UNITED COMMUNITY BANKS, INC.
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS
AGREEMENT (the “Agreement”), made and entered into
as of this 28 day of February 2006, by and between
UNITED COMMUNITY BANKS, INC. , a Georgia Corporation (the
“Company”), and GUY W. FREEMAN
(“Executive”).
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:
This Agreement
shall commence on the date hereof and shall terminate on the
earlier of Executive’s termination of employment without
entitlement to any benefits hereunder or the date Executive attains
age 75; provided, however, the Agreement may be terminated prior to
such time by mutual written agreement of Executive and the Company.
This Agreement shall not be considered an employment agreement and
in no way guarantees Executive the right to continue in the
employment of the Company or its affiliates. Executive’s
employment is considered employment at will, subject to
Executive’s right to receive payments and benefits upon
certain terminations of employment as provided below.
2.
DEFINITIONS . For purposes of this Agreement, the following
terms shall have the meanings specified below:
2.1 “
Base Salary .” Executive’s annual salary in
effect on his Date of Termination or, if greater, Executive’s
highest rate of annual salary in effect during the six-month period
prior to his Date of Termination.
2.2 “
Board ” or “ Board of Directors .”
The Board of Directors of the Company, or its successor.
2.3 “
Cause .” The involuntary termination of Executive by
the Company for the following reasons shall constitute a
termination for Cause:
(a) If
termination shall have been the result of an act or acts by
Executive which have been found in an applicable court of law to
constitute a felony (other than traffic-related
offenses);
(b) If
termination shall have been the result of an act or acts by
Executive which are in the good faith judgment of the Board
determined to be in violation of law or of policies of the Company
and which result in demonstrably material injury to the
Company;
(c) If
termination shall have been the result of an act or acts of proven
or undenied dishonesty by Executive resulting or intended to result
directly or indirectly in significant gain or personal enrichment
to Executive at the expense of the Company; or
(d) Upon
the willful and continued failure by Executive substantially to
perform his duties with the Company (other than any such failure
resulting from incapacity due to mental or physical illness not
constituting a Disability, as defined herein), after a demand in
writing for substantial performance is delivered by the Board or
President, which demand specifically identifies the manner in which
the Board or President believes that Executive has not
substantially performed his duties, and such failure results in
demonstrably material injury to the Company.
With
respect to clauses (b), (c) or (d) above of this Section,
Executive shall not be deemed to have been involuntarily terminated
for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a
meeting of the Board (after reasonable notice to Executive and an
opportunity for him, together with his counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board,
Executive was guilty of conduct set forth above in clauses (b),
(c) or (d) and specifying the particulars thereof in
detail. For purposes of this Agreement, no act or failure to act by
Executive shall be deemed to be “willful” unless done
or omitted to be done by Executive not in good faith and without
reasonable belief that Executive’s action or omission was in
the best interests of the Company.
2.4 “
Change in Control .” A Change in Control of the
Company means any one of the following events:
(a) The
acquisition (other than from the Company) by any Person of
Beneficial Ownership of twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding
voting securities; provided, however, that for purposes of this
definition, Person shall not include any person who on June 1,
2001 owned ten percent (10%) or more of the Company’s
outstanding securities, and a Change in Control shall not be deemed
to occur solely because twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding
securities is acquired by (i) a trustee or other fiduciary
holding securities under one (1) or more employee benefit
plans maintained by the Company or any of its subsidiaries, or
(ii) any corporation, which, immediately prior to
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such
acquisition, is owned directly or indirectly by the shareholders of
the Company in the same proportion as their ownership of stock in
the Company immediately prior to such acquisition.
(b) Approval by
shareholders of the Company of (1) a merger or consolidation
involving the Company if the shareholders of the Company,
immediately before such merger or consolidation do not, as a result
of such merger or consolidation, own, directly or indirectly, more
than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from
such merger or consolidation in substantially the same proportion
as their ownership of the combined voting power of the voting
securities of the Company outstanding immediately before such
merger or consolidation, or (2) a complete liquidation or
dissolution of the Company or an agreement for the sale or other
disposition of all or substantially all of the assets of the
Company.
(c) A change in
the composition of the Board such that the individuals who, as of
June 1, 2001, constitute the Board (such Board shall be hereinafter
referred to as the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided,
however, for purposes of this definition that any individual who
becomes a member of the Board subsequent to June 1, 2001 whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided, further, that any
such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest, or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board, shall not be so considered
as a member of the Incumbent Board.
2.5 “ CIC
Severance Period .” A period equal to the lesser of
(i) 36 months from Executive’s Date of Termination
or (ii) the number of months (rounded to the nearest month)
from Executive’s Date of Termination until the date he
attains age 75.
2.6 “
Code .” The Internal Revenue Code of 1986, as it may
be amended from time to time.
2.7 “
Company .” United Community Banks, Inc., a Georgia
corporation, or any successor to its business and/or
assets.
2.8 “
Date of Termination .” The date specified in the
Notice of Termination (which, unless otherwise required by this
Agreement, may be immediate) as the date upon which the
Executive’s employment with the Company is to cease. In the
case of termination by Executive for Good Reason, the Date of
Termination shall not be less than thirty (30) days nor more
than sixty (60) days from the date the notice of termination
is given.
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2.9 “
Disability .” Disability shall have the meaning
ascribed to such term in the Company’s long-term disability
plan covering the Executive, or in the absence of such plan, a
meaning consistent with Section 22(e)(3) of the
Code.
2.10 “
Good Reason .” A Good Reason for termination by
Executive of Executive’s employment shall mean the occurrence
(without the Executive’s express written consent) during the
6-month period prior to, or within the eighteen (18) month
period following, the date of a Change in Control of any one of the
following acts by the Company, or failures by the Company to act,
unless, in the case of any act or failure to act described in
paragraphs (a), (c), or (d) below, such act or failure to act
is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof (the date
6 months prior to the date of the Change in Control is
referred to in this Section 2.10 as the “Change in
Control Date”):
(a) the
substantial adverse change in Executive’s responsibilities at
the Company from those in effect immediately prior to the Change in
Control Date; or
(b) the
required relocation of Executive to a location outside of the
market area of the Company on the Change in Control Date;
or
(c) a
material reduction from those in effect on the Change in Control
Date in the levels of coverage of Executive under the
Company’s director and officer liability insurance policy or
indemnification commitments; or
(d) after
the Change in Control Date, a reduction in Executive’s Base
Salary, a reduction in his incentive compensation or the failure by
the Company to continue to provide Executive with benefits
substantially similar to those enjoyed by Executive under any of
the Company’s pension, deferred compensation, life insurance,
medical, health and accident or disability plans in which Executive
was participating at the Change in Control Date, the taking of any
action by the Company which would directly or indirectly reduce any
of such benefits or deprive Executive of any material fringe
benefit enjoyed by Executive at the Change in Control
Date.
Executive’s
right to terminate the Executive’s employment for Good Reason
shall not be affected by the Executive’s incapacity due to
physical or mental illness, except for a Disability as defined in
Section 2.9 above. Executive’s continued employment
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason
hereunder.
2.11 “
Notice of Termination” . A written notice from one
party to the other party specifying the Date of Termination and
which sets forth in reasonable detail the facts and circumstances
relating to the basis for termination of Executive’s
employment.
2.12 “
Person” . Any individual, corporation, bank,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or other entity.
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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 suc
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