred Stock shall be converted into shares of Common Stock in
accordance with the following procedures:

     

    (i)           At
all times after the Stockholder Approval, a Convertible Holder may exercise a
conversion right by the delivery of a Conversion Notice to the office of the
Transfer Agent during normal business hours and (if so required by the
Corporation or the Transfer Agent) an instrument of transfer, in form
satisfactory to the Corporation and to the Transfer Agent, duly executed by such
Convertible Holder or his duly authorized attorney, and funds in the amount of
any applicable transfer tax (unless provision satisfactory to the Corporation is
otherwise made therefor), if required pursuant to Section
II(c)(iii).

     

    
      
         

      

      
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    (ii)           As
promptly as practicable after the delivery of a Conversion Notice and the
payment in cash of any amount required by the provisions of Sections 2(c)(i) and
2(c)(iii), the Corporation will deliver or cause to be delivered at the office
of the Transfer Agent to or upon the written order of the Convertible Holder,
certificates or a confirmation of book-entry transfer of shares representing the
number of fully paid and non-assessable shares of Common Stock issuable upon
such conversion, issued in such name or names as the Convertible Holder may
direct. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of the delivery of the Conversion Notice, and
all rights of the Convertible Holder shall cease with respect to such shares of
Junior Preferred Stock at such time and the Person or Persons in whose name or
names the shares of Common Stock issued upon conversion are to be issued shall
be treated for all purposes as having become the record holder or holders of
such shares of Common Stock at such time; provided, however, that any delivery
of a Conversion Notice and payment on any date when the stock transfer books of
the Corporation shall be closed shall constitute the Person or Persons in whose
name or names the shares of Common Stock are to be issued as the record holder
or holders thereof for all purposes immediately prior to the close of business
on the next succeeding day on which such stock transfer books are
open.

     

    (iii)           The
issuance of shares of Common Stock upon conversion of shares of Junior Preferred
Stock shall be made without charge for any stamp or other similar tax in respect
of such issuance. However, if any such shares to be issued upon conversion are
to be issued in a name other than that of the Holder of the share or shares of
Junior Preferred Stock converted, the person or persons requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance, or shall establish to the
satisfaction of the Corporation that such tax has been paid.

     

    (iv)           No
fractional shares of Common Stock or scrip shall be issued upon conversion of
shares of Junior Preferred Stock. If more than one share of Junior Preferred
Stock shall be surrendered for conversion at any one time by the same Holder,
the number of full shares of Common Stock issuable upon conversion thereof shall
be computed on the basis of the aggregate number of shares of Junior Preferred
Stock so surrendered. Instead of any fractional shares of Common Stock that
would otherwise be issuable upon conversion of any shares of Junior Preferred
Stock, the Corporation shall pay to the Holder an amount in cash in respect of
such fractional interest equal to the value of such fractional interest based on
the closing sales price of the Common Stock on such national securities exchange
or automated quotation system on which the Common Stock is then listed or
authorized for quotation or, if the Common Stock is not so listed or authorized
for quotation, an amount determined in good faith by the Board to be the fair
value of the Common Stock at the close of business on the business day
immediately preceding the applicable Conversion Date.

     

    (v)           At
all times after the Stockholder Approval, the Corporation shall be required to
reserve or keep available, out of its authorized but unissued Common Stock, or
have sufficient authorized Common Stock to cover, the shares of Common Stock
deliverable upon the conversion of the Junior Preferred Stock  The
Corporation shall take all action necessary so that all shares of Common Stock
that may be issued upon conversion of shares of Junior Preferred Stock will upon
issue be validly issued, fully paid and nonassessable, and free from all liens
and charges in respect of the issuance or delivery thereof.

     

    
      
         

      

      
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    (d)           From
and after a Conversion Date, dividends hereunder shall no longer accrue with
respect to shares of Junior Preferred Stock converted on such date, and such
converted shares of Junior Preferred Stock shall cease to be outstanding,
subject to the rights of Holders of such Junior Preferred Stock to receive any
previously accrued and unpaid dividends on such shares and any other payments to
which they are otherwise entitled pursuant to Section III or Section
VI.

     

    Section
III.       
     Dividend Rights

     

    (a)           From
and after the Issue Date, (i) Holders shall be entitled to receive, when, as and
if declared by the Board or any duly authorized committee of the Board, but only
out of assets legally available therefor, all dividends or other distributions
in the form of cash or assets (other than shares of Common Stock) declared and
paid or made in respect of the shares of Common Stock, at the same time and on
the same terms as holders of Common Stock, in an amount per one-hundredth of a
share of Junior Preferred Stock equal to the product of (A) the Applicable
Conversion Rate then in effect and (B) any per share dividend or other
distribution in the form of cash or assets (other than shares of Common Stock)
declared and paid or made in respect of each share of Common Stock (the “Common
Equivalent Dividend Amount”), and (ii) no cash dividend or other cash
distribution shall be declared and paid or made in respect of Common Stock
unless the Board or any duly authorized committee of the Board declares and pays
to Holders of the Junior Preferred Stock, at the same time and on the same terms
as holders of Common Stock, the Common Equivalent Dividend Amount per
one-hundredth of a share of Junior Preferred Stock. Notwithstanding any
provision in this Section III(a) to the contrary, Holders of the Junior
Preferred Stock shall not be entitled to receive any dividend or other
distribution in the form of cash or assets (other than shares of Common Stock)
paid or made with respect to the Common Stock after the Issue Date (x) if the
Record Date for determination of holders of Common Stock entitled to receive
such dividend or distribution occurs prior to the Issue Date, or (y) with
respect to shares of Junior Preferred Stock converted on or prior to such Record
Date.

     

    (b)           Each
dividend or other distribution pursuant to Section III(a) above will be payable
to Holders of record of Junior Preferred Stock as they appear in the records of
the Corporation at the close of business on the Record Date for the
corresponding dividend or distribution to the holders of shares of Common
Stock.

     

    (c)           To
the extent the Corporation declares dividends on the Junior Preferred Stock and
Common Stock but does not make full payment of such declared dividends, the
Corporation will allocate the dividend payments on a pro rata basis among the
holders of shares of Junior Preferred Stock and the holders of Common Stock so
that the amount of dividends actually paid per share on the Junior Preferred
Stock and Common Stock shall in all cases bear to each other the same ratio as
the then Applicable Conversion Rate. The foregoing right shall not be cumulative
and shall not in any way create any claim or right in favor of Holders in the
event that dividends have not been declared or paid in respect of any prior
calendar quarter.

     

    (d)           Holders
of Junior Preferred Stock shall not be entitled to any dividends, whether
payable in cash, securities or other property, on the Junior Preferred Stock
other than dividends (if any) declared and payable on Junior Preferred Stock as
specified in this Section III and dividends of Common Stock or other securities
of the Corporation pursuant to Section II(b).

     

    
      
         

      

      
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    (e)           Notwithstanding
any provision in this Certificate of Designation to the contrary, Holders of
Junior Preferred Stock shall not be entitled to receive any dividends with
respect to any such shares converted into Common Stock, except to the extent
that any such dividends have been declared by the Board or any duly authorized
committee of the Board (and the Record Date for such dividend occurs) after the
Issue Date and prior to the applicable Conversion Date of such
shares.

     

    Section
IV.             Voting

     

    (a)           Shares
of Junior Preferred Stock shall have no voting rights except as set forth in
Section IV(b) or as otherwise required by Georgia law from time to time. In
exercising the voting rights set forth in Section IV(b), each Holder shall be
entitled to one vote for each share of Junior Preferred Stock held by such
Holder.

     

    (b)           So
long as any shares of Junior Preferred Stock remain outstanding, unless a
greater percentage shall then be required by law, the Corporation shall not,
without the affirmative vote or written consent of the Holders (voting or
consenting separately as one class) of at least a majority of the outstanding
shares of Junior Preferred Stock, amend, alter or repeal or otherwise change
(including in connection with any merger, consolidation or other similar
transaction) any provision of the Articles of Incorporation, including this
Certificate of Designation, if the amendment, authorization or repeal would
significantly and adversely affect the rights or preferences of the Junior
Preferred Stock.  Notwithstanding the foregoing, except as otherwise
required by law, the Corporation may, without the consent of any Holder,
authorize, increase the authorized amount of, or issue shares of Senior Stock or
Parity Stock, and in taking such actions, the Corporation shall not be deemed to
have significantly adversely affected the existing terms of the Junior Preferred
Stock.

     

    Section
V.              Liquidation

     

    (a)           In
the event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, which occurs while any Junior
Preferred Stock remains outstanding (each a “Liquidation
Event”), Holders of shares of Junior Preferred Stock shall, subject to
the prior rights of any holders of Senior Stock, be entitled to receive and be
paid out of the assets of the Corporation available for distribution to its
stockholders, for each such share (or fraction thereof), a liquidating
distribution in an amount equal to that received by holders of the Common Stock
for each share of Common Stock into which such share of Junior Preferred Stock
(or fraction thereof) was convertible at the Applicable Conversion Rate
immediately prior to such Liquidation Event.

     

    (b)           If,
in any distribution described in Section V(a) above, the assets of the
Corporation or proceeds thereof are not sufficient to pay in full the amounts
payable with respect to all outstanding shares of Junior Preferred Stock and the
corresponding amounts payable with respect to the Common Stock or any other
Parity Stock as to such distribution, Holders of Junior Preferred Stock and the
holders of Common Stock or any other Parity Stock shall share ratably in any
such distribution in proportion to the full respective distributions to which
they are entitled.

     

    (c)           For
purposes of this Section V, neither the sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property and assets of the Corporation (other than in
connection with the voluntary or involuntary liquidation, winding up or
dissolution of the Corporation) nor the merger, consolidation or any other
business combination transaction of the Corporation into or with any other
corporation or Person shall be deemed to be a voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation.

     

    
      
         

      

      
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    (d)           In
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the Corporation shall, within ten (10) days after the date
the Board approves such action, or at least twenty (20) days prior to any
stockholder’s meeting called to approve such action, if applicable, or within
twenty (20) days after the commencement of any involuntary proceeding, whichever
is earlier, give each Holder initial written notice of the proposed
action.  Such initial written notice shall describe the material terms
and conditions of such proposed action.

     

    Section
VI.             Adjustments
for Change of Control

     

    (a)         
  Upon the
occurrence of a Change of Control (as defined herein) while any shares of Junior
Preferred Stock remain outstanding, each share of Junior Preferred Stock (or
fraction thereof) outstanding immediately prior to such Change of Control shall,
without the consent of Holders, become convertible into the types and amounts of
securities, cash, and other property that is or was receivable in such Change of
Control by a holder of the number of shares of Common Stock into which such
share of Junior Preferred Stock (or fraction thereof) was convertible
immediately prior to such Change of Control (such securities, cash, and other
property, the “Exchange
Property”);
provided,
however,
that if receipt of the Exchange Property would  cause the Holder to
the Holder to acquire control of a bank, as “control” is defined in Section
2(a)(2) of the Bank Holding Company Act of 1956, as amended, and the
implementing regulations of the Board of Governors of the Federal Reserve
System, require the Holder to file a Change in Bank Control Act notice or
require the Holder to make any similar regulatory filing, proper provision shall
be made for such Holder to receive shares of non-voting securities in lieu of
any voting securities included in the Exchange Property, the terms of which
non-voting securities shall be as nearly equivalent as practicable to those of
the Junior Preferred Stock.

     

    (b)        
   A “Change
of Control” shall mean:

     

     (i)  an
acquisition of more than fifty percent (50%) of the equity securities of the
Corporation (measured by vote or value) by means of merger or other form of
corporate reorganization in which outstanding shares of the Corporation are
exchanged for securities or other consideration issued, or caused to be issued,
by the Acquiring Person (as defined below) or its Parent, Subsidiary or
Affiliate (each as defined in Rule 12b-2 of the Exchange
Act);

     

     (ii)  a
sale or other disposition of all or substantially all of the assets of the
Corporation (on a consolidated basis) in a single transaction or series of
related transactions;

     

     (iii)  any
tender offer, exchange offer, stock purchase or other transaction or event or
series of related transactions or events by or involving the Corporation in
which a single entity or group becomes the direct or indirect owner of more than
fifty percent (50%) of the equity securities of the Corporation (measured by
vote or value);

     

     (iv) a capital
reorganization or reclassification of the Common Stock or other
securities.

     

    Notwithstanding
anything contained herein to the contrary, a change in the state of
incorporation of the Corporation shall not in and of itself constitute a Change
of Control.

     

    
      
         

      

      
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    (c)           “Acquiring
Person” means, in connection with any Change of Control any of the
following, at the Holder’s election, (i) the continuing or surviving Person of a
consolidation or merger with the Corporation (if other than the Corporation),
(ii) the transferee of all or substantially all of the properties or assets of
the Corporation, (iii) the corporation consolidating with or merging into the
Corporation in a consolidation or merger in connection with which the Common
Stock is changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (iv) the entity or group acting in concert
acquiring or possessing the power to cast the majority of the eligible votes at
a meeting of the Corporation’s stockholders at which directors are elected, or,
(v) in the case of a capital reorganization or reclassification, the
Corporation, or (vi) at the Holder’s election, any Person that (x) controls the
Acquiring Person directly or indirectly through one or more intermediaries, (y)
is required to include the Acquiring Person in the consolidated financial
statements contained in such Person’s Annual Report on Form 10 K (if such Person
is required to file such a report) or would be required to so include the
Acquiring Person in such Person’s consolidated financial statements if they were
prepared in accordance with U.S. generally accepted accounting principles and
(z) is not itself included in the consolidated financial statements of any other
Person (other than its consolidated subsidiaries).

     

    (d)           If
holders of shares of Common Stock have the opportunity to elect the form of
consideration to be received in a Change of Control, the Holders of Junior
Preferred Stock shall be entitled to receive the same
election.

     

    (e)           The
Corporation (or any successor) shall, within 20 days of the occurrence of any
Change of Control or, if earlier, the date on which similar notice is given to
holders of Common Stock, provide written notice to the Holders of such
occurrence and of the type and amount of the cash, securities or other property
that constitutes the Exchange Property.  Failure to deliver such
notice shall not affect the operation of this Section VI.

     

    Section
VII.            Reports
as to Adjustments

     

    Whenever
the number of shares of Common Stock into which the shares of Junior Preferred
Stock are convertible is adjusted as provided in Section II(b), the Corporation
shall, as soon as is reasonable practicable, compute such adjustment and furnish
to the Holders a certificate of the Corporation, setting forth the number of
shares of Common Stock into which each share of Junior Preferred Stock (or
fraction thereof) is convertible as a result of such adjustment, a brief
statement of the facts requiring such adjustment, the computation thereof and
when such adjustment will become effective.

     

    Section
VIII.          Transfer
Restrictions

     

    Shares of
Junior Preferred Stock may not be transferred to any Person other than pursuant
to a Permitted Transfer, and any attempt to transfer one or more shares of
Junior Preferred Stock (or fraction thereof) to a Person other than pursuant to
a Permitted Transfer shall be void and of no effect.

     

    Section
IX.             Exclusion
of Other Rights

     

    Except as
may otherwise be required by law, shares of Junior Preferred Stock shall not
have any powers, preferences, participation and other special rights,
qualifications, limitations, restrictions and other designations, other than
those specifically set forth herein (as this Certificate of Designation may be
amended from time to time) and in the Articles of Incorporation. The shares of
Junior Preferred Stock shall have no preemptive or subscription
rights.

     

    
      
         

      

      
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    Section
X.              Severability
of Provisions

     

    If any
powers, preferences, participation and other special rights, qualifications,
limitations, restrictions and other designations of the Junior Preferred Stock
set forth in this Certificate of Designation (as this Certificate of Designation
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other powers,
preferences, participation and other special rights, qualifications,
limitations, restrictions and other designations of the Junior Preferred Stock
set forth in this Certificate of Designation (as so amended) which can be given
effect without the invalid, unlawful or unenforceable powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations of the Junior Preferred Stock shall,
nevertheless, remain in full force and effect, and no powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations of the Junior Preferred Stock herein set
forth shall be deemed dependent upon any other such powers, preferences,
participation and other special rights, qualifications, limitations,
restrictions and other designations of the Junior Preferred Stock unless so
expressed herein.

     

    Section
XI.             Rank

     

    Notwithstanding
anything set forth in the Articles of Incorporation or this Certificate of
Designation to the contrary, the Board or any authorized committee of the Board,
without the vote of Holders of the Junior Preferred Stock, may authorize and
issue additional shares of stock ranking junior or senior to, or on parity with,
the Junior Preferred Stock as to dividends and the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation or any other powers, preferences, participation and
other special rights, qualifications, limitations, restrictions and other
designations.

     

    Section
XII.            No
Redemption

     

    The
Corporation may not, at any time, redeem the outstanding shares of the Junior
Preferred Stock, except upon the unanimous consent of the Holders of all
outstanding shares of Junior Preferred Stock.

     

    Section
XIII.          Repurchases

     

    Subject
to the limitations imposed herein, the Corporation may purchase and sell shares
of Junior Preferred Stock (or fraction thereof) from time to time to such
extent, in such manner, and upon such terms as the Board or any duly authorized
committee of the Board may determine.

     

    Section
XIV.          No Sinking
Fund

     

    Shares of
Junior Preferred Stock are not subject to the operation of a sinking fund or any
similar provisions.

     

    Section
XV.          
Notices

     

    All
notices, requests and other communications to a Holder of Junior Preferred Stock
shall be in writing (including facsimile transmission) and shall be given at the
address of such Holder as shown on the books of the Corporation. A Holder of
Junior Preferred Stock may waive any notice required hereunder by a writing
signed before or after the time required for notice or the action in question.
Notice shall be deemed given on the earlier of the date received or three
business days after the date such notice is mailed by first-class mail, postage
prepaid.

     

     

    9ex4-2.htm

    
      
        

      

    

    Exhibit
4.2

     

    FORM
OF

    CERTIFICATE
OF RIGHTS AND PREFERENCES

    OF

    SERIES
C CONVERTIBLE PREFERRED STOCK

    OF

    UNITED
COMMUNITY BANKS, INC.

     

    March
[●], 2010

     

    Pursuant
to Section 14-2-602 of the Georgia Business Corporation Code and Article V of
the Restated Articles of Incorporation, as amended, of United Community Banks,
Inc., a corporation organized and existing under the laws of the State of
Georgia (the “Company”),
hereby certifies that the following resolution was duly adopted by the Board of
Directors of the Company effective as of March [●], 2010 pursuant to authority
conferred upon the Board of Directors by the Restated Articles of Incorporation
of the Company, as amended, which authorize the issuance of up to Ten Million
(10,000,000) shares of preferred stock, par value $1.00 per share.

     

    RESOLVED,
that pursuant to authority expressly granted to and vested in the Board of
Directors of the Company and pursuant to the provisions of the Articles of
Incorporation, the Board of Directors hereby creates a series of preferred
stock, herein designated and authorized as the Series C Convertible Preferred
Stock, par value $1.00 per share, which shall consist of Sixty-Five Thousand
(65,000) of the shares of preferred stock which the Company now has authority to
issue, and the Board of Directors hereby fixes the powers, designations and
preferences and the relative, participating, optional and other special rights
of the shares of such series, and the qualifications, limitations and
restrictions thereof as follows:

     

    1.      Number.  The
number of shares constituting the Series C Convertible Preferred Stock shall be
Sixty-Five Thousand (65,000), all of which are issuable solely under the
Agreement.

     

    2.      Definitions.  Unless
the context otherwise requires, when used herein the following terms shall have
the meaning indicated.

     

    “Acquiring
Person” has the meaning set forth in the Agreement.

     

    “Acquisition
Consideration” is defined in Section
6(f)(iii)(C).

     

    “Agreement”
means the Securities Purchase Agreement dated as of April 1, 2010, by and
between the Company and Fletcher pursuant to which Sixty-Five Thousand (65,000)
shares of Series C Preferred Stock and a warrant are to be issued by the
Company, including all schedules, annexes and exhibits thereto, and as such
agreement may be amended from time to time.

     

    “Articles
of Incorporation” means the Restated Articles of Incorporation of the
Company, as amended.

     

    “Board”
means the Board of Directors of the Company.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    “Business
Day” means any day on which the Common Stock may be traded on the Nasdaq,
or if not admitted for trading on the Nasdaq, on any day other than a Saturday,
Sunday or holiday on which banks in New York City are required or permitted to
be closed.

     

    “Capital
Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated) of capital or capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership, limited
partnership, limited liability company or other equity interests of such
Person.

     

    “Certificate
of Rights and Preferences” means this Certificate of Rights and
Preferences of the Series C Preferred Stock.

     

    “Change
of Control” has the meaning set forth in the Agreement.

     

    “Change
of Control Notice” is defined in Section
6(f)(i).

     

    “Common
Stock Equivalent Junior Preferred Stock” means the Company’s Common Stock
Equivalent Junior Preferred Stock, par value $1.00 per share, issuable pursuant
to Section 6 of the Agreement, and any Capital Stock for or into which such
Common Stock Equivalent Junior Preferred Stock hereafter is exchanged,
converted, reclassified or recapitalized by the Company or pursuant to a Change
of Control (or, at the election of the Holder, the Capital Stock of any
Acquiring Person from and after the consummation of a Change of
Control).

     

    “Common
Stock” means the Company’s common stock, par value $1.00 per share, and
any Capital Stock for or into which such common stock hereafter is exchanged,
converted, reclassified or recapitalized by the Company or pursuant to a Change
of Control (or, at the election of the Holder, the Capital Stock of any
Acquiring Person from and after the consummation of a Change of
Control).

     

    “Company”
means United Community Banks, Inc., a Georgia corporation (or any Acquiring
Person from and after the consummation of a Change of Control).

     

    “Contingent
Notice” is defined in Section
6(f)(iii).

     

    “Conversion
Closing Date” is defined in Section
6(a)(i).

     

    “Conversion
Notice” is defined in Section
6(a)(i).

     

    “Conversion
Notice Date” is defined in Section
6(a)(i).

     

    “Conversion
Price” means Six Dollars and Two Cents ($6.02), subject to adjustment as
set forth herein.

     

    “Conversion
Stock Amount” is defined in Section
6(a)(ii).

     

    “Daily
Market Price” has the meaning set forth in the Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Dividend
Payment Date” is defined in Section
3(a).

     

    “Dividend
Period” is defined in Section
3(a).

     

    “Dividend
Rate” means (i) prior to receipt of the Stockholder Consent, a rate equal
to One Thousand Dollars ($1,000) per share multiplied by the lesser of (a)
twelve percent (12%) per annum and (b) the sum of the three (3)-month London
Interbank Offer Rate (LIBOR) determined as of the first day of the Dividend
Period (or if the first day of the Dividend Period is not a Business Day, then
the first Business Day after the first day of the Dividend Period) plus eight
percent (8%) per annum, subject to Section
3(c); and (ii) after receipt of the Stockholder Consent, a rate equal to
One Thousand Dollars ($1,000) per share multiplied by the lesser of (a) eight
percent (8%) per annum and (b) the sum of the three (3)-month London Interbank
Offer Rate (LIBOR) determined as of the first day of the Dividend Period (or if
the first day of the Dividend Period is not a Business Day, then the first
Business Day after the first day of the Dividend Period) plus four percent (4%)
per annum, subject to Section
3(c).

     

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

     

    “Fletcher”
means Fletcher International, Ltd. a company domiciled in Bermuda, together with
its successors.

     

    “Holder”
shall mean Fletcher and any one or more Persons to whom Fletcher sells,
exchanges, transfers, assigns, gives, pledges, encumbers, hypothecates,
alienates or distributes, whether directly or indirectly, any or all the Series
C Preferred Stock or all or any portion of the right to purchase the Series C
Preferred Stock under the Agreement.

     

    “Investment
Period” has the meaning set forth in the Agreement.

     

    “Issue
Date” means with respect to any shares of Series C Preferred Stock the
original date of issuance of such shares of Series C Preferred
Stock.

     

    “Junior
Securities” means Capital Stock that, with respect to dividends and
distributions upon Liquidation, ranks junior to the Series C Preferred Stock,
including but not limited to Common Stock, Common Stock Equivalent Junior
Preferred Stock and any other class or series of Capital Stock issued by the
Company or any Subsidiary of the Company on or after the date of the Agreement,
but excluding any Parity Securities and Senior Securities issued (i) to Fletcher
or its authorized assignees under the Agreement, (ii) with the approval of the
Holders of a Majority of the Series C Preferred Stock or (iii) upon the
conversion, redemption or exercise of securities described in clause (i) or (ii)
in accordance with the terms thereof.

     

    “Liquidation”
means the voluntary or involuntary liquidation, dissolution or winding up of the
Company; provided,
however,
that a consolidation, merger or share exchange shall not be deemed a
Liquidation, nor shall a sale, assignment, conveyance, transfer, lease or other
disposition by the Company of all or substantially all of its assets, which does
not involve a distribution by the Company of cash or other property to the
holders of Common Stock and Common Stock Equivalent Junior Preferred Stock, be
deemed to be a Liquidation.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    “Liquidation
Preference” is defined in Section
4.

     

    “Majority
of the Series C Preferred Stock” means more than fifty percent (50%) of
the then outstanding shares of Series C Preferred Stock.

     

    “Maximum
Number” has the meaning set forth in the Agreement.

     

    “Nasdaq”
has the meaning set forth in the Agreement.

     

    “Ordinary
Cash Dividend” means all quarterly cash dividends out of capital surplus
or retained earnings legally available therefore (determined in accordance with
generally accepted accounting principles, consistently applied), in an amount
and frequency consistent with past practice.

     

    “Parent”
means, as to any Acquiring Person, any Person that (i) controls the Acquiring
Person directly or indirectly through one or more intermediaries, (ii) is
required to include the Acquiring Person in the consolidated financial
statements contained in such Parent’s Annual Report on Form 10-K (if the Parent
is required to file such a report) or would be required to so include the
Acquiring Person in such Parent’s consolidated financial statements if they were
prepared in accordance with U.S. generally accepted accounting principles and
(iii) is not itself included in the consolidated financial statements of any
other Person (other than its consolidated subsidiaries).

     

    “Parity
Securities” means any class or series of Capital Stock that, with respect
to dividends or distributions upon Liquidation, is pari
passu with the Series C Preferred Stock.

     

    “Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, limited liability company, joint venture, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

     

    “Preferred
Stock” means the Company’s preferred stock authorized pursuant to the
provisions of the Articles of Incorporation.

     

    “Prevailing
Market Price” means, with respect to any reference date, the average of
the Daily Market Prices of the Common Stock (or, for purposes of determining the
Prevailing Market Price of the common stock of an Acquiring Person or its Parent
under Section
6(f), the common stock of such Acquiring Person or such Parent) for the
twenty-five (25) Business Days ending on and including the third (3rd)
Business Day before such reference date.

     

    “Redemption
Closing Date” is defined in Section
6(b)(i).

     

    “Redemption
Notice” is defined in Section
6(b)(i).

     

    “Redemption
Price” means Five Dollars and Twenty-Five Cents ($5.25), subject to
adjustment as set forth herein.

     

    “Redemption
Stock Amount” is defined in Section
6(b)(ii).

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    “Restatement”
has the meaning set forth in the Agreement.

     

    “SEC”
means the Securities and Exchange Commission.

     

    “Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

     

    “Senior
Securities” means any class or series of Capital Stock that, with respect
to dividends or distributions upon Liquidation, ranks senior to the Series C
Preferred Stock.

     

    “Series
C Preferred Stock” means the Series C Convertible Preferred Stock of the
Company or successor as contemplated by Section
6(f).

     

    “Stated
Value” is an amount equal to One Thousand Dollars ($1,000) per share of
Series C Preferred Stock plus (x) any unpaid dividends on the Series C Preferred
Stock (as of the date of determination, which for purposes of Sections
6(a) and 6(b)
shall be the Conversion Closing Date and Redemption Closing Date, respectively),
whether or not declared and whether or not earnings are available in respect of
such dividends (i.e., the Stated Value shall increase in each Dividend Period by
the Dividend Rate if and to the extent that dividends for such Dividend Period
are not declared and paid by the respective Dividend Payment Date) and
(y) any unpaid dividends declared on the Common Stock and Common Stock
Equivalent Junior Preferred Stock in an amount equal to the product of (A) the
per-share dividend other than the Ordinary Cash Dividend paid on Common Stock
and Common Stock Equivalent Junior Preferred Stock multiplied by (B) the
number of shares of Common Stock and/or the number of one-hundredths of a share
of Common Stock Equivalent Junior Preferred Stock issuable upon redemption or
conversion (whichever number of shares is greater) of a share of Series C
Preferred Stock on the date such dividend is declared on the Common Stock and
Common Stock Equivalent Junior Preferred Stock.  In the event the
Company shall declare a distribution on the Common Stock and Common Stock
Equivalent Junior Preferred Stock payable in securities or property other than
cash, the value of such securities or property will be the fair market
value.  Any securities shall be valued as follows: (i) if traded on a
national securities exchange (as defined in the Exchange Act), the value shall
be deemed to be the average of the closing prices of the securities on such
exchange or system over the twenty-five (25) Business Day period ending three
(3) calendar days prior to such declaration; (ii) if actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the twenty-five (25) Business Day
period ending three (3) calendar days prior to such declaration; and (iii) if
there is no active public market, the value shall be the fair market value
thereof, as determined in good faith by the Board.

     

    “Stockholder
Consent” has the meaning set forth in the Agreement.

     

    “Stockholder
Consent Date” has the meaning set forth in the Agreement.

     

    “Subsidiary”
of a Person means (i) a corporation, a majority of whose stock with voting
power, under ordinary circumstances, to elect directors is at the time of
determination, directly or indirectly, owned by such Person or by one or more
Subsidiaries of such Person, or (ii) any other entity (other than a corporation)
in which such Person or one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has a least a majority
ownership interest.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    The
foregoing definitions will be equally applicable to both the singular and plural
forms of the defined terms.

     

    3.      Dividends
and Distributions.

     

    (a)           Holders
shall be entitled to receive out of the assets of the Company legally available
for that purpose, cash dividends at the Dividend Rate to be paid in accordance
with the terms of this Section
3.  In addition, Holders for each share of Series C Preferred
Stock then owned by such Holder shall be entitled to receive out of the assets
of the Company legally available for that purpose, dividends or other
distributions declared on the Common Stock and Common Stock Equivalent Junior
Preferred Stock in the same form as such dividends or distributions in an amount
equal to the product of (x) the amount of any per-share dividend or distribution
other than the Ordinary Cash Dividends paid on the Common Stock and Common Stock
Equivalent Junior Preferred Stock multiplied by (y) the number of shares of
Common Stock and/or the number of one-hundredths of a share of Common Stock
Equivalent Junior Preferred Stock issuable upon redemption or conversion
(whichever number of shares is greater) of a share of the Series C Preferred
Shares on the date such dividend is declared, to be paid in accordance with the
terms of this Section
3.  Such dividends shall be payable quarterly in arrears, when
and as declared by the Board (or a duly appointed committee of directors), on
April 15, July 15, October 15 and January 15 of each year commencing on
April 15, 2010 and, in the case of dividends resulting from dividends or
distributions declared on Common Stock and Common Stock Equivalent Junior
Preferred Stock, no later than the date on which such dividends or distributions
are paid to holders of the Common Stock and Common Stock Equivalent Junior
Preferred Stock (each such date being herein referred to as a “Dividend
Payment Date”).  The period from the Issue Date to
March 31, 2010, and each quarterly period between consecutive Dividend
Payment Dates shall hereinafter be referred to as a “Dividend
Period.”  The dividend for any Dividend Period for any share of
Series C Preferred Stock that is not outstanding on every calendar day of the
Dividend Period shall be prorated based on the number of calendar days such
share was outstanding during the period.  Each such dividend shall be
paid to the Holders of record of the Series C Preferred Stock as their names
appear on the share register of the Company on the Dividend Payment
Date.  Dividends on account of arrears for any past Dividend Periods
may be declared and paid at any time, without reference to any Dividend Payment
Date (including, without limitation, for purposes of computing the Stated Value
of any shares of Series C Preferred Stock in connection with the conversion or
redemption thereof or any Liquidation of the Company), to Holders of record on a
date designated by the Board, not exceeding thirty (30) calendar days preceding
the payment date thereof, as may be fixed by the Board.  For purposes
of determining the amount of dividends accrued as of the first Dividend Payment
Date and as of any date that is not a Dividend Payment Date, such amount shall
be calculated on the basis of the Dividend Rate for the actual number of
calendar days elapsed from and including the Issue Date (in case of the first
Dividend Payment Date and any date prior to the first Dividend Payment Date) or
the last preceding Dividend Payment Date (in case of any other date) to the date
as of which such determination is to be made, based on a three hundred sixty
five (365) day year.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (b)           So
long as any shares of the Series C Preferred Stock shall be outstanding,
(i) the Company shall not and shall not allow its Subsidiaries (other than
direct or indirect wholly-owned Subsidiaries) to declare or pay any dividend
whatsoever, whether in cash, property or otherwise, set aside any cash or
property for the payment of any dividends, or make any other distribution on any
Junior Securities or Parity Securities and (ii) the Company shall not and
shall not allow its Subsidiaries to repurchase, redeem or otherwise acquire for
value or set aside any cash or property for the repurchase or redemption of any
Junior Securities or Parity Securities, unless in each such case all dividends
to which the Holders of the Series C Preferred Stock shall have been entitled to
receive for all previous Dividend Periods shall have been paid and dividends on
the Series C Preferred Stock for the subsequent four Dividend Periods shall have
been designated and set aside in cash.

     

    (c)           Notwithstanding
anything herein to the contrary, whenever, at any time or times after the
Company has obtained the approval of the stockholders of the Company to increase
the authorized number of shares of Common Stock, the Company shall fail to
redeem any Series C Preferred Stock by the date it is obligated to do so under
Section
6(b) hereof and such failure is ongoing, then (x) the Dividend Rate with
respect to such Series C Preferred Stock that is subject to such redemption
shall mean a rate equal to twenty two percent (22%) per annum times the Stated
Value until such date that the failure to redeem no longer exists.

     

    (d)           The
Company shall be entitled to deduct and withhold from any dividend on the Series
C Preferred Stock such amounts as the Company is required to deduct and withhold
with respect to such dividend under the Internal Revenue Code of 1986, as
amended, or any other provision of state, local or foreign tax law.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    4.      Liquidation
Preference.  In the event of any Liquidation, after payment or
provision for payment by the Company of the debts and other liabilities of the
Company and the liquidation preference of any Senior Securities that rank senior
to the Series C Preferred Stock with respect to distributions upon Liquidation,
each Holder shall be entitled to receive an amount in cash for each share of the
then outstanding Series C Preferred Stock held by such Holder equal to the
greater of (a) the Stated Value per share to and including the date full payment
is tendered to the Holders with respect to such Liquidation and (b) the amount
the Holders would have received if the Holders had converted all outstanding
shares of Series C Preferred Stock into Common Stock and/or Common Stock
Equivalent Junior Preferred Stock in accordance with the provisions of Section
6(a) hereof or redeemed all outstanding shares of Series C Preferred
Stock into Common Stock and/or Common Stock Equivalent Junior Preferred Stock
under Section 6(b)
hereof (whichever is greater), in each case as of the Business Day immediately
preceding the date of such Liquidation (such greater amount being referred to
herein as the “Liquidation
Preference”), before any distribution shall be made to the holders of any
Junior Securities (and any Senior Securities or Parity Securities that, with
respect to distributions upon Liquidation, rank junior to the Series C Preferred
Stock) upon the Liquidation of the Company.  In case the assets of the
Company available for payment to the Holders are insufficient to pay the full
Liquidation Preference on all outstanding shares of the Series C Preferred Stock
and all outstanding shares of Parity Securities and Senior Securities that, with
respect to distributions upon Liquidation, are pari
passu with the Series C Preferred Stock in the amounts to which the
holders of such shares are entitled, then the entire assets of the Company
available for payment to the Holders and to the holders of such Parity
Securities and Senior Securities shall be distributed ratably among the Holders
of the Series C Preferred Stock and the holders of such Parity Securities and
Senior Securities, based upon the aggregate amount due on such shares upon
Liquidation.  Written notice of any Liquidation of the Company,
stating a payment date and the place where the distributable amounts shall be
payable, shall be given by facsimile and overnight delivery not less than ten
(10) calendar days prior to the payment date stated therein, to the Holders of
record of the Series C Preferred Stock, if any, at their respective addresses as
the same shall appear on the books of the Company.

     

    5.      Voting
Rights.  The Holders shall have the following voting rights
with respect to the Series C Preferred Stock:

     

    (a)           Each
share of Series C Preferred Stock shall entitle the holder thereof to the voting
rights specified in Section
5(b) and no other voting rights except as required by law.

     

    (b)           The
consent of the Holders of at least a Majority of the Series C Preferred Stock,
voting separately as a single class with one vote per share, in person or by
proxy, either in writing without a meeting or at an annual or a special meeting
of such Holders called for the purpose, shall be necessary to amend, alter or
repeal, by way of merger or otherwise, any of the provisions of the Articles of
Incorporation, including the Certificate of Rights and Preferences, or Bylaws of
the Company so as to significantly and adversely affect any of the rights or
preferences of the Holders of the Series C Preferred Stock. Without limiting the
generality of the preceding sentence, such change includes any action that
would:

     

    (i)           Reduce
the Dividend Rate on the Series C Preferred Stock or defer the date from which
dividends will accrue, or cancel accrued and unpaid dividends, or change the
relative seniority rights of the holders of Series C Preferred Stock as to the
payment of dividends in relation to the holders of any other Capital Stock of
the Company;

     

    (ii)          Reduce
the amount payable to the holders of the Series C Preferred Stock upon the
voluntary or involuntary liquidation, dissolution, or winding up of the Company,
or change the relative seniority of the liquidation preferences of the holders
of the Series C Preferred Stock to the rights upon liquidation of the holders of
any other Capital Stock of the Company;

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (iii)           Make
the Series C Preferred Stock redeemable at the option of the
Company;

     

    (iv)           Authorize,
create or issue any shares of Senior Securities (or amend the provisions of any
existing class of Capital Stock to make such class of Capital Stock a class of
Senior Securities); or

     

    (v)           
Decrease (other than by redemption or conversion) the total number of authorized
shares of Series C Preferred Stock.

     

    6.      Conversion
and Redemption.

     

    (a)           Procedure
for Conversion at the Option of the Company.

     

    (i)                 General.  Subject
to Section
6(c) hereof, on or after the five year anniversary of the
Stockholder Consent Date, on any date on which the Prevailing Market Price
exceeds the Conversion Price by one hundred percent (100%) or more, the
Company shall have the option to convert all, but not less than all, of the then
outstanding shares of Series C Preferred Stock by delivering a duly executed
written Preferred Stock conversion notice, substantially in the form attached as
Annex F to the Agreement (the “Conversion
Notice” and the date such notice is deemed delivered hereunder, the
“Conversion
Notice Date”), by facsimile, mail or overnight courier delivery, to the
Holder. The closing of such conversion shall take place, subject to the
satisfaction or waiver of the conditions set forth in Section 6(a)(iii),
(a) on the twentieth (20th)
Business Day following and excluding the Conversion Notice Date or (b) any other
date upon which the exercising Holder and the Company mutually agree (the “Conversion
Closing Date”). The Conversion Notice shall apply only to shares of
Series C Preferred Stock for which no Redemption Notice has been tendered to the
Company before the twentieth (20th)
Business Day after the Conversion Notice Date, regardless of when the applicable
redemption is consummated.

     

    (ii)                 Conversion
for stock.  Subject to Section
6(c) hereof, such shares of stock shall be converted into that number of
shares of  Common Stock and/or number of one-hundredths (1/100th) of
a share of Common Stock Equivalent Junior Preferred Stock equal to (a) the
aggregate Stated Value of such shares divided by (b) the Conversion Price (the
“Conversion
Stock Amount”).  On the Conversion Closing Date, the Holder
shall surrender the certificate representing the shares of Series C Preferred
Stock to be converted to the Company at the address set forth for notices to the
Company specified in Section 18 of the Agreement, and the Company shall deliver
to such Holder as specified in the Conversion Notice the Conversion Stock Amount
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock and/or Common Stock Equivalent Junior Preferred Stock.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (iii)                 Closing
conditions.  It shall be a condition of the converting Holder’s
obligation to close that each of the following is satisfied, unless expressly
waived by such Holder in writing (which Holder may do or refrain from doing in
its sole discretion):

     

    (A) (w)
the representations and warranties made by the Company in the Agreement shall be
true and correct as of the Conversion Closing Date, except those representations
and warranties that address matters only as of a particular date, which shall be
true and correct as of such date; (x) the Company shall have complied fully
with all of the covenants and agreements in the Agreement; (y) all shares of
Common Stock to be issued upon such conversion shall be duly listed and admitted
to trading on the Nasdaq Global Select Market, the Nasdaq Global Market or the
New York Stock Exchange; and (z) such Holder shall have received a certificate
of the Chief Executive Officer and the Chief Financial Officer of the Company
dated such date and to the effect of clauses (x), (y) and (z).

     

    (B) On
the Conversion Closing Date, the Company shall have delivered to the Holder
(x) a Conversion Notice, substantially in the form attached as Annex G to
the Agreement and (y) the legal opinion described in Section 12(b) of the
Agreement.

     

    (C) If
the issuance of Common Stock or Common Stock Equivalent Junior Preferred Stock
would cause the number of shares of Common Stock and Common Stock Equivalent
Junior Preferred Stock held by any Holder to exceed the Maximum Number then
delivery of such shares of Common Stock or Common Stock Equivalent Junior
Preferred Stock shall be deferred pursuant to Section 6(d) of the
Agreement.  Notwithstanding anything herein to the contrary, in such
event, the Company shall no longer be obligated to pay any dividend on the
Series C Preferred Stock or provide or recognize any other preferences,
limitations, powers or other rights provided by this Certificate of Rights and
Preferences to the extent that, if the Series C Preferred Stock would have been
converted, the Holder would beneficially own Common Stock and Common Stock
Equivalent Junior Preferred Securities that would exceed the Maximum
Number.

     

    The
Company shall use its best efforts to cause each of the foregoing conditions to
be satisfied at the earliest practicable date after a Conversion
Notice.  If such conditions are not satisfied or waived prior to the
twentieth (20th)
Business Day following and excluding the date the Conversion Notice is
delivered, then the Company may, at its sole option, and at any time, withdraw
the Conversion Notice by written notice to the Holder regardless of whether such
conditions have been satisfied or waived as of the withdrawal date and, after
such withdrawal, shall have no further obligations with respect to such
Conversion Notice and may submit a Conversion Notice with respect to the shares
referenced in the withdrawn Conversion Notice pursuant to Section
6(a)(i) hereof, subject to the closing conditions in this Section
6(a)(iii).

     

    
      
         

      

      
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    (iv)                 Holder
of record.  Each conversion of Series C Preferred Stock shall
be deemed to have been effected immediately before the close of business on the
Business Day on which the Conversion Notice is delivered (except, that, for
purposes of calculation of the Stated Value, dividends shall accrue until and
including the Conversion Closing Date), and at such time the Person or Persons
in whose name or names any certificate or certificates for shares of Common
Stock or Common Stock Equivalent Junior Preferred Securities shall be issuable
upon such conversion as provided in Section
6(a)(ii) shall be deemed to have become the holder or holders of record
thereof.

     

    (b)           Procedure
for Redemption at the Option of the Holder.

     

    (i)                
  General.  Subject
to Section
6(c) hereof, at any time after the Company has obtained the approval of
the stockholders of the Company to increase the authorized number of shares of
Common Stock, a Holder of Series C Preferred Stock may at the option of the
Holder require the Company to redeem any or all shares of Series C Preferred
Stock held by such Holder for Common Stock and/or Common Stock Equivalent Junior
Preferred Stock on one or more occasions by delivering an optional redemption
notice (a “Redemption
Notice”) to the Company substantially in the form attached as Annex H to
the Agreement; provided, however, that until the Company has obtained the
approval of the stockholders of the Company to increase the authorized number of
shares of Common Stock, a Holder of Series C Preferred Stock may require the
Company to redeem any or all of such shares of Series C Preferred Stock for
Common Stock Equivalent Junior Preferred Stock.  The closing of such
redemption shall take place, subject to the satisfaction or waiver of the
conditions set forth in Section 6(b)(iii)
(a) on the second (2nd)
Business Day, or if the Holder so elects, the third (3rd)
Business Day, following and excluding the date the Redemption Notice is
delivered or (b) any other date upon which the exercising Holder and the Company
mutually agree (the “Redemption
Closing Date”).

     

    (ii)         
        Redemption
for stock.  Subject to Section
6(c) hereof, such shares of Series C Preferred Stock shall be redeemed
into that number of shares of Common Stock and/or number of one-hundredths
(1/100th) of
a share of Common Stock Equivalent Junior Preferred Stock equal to (a) the
aggregate Stated Value of such shares divided by (b) the Redemption Price (the
“Redemption
Stock Amount”).  On the Redemption Closing Date, the Holder
shall surrender the certificate representing the shares of Series C Preferred
Stock to be redeemed to the Company at the address set forth for notices to the
Company specified in Section 18 of the Agreement and the Company shall deliver
to such Holder as specified in the Redemption Notice the Redemption Stock Amount
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock and/or Common Stock Equivalent Junior Preferred Stock.

     

    
      
         

      

      
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    (iii)                 Closing
conditions.  It shall be a condition of the redeeming Holder’s
obligation to close that each of the following is satisfied, unless expressly
waived by such Holder in writing:

     

    (A) (w)
the representations and warranties made by the Company in the Agreement shall be
true and correct as of the Redemption Closing Date, except those representations
and warranties that address matters only as of a particular date, which shall be
true and correct as of such date; (x) the Company shall have complied fully
with all of the covenants and agreements in the Agreement; (y) all shares of
Common Stock to be issued upon such redemption shall be duly listed and admitted
to trading on the Nasdaq Global Select Market, the Nasdaq Global Market or the
New York Stock Exchange; and such Holder shall have received a certificate of
the Chief Executive Officer and (z) the Chief Financial Officer of the Company
dated such date and to the effect of clauses (w), (x) and (y).

     

    (B) On
the Redemption Closing Date, the Company shall have delivered to the Holder
(x) a Preferred Stock redemption delivery notice, substantially in the form
attached as Annex I to the Agreement and (y) the legal opinion described in
Section 12(b) of the Agreement.

     

    (C) As
of the Redemption Closing Date, the Company shall have notified the Holder of
all Restatements.

     

    (D) If
the issuance of Common Stock or Common Stock Equivalent Junior Preferred Stock
would cause the number of shares of Common Stock and Common Stock Equivalent
Junior Preferred Stock held by any Holder to exceed the Maximum Number then
delivery of such shares of Common Stock or Common Stock Equivalent Junior
Preferred Stock shall be deferred pursuant to Section 6(d) of the
Agreement.  Notwithstanding anything herein to the contrary, in such
event, the Company shall no longer be obligated to pay any dividend on the
Preferred Stock or provide or recognize any other preferences, limitations,
powers or other rights provided by this Certificate of Rights and Preferences to
the extent that, if the Series C Preferred Stock would have been redeemed, the
Holder would beneficially own Common Stock and Common Stock Equivalent Junior
Preferred Securities that would exceed the Maximum Number.

     

    
      
         

      

      
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    (iv)                 Holder
of record.  Each redemption of Series C Preferred Stock shall
be deemed to have been effected immediately before the close of business on the
Business Day on which the Redemption Notice is delivered (except, that, for the
purposes of calculation of the Stated Value, dividends shall accrue until and
including the Redemption Closing Date), and at such time the Person or Persons
in whose name or names any certificate or certificates for shares of Common
Stock (or Other Securities) shall be issuable upon such redemption as provided
in Section
6(b)(ii) shall be deemed to have become the holder or holders of record
thereof.  The foregoing notwithstanding, such redemption shall not be
deemed effective if and as of the date that the Holder delivers written notice
of withdrawal to the Company as set forth in Section
6(b)(v) below.

     

    (v)                 Withdrawal
of Redemption Notice.  If the conditions set forth in Section
6(b)(iii) are not satisfied or waived on or prior to the Redemption
Closing Date or if the Company fails to perform its obligations on any
Redemption Closing Date (including delivery of all shares of Series C Preferred
Stock issuable on such date), then in addition to all remedies available to
Holder at law or in equity, Holder may, at its sole option, and at any time,
withdraw the Redemption Notice by written notice to the Company regardless of
whether such conditions have been satisfied or waived as of the withdrawal date
and, after such withdrawal, shall have no further obligations with respect to
such Redemption Notice and may submit a Redemption Notice on any future date
with respect to such Series C Preferred Stock and the Redemption Price for such
subsequent Redemption Notice shall be the lesser of (x) the Redemption Price in
the withdrawn Redemption Notice and (y) the Redemption Price in effect as of the
date of the subsequent Redemption Notice.  If the Company fails to
deliver (A) shares of Common Stock as provided in Section
6(b) on or before the later of the twentieth (20th)
Business Day following and excluding (1) the Redemption Closing Date or
(2) three (3) Business Days after the Stockholder Consent Date (if and to
the extent such approval is required to issue such shares of Common Stock) or
(B) shares of Common Stock Equivalent Junior Preferred Stock on or before the
twentieth (20th)
Business Day following and excluding the Redemption Closing Date, then the
Redemption Price shall equal the lesser of Four Dollars and Forty-One Cents
($4.41) and the Redemption Price in effect immediately before such
date.

     

    (vi)                 Partial
redemption.  If any redemption is for only part of the shares
represented by the certificate surrendered, the Company shall deliver on the
Redemption Closing Date a new Series C Preferred Stock certificate of like
tenor, calling in the aggregate on the face or faces thereof for the number of
shares of Series C Preferred Stock in the name and to an address specified by
the Holder.

     

    
      
         

      

      
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    (c)      
     Maximum
Voting Stock Amount.  The Company shall not effect any
conversion or redemption of the Series C Preferred Stock, and the Holders shall
not have the right to convert or redeem any portion of the Series C Preferred
Stock, into Common Stock to the extent such conversion, redemption or exercise
would result in aggregate issuances upon conversion or redemption of the Series
C Preferred Stock in excess of nine and seventy-five one hundredths percent
(9.75%)(the “Maximum
Voting Stock Amount”) of the number of shares of Common Stock that would
be outstanding after giving effect to such conversion or
redemption.  Holders of a Majority of the Series C Preferred Stock
shall have the right to permanently reduce the percentage used in the
determination of the Maximum Voting Stock Amount to four and seventy-five one
hundredths percent (4.75%) at any time, effective upon delivery of written
notice of such election to the Company.  In the event that the Company
cannot effect a conversion or redemption of the Series C Preferred Stock into
Common Stock pursuant to the terms of this Section 6(c), the conversion or
redemption shall be effected into an equal number of shares of Common Stock
Equivalent Junior Preferred Stock of the Company.

     

    (d)           The
Company shall at all times reserve for issuance such number of its shares of
Common Stock and Common Stock Equivalent Junior Preferred Stock as shall be
required under the Agreement.  The Company will procure, at its sole
expense, the listing of the Common Stock issuable upon conversion or redemption
of the Series C Preferred Stock (including upon the conversion of Common Stock
Equivalent Junior Preferred Stock issuable upon the conversion or redemption of
the Series C Preferred Stock) and shares issuable as dividends hereunder,
subject to issuance or notice of issuance, on all stock exchanges and quotation
systems on which the Common Stock is then listed or quoted, no later than the
date on which such Series C Preferred Stock is issued to the Holder and
thereafter shall use its best efforts to prevent delisting or removal from
quotation of such shares.  The Company will pay any and all
documentary stamp or similar issue or transfer taxes that may be payable in
respect of the issuance or delivery of shares of Common Stock and/or Common
Stock Equivalent Junior Preferred Stock on conversion or redemption of shares of
the Series C Preferred Stock.  The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involving the issue and delivery of shares of Common Stock and/or Common Stock
Equivalent Junior Preferred Stock in a name other than that in which the shares
of Series C Preferred Stock so converted or redeemed were registered, and no
such issue and delivery shall be made unless and until the person requesting
such issue has paid to the Company the amount of any such tax, or has
established, to the reasonable satisfaction of the Company, that such tax has
been paid.

     

    (e)           No
fractional shares or scrip representing fractional shares of Common Stock or,
other than fractional shares in increments of one-hundredth (1/100th) of
a share, of Common Stock Equivalent Junior Preferred Stock shall be issued upon
the conversion or redemption of the Series C Preferred Stock.  If any
such conversion or redemption would otherwise require the issuance of a
fractional share of Common Stock or, other than fractional shares in increments
of one-hundredth (1/100th) of
a share, of Common Stock Equivalent Junior Preferred Stock, an amount equal to
such fraction multiplied by the current Daily Market Price per share of Common
Stock on the date of conversion or redemption shall be paid to the Holder in
cash by the Company.  If more than one share of Series C Preferred
Stock shall be surrendered for conversion or redemption at one time by or for
the same Holder, the number of shares of Common Stock and/or Common Stock
Equivalent Junior Preferred Stock issuable upon conversion or redemption thereof
shall be computed on the basis of the aggregate number of shares of Series C
Preferred Stock so surrendered.

     

    
      
         

      

      
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    (f)           Change
of Control.

     

    (i)                 If
the Company on or after the date of the Agreement is party to any Change of
Control, proper provision shall be made so that, upon the basis and the terms
and in the manner provided herein, the Holder of each unconverted and unredeemed
share of Series C Preferred Stock, upon conversion or redemption thereof at any
time after the consummation of such Change of Control, shall be entitled to, and
appropriate adjustments will be made to ensure that the Holder will receive,
equivalent rights as those provided in this Certificate of Rights and
Preferences, including, without limitation, the voting, dividend, conversion,
redemption and liquidation rights contained herein with respect to the Acquiring
Person.  The Company shall, prior to the consummation of any Change of
Control, provide that each Person (other than the Company) that may be required
to deliver any stock, securities, cash or property upon conversion of Series C
Preferred Stock as provided herein shall assume, by written instrument delivered
to, and reasonably satisfactory to, the Holders of a Majority of the Series C
Preferred Stock, (a) the obligations of the Company under this Certificate of
Rights and Preferences (and if the Company shall survive the consummation of
such transaction, such assumption shall be in addition to, and shall not release
the Company from, any continuing obligations of the Company under this
Certificate of Rights and Preferences) and (b) the obligation to deliver to the
Holders of Series C Preferred Stock such shares of stock, securities, cash or
property as, in accordance with the provisions of this Certificate of Rights and
Preferences, such Holders may be entitled to receive, and such Person shall have
similarly delivered to such Holders an opinion of counsel for such Person, which
counsel shall be reasonably satisfactory to Holders of a Majority of the Series
C Preferred Stock, stating that the rights of such Holders under this
Certificate of Rights and Preferences shall thereafter continue in full force
and effect with respect to such Acquiring Person in accordance with the terms
hereof.

     

    (ii)                 In
the event of a Change of Control, all references to the Conversion Price or the
Redemption Price herein shall be references to the Stock Adjustment Measuring
Price.  “Stock
Adjustment Measuring Price” means an amount equal to the Conversion Price
or the Redemption Price, as applicable, multiplied by a fraction,

     

    (A) the
numerator of which is the Daily Market Price of the securities for Common Stock
is exchanged in the Change of Control (or if none, the most widely-held class of
voting securities of the Acquiring Person) determined as of the Business Day
immediately preceding and excluding the date on which the Change of Control is
consummated; and

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (B) the
denominator of which is the Daily Market Price of the Common Stock of the
Company determined as of the Business Day immediately preceding and excluding
the date on which the Change of Control is consummated.

     

    (iii)                 Prior
to the effective date of a Change of Control, the Company shall continue to have
the right to submit to each Holder Conversion Notices and each Holder shall
continue to have the right to submit to the Company Redemption Notices and
consummate closings of any such conversions or redemptions, in each party’s sole
discretion, in accordance with the terms and conditions of this Certificate of
Rights and Preferences.  In addition, the Holder at its sole option
may elect to submit to the Company a special notice (a “Contingent
Notice”) to redeem the Series C Preferred Stock (including any Series C
Preferred Stock issued pursuant to a Contingent Investment Notice (as defined in
the Agreement) under the Agreement) in whole or in part in connection with such
Change of Control; in which case, notwithstanding anything to the contrary
herein:

     

    (A) the
effectiveness of such contingent redemption shall be conditional upon the
effectiveness of the Change of Control;

     

    (B) until
the effective date of such Change of Control, the Holder shall have the right to
deliver a notice to withdraw such Contingent Notice; and

     

    (C) if
such Contingent Notice shall not have been withdrawn, then on the effective date
of such Change of Control, such Holder shall receive the same consideration, in
the form of cash, securities or other assets (the “Acquisition
Consideration”) per share of Common Stock and Common Stock Equivalent
Junior Preferred Stock issuable to any other holder of shares of Common Stock
and Common Stock Equivalent Junior Preferred Stock in connection with such
Change of Control based upon the number of shares of Common Stock and Common
Stock Equivalent Junior Preferred Stock which the Holder would have held if the
Holder had consummated such redemption on the Business Day immediately preceding
the date on which such Change of Control occurs.

     

    7.      Status
of Converted and Redeemed Shares; Limitations on Series C Preferred
Stock.  The Company shall return to the status of unauthorized
and undesignated shares of Preferred Stock each share of Series C Preferred
Stock which shall be converted, redeemed or for any other reason acquired by the
Company, and such shares thereafter may have such characteristics and
designations as the Board may determine (subject to Section
5 hereof),
provided, however,
that no share of Series C Preferred Stock which shall be converted, redeemed or
otherwise acquired by the Company shall thereafter be reissued, sold or
transferred by the Company as Series C Preferred Stock.  The Company
will not issue any further shares of Series C Preferred
Stock.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    8.      Subdivision
of Common Stock.  Notwithstanding anything herein to the
contrary, if the Company at any time subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) the
shares of Common Stock and/or Common Stock Equivalent Junior Preferred Stock
into a greater number of shares, then, after the date of record for effecting
each such subdivision, all measurements and references herein related to share
prices for such securities will be proportionately decreased and all references
to share numbers for such securities herein will be proportionately
increased.

     

    9.      Nonperformance.  If
the Company, shall (i) at any time fail to deliver the shares of Common Stock
Equivalent Junior Preferred Stock required to be delivered to the Holder
pursuant hereto or (ii) at any time after the Company has obtained the approval
of the stockholders of the Company to increase the authorized number of shares
of Common Stock, fail to deliver the shares of Common Stock or required to be
delivered to the Holder pursuant hereto, for any reason other than the failure
of any condition precedent to the Company’s obligations hereunder or the failure
by the Holder to comply with its obligations hereunder, then the Company shall
(without limitation to the Holder’s other remedies at law or in equity): (i)
indemnify and hold the Holder harmless against any loss, claim or damage arising
from or as a result of such failure by the Company (regardless of whether any of
the foregoing results from a third-party claim or otherwise) and (ii) reimburse
the Holder for all of its reasonable out-of-pocket expenses (which includes fees
and expenses of its counsel) incurred by the Holder in connection herewith and
the transactions contemplated herein (regardless of whether any of the foregoing
results from a third-party claim or otherwise).

     

    10.      Assignment.  The
Holder may, in its sole discretion, freely assign, pledge, hypothecate or
transfer all shares of Series C Preferred Stock.

     

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of this page is intentionally left blank.]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Certificate of Rights and Preferences has been signed on
behalf of the Company by its Chief Financial Officer and attested to by its
Corporate Secretary, all as of the date first set forth above.

    
      
        	 	 	 	 
	 	UNITED COMMUNITY
      BANKS, INC.	 
	 	 	 	 
	 	Name:	Rex S.
      Schuette	 
	 	Title:	Chief Financial
      Officer	 
	 	 	 	 
	 	Name: 	Lori McKay	 
	 	Title:	Corporate
      Secretary	 

      

       

    

    [Signature
Page to Certificate of Rights and Preferences]

     

     

    18

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