Document:

Change in Control Severance Agreement

Exhibit
10.1          

 

UNITED COMMUNITY BANKS,
INC.

CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS
AGREEMENT (the "Agreement"), made and entered into as of this _____
day of ______________, 2001, by and between UNITED COMMUNITY BANKS, INC.,
a Georgia Corporation (the "Company"), and _______________
("Executive").

W I T N E S S E T H:

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

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

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

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

NOW,
THEREFORE, the parties hereby agree as follows:

1.            TERM
OF AGREEMENT.

This
Agreement shall commence on the date hereof and shall terminate on the earlier
of Executive’s termination of employment without entitlement to any benefits
hereunder or the date Executive attains age 65; provided, however, the Agreement
may be terminated prior to such time by mutual written agreement of Executive
and the Company. This Agreement shall not be considered an employment agreement
and in no way guarantees Executive the right to continue in the employment of
the Company or its affiliates. Executive’s employment is considered employment
at will, subject to Executive’s right to receive payments and benefits upon
certain terminations of employment as provided below.

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

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

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

 

 

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

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

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

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

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

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

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

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

  

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

    (c)       A
    change in the composition of the Board such that the individuals who, as of
    June 1, 2001, constitute the Board (such Board shall be hereinafter referred
    to as the "Incumbent Board") cease for any reason to constitute at
    least a majority of the Board; provided, however, for purposes of this
    definition that any individual who becomes a member of the Board subsequent
    to June 1, 2001 whose election, or nomination for election by the Company’s
    shareholders, was approved by a vote of at least a majority of those
    individuals who are members of the Board and who were also members of the
    Incumbent Board (or deemed to be such pursuant to this proviso) shall be
    considered as though such individual were a member of the Incumbent Board;
    but, provided, further, that any such individual whose initial assumption of
    office occurs as a result of either an actual or threatened election contest
    (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
    the Exchange Act, including any successor to such Rule), or other actual or
    threatened solicitation of proxies or consents by or on behalf of a Person
    other than the Board, shall not be so considered as a member of the
    Incumbent Board.

  

2.5       "CIC
Severance Period." A period equal to the lesser of (i) 36 months from
Executive’s Date of Termination or (ii) the number of months (rounded to the
nearest month) from Executive’s Date of Termination until the date he attains
age 65.

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

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

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

 

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

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

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

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

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

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

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

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

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

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3.       SCOPE
OF AGREEMENT.

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

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

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

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

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

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

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

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

4.3       Health
and Life Insurance Coverages.

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

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

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

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

6

 

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

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

5.            LIMITATION
ON BENEFITS.

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

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

5.3       This
Section 5 shall be interpreted so as to avoid the imposition of excise taxes on
Executive under Section 4999 of the Code or the disallowance of a deduction to
the Company pursuant to Section 280G(a) of the Code with respect to amounts
payable under this Agreement or otherwise. Notwithstanding the foregoing, in no
event will any of the provisions of this Section 5 create, without the consent
of Executive, an obligation on the part of Executive to refund any amount to the
Company following payment of such amount.

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

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

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

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

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

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

6.            MISCELLANEOUS.

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

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

6.3       Successors;
Binding Agreement.

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

8

 

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

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

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

  
    	
          If to the
          Company:
	
          United
          Community Banks, Inc.

	
           
	
          Attention:
          ______________

	
           
	
          P.O. Box 398

	
           
	
          Blairsville,
          GA 30514

           

	
          If to
          Executive:
	
           _________________

	
           
	
          _________________

	
           
	
          _________________

         

  

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

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

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

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

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

6.9       Disputes; Legal
Fees; Indemnification.

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

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

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

 

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

	
 

    	
EXECUTIVE

____________________________________

 

    
	
 

    	UNITED COMMUNITY BANKS,
INC.

      

      By:___________________________________

    

 

Attest:

 

______________________________

Secretary

(CORPORATE SEAL)Change in Control Severance Agreement

Exhibit
10.2          

 

UNITED COMMUNITY BANKS,
INC.

CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS
AGREEMENT (the "Agreement"), made and entered into as of this 7th day of
June, 2001, by and between UNITED COMMUNITY BANKS, INC.,
a Georgia Corporation (the "Company"), and Guy W. Freeman ("Executive").

W I T N E S S E T H:

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

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

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

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

NOW,
THEREFORE, the parties hereby agree as follows:

1.            TERM
OF AGREEMENT.

This
Agreement shall commence on the date hereof and shall terminate on the earlier
of Executive’s termination of employment without entitlement to any benefits
hereunder or the date Executive attains age 70; provided, however, the Agreement
may be terminated prior to such time by mutual written agreement of Executive
and the Company. This Agreement shall not be considered an employment agreement
and in no way guarantees Executive the right to continue in the employment of
the Company or its affiliates. Executive’s employment is considered employment
at will, subject to Executive’s right to receive payments and benefits upon
certain terminations of employment as provided below.

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

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

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

 

 

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

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

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

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

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

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

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

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

  

2

 

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

    (c)       A
    change in the composition of the Board such that the individuals who, as of
    June 1, 2001, constitute the Board (such Board shall be hereinafter referred
    to as the "Incumbent Board") cease for any reason to constitute at
    least a majority of the Board; provided, however, for purposes of this
    definition that any individual who becomes a member of the Board subsequent
    to June 1, 2001 whose election, or nomination for election by the Company’s
    shareholders, was approved by a vote of at least a majority of those
    individuals who are members of the Board and who were also members of the
    Incumbent Board (or deemed to be such pursuant to this proviso) shall be
    considered as though such individual were a member of the Incumbent Board;
    but, provided, further, that any such individual whose initial assumption of
    office occurs as a result of either an actual or threatened election contest
    (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
    the Exchange Act, including any successor to such Rule), or other actual or
    threatened solicitation of proxies or consents by or on behalf of a Person
    other than the Board, shall not be so considered as a member of the
    Incumbent Board.

  

2.5       "CIC
Severance Period." A period equal to the lesser of (i) 36 months from
Executive’s Date of Termination or (ii) the number of months (rounded to the
nearest month) from Executive’s Date of Termination until the date he attains
age 70.

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

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

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

 

3

 

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

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

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

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

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

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

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

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

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

4

 

3.       SCOPE
OF AGREEMENT.

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

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

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

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

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

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

5

 

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

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

4.3       Health
and Life Insurance Coverages.

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

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

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

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

6

 

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

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

5.            LIMITATION
ON BENEFITS.

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

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

5.3       This
Section 5 shall be interpreted so as to avoid the imposition of excise taxes on
Executive under Section 4999 of the Code or the disallowance of a deduction to
the Company pursuant to Section 280G(a) of the Code with respect to amounts
payable under this Agreement or otherwise. Notwithstanding the foregoing, in no
event will any of the provisions of this Section 5 create, without the consent
of Executive, an obligation on the part of Executive to refund any amount to the
Company following payment of such amount.

7

 

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

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

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

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

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

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

6.            MISCELLANEOUS.

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

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

6.3       Successors;
Binding Agreement.

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

8

 

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

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

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

  
    	
          If to the
          Company:
	
          United
          Community Banks, Inc.

	
           
	
          Attention:
          ______________

	
           
	
          P.O. Box 398

	
           
	
          Blairsville,
          GA 30514

           

	
          If to
          Executive:
	
           Guy W.
          Freeman

	
           
	
          _________________

	
           
	
          _________________

         

  

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

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

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

9

 

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

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

6.9       Disputes; Legal
Fees; Indemnification.

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

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

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

 

10

 

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

	
 

    	
EXECUTIVE

/s/ Guy W.
Freeman                                            

 

    
	
 

    	UNITED COMMUNITY BANKS,
INC.

      

      By:  /s/ Jimmy Tallent                                            

    

 

Attest:

 

/s/ Thomas C. Gilliland                                     

Secretary

(CORPORATE SEAL)

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