AGREEMENT AND PLAN OF REORGANIZATION

          THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made and entered into as of this 12th day of
June, 1997, by and between FIRST CLAYTON BANCSHARES, INC., a
Georgia business corporation (hereinafter "Clayton," and unless
the context otherwise requires, the term "Clayton" shall include
both First Clayton Bancshares, Inc. and its subsidiary First
Clayton Bank & Trust Company ("Clayton Bank")), and UNITED
COMMUNITY BANKS, INC., a Georgia business corporation
(hereinafter "United," and unless the context otherwise requires,
the term "United" shall include United Community Banks, Inc. and
its subsidiaries, United Community Bank, a Georgia banking
corporation, Peoples Bank of Fannin County, a Georgia banking
corporation, White County Bank, a Georgia banking corporation,
Towns County Bank, a Georgia banking corporation, Carolina
Community Bank, a North Carolina banking corporation, and United
Family Finance Company, a Georgia business corporation).

                         R E C I T A L S:

          WHEREAS, the respective boards of directors of Clayton
and United deem it advisable and in the best interests of each
such entity and their respective shareholders that Clayton merge
with United (the "Merger"), with United being the surviving
corporation and with all of the issued and outstanding shares of
common stock, $1.00 par value per share, of Clayton ("Clayton
Stock") being converted into the right to receive shares of the
authorized common stock, $1 par value per share, of United
("United Stock"), all upon the terms and conditions hereinafter
set forth and as set forth in the Agreement and Plan of Merger
attached hereto as Exhibit A and incorporated herein by reference
(the "Merger Agreement"); and

          WHEREAS, the boards of directors of the respective
entities believe that the merger of Clayton and United and the
synergies produced thereby will greatly enhance and strengthen
the franchises and future prospects of both companies;

          NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt
and adequacy of which as legally sufficient consideration are
hereby acknowledged, the parties hereto agree as follows:

                            ARTICLE I

                             CLOSING

          The transactions contemplated herein shall be
consummated (the "Closing") at the offices of Kilpatrick Stockton
LLP, Suite 2800, 1100 Peachtree Street, Atlanta, Georgia, on the
first business day following receipt of all approvals from any
governmental authorities having jurisdiction over the
transactions contemplated by this Agreement and the Merger
Agreement, and the expiration of any waiting or similar period
required by applicable law (the "Closing Date"), or at such other
time and place as may be mutually satisfactory to the parties
hereto.


                            ARTICLE II

                              MERGER

          Pursuant to the terms and conditions provided herein,
on the Closing Date Clayton and United shall be merged in
accordance with and in the manner set forth in the Merger
Agreement.  The surviving corporation following the Merger will
operate under the Articles of Incorporation of United and will be
the parent holding company of First Clayton Bank & Trust Company,
a Georgia banking corporation, United Community Bank, a Georgia
banking corporation, Peoples Bank of Fannin County, a Georgia
banking corporation, White County Bank, a Georgia banking
corporation, Towns County Bank, a Georgia banking corporation,
Carolina Community Bank, a North Carolina banking corporation,
and United Family Finance Company, a Georgia business
corporation, the latter six of which are currently wholly-owned
subsidiaries of United.  Upon the terms and conditions of this
Agreement and the Merger Agreement, United shall make available
on or before the Effective Date (as defined in the Merger
Agreement) for delivery to the holders of Clayton Stock (i) the
number of shares of United Stock to be issued upon conversion of
the shares of Clayton Stock and (ii) sufficient funds to provide
for cash payments in lieu of the issuance of fractional shares as
provided in the Merger Agreement, provided, however, that unless
and until a holder of Clayton Stock entitled to receive United
Stock pursuant to the Merger shall have surrendered his Clayton
Stock certificate(s) or unless otherwise required by law, the
holder of such certificate(s) shall not have any right to receive
payment of any dividends or other distributions on the shares of
United Stock or receive any notices sent by United to its
shareholders or to vote such shares.

                           ARTICLE III

                         OTHER AGREEMENTS

          3.1  REGISTRATION OF UNITED STOCK.  United agrees to
file with the Securities and Exchange Commission (the "SEC") as
soon as reasonably possible a registration statement (the "United
Registration Statement") under the Securities Act of 1933, as
amended (the "1933 Act"), on Form S-4 or some other appropriate
form covering the issuance of the shares of United Stock to the
shareholders of Clayton pursuant to this Agreement and the Merger
Agreement and to use its best efforts to cause the United
Registration Statement to become effective and to remain
effective through the Closing Date.  United agrees to take any
action required to be taken under the applicable state securities
laws in connection with the issuance of shares of United Stock
upon consummation of the Merger.  Clayton agrees to provide
United reasonable assistance as necessary in the preparation of
the United Registration Statement, including, without limitation,
providing United with all material facts regarding the opera-
tions, business, assets, liabilities and personnel of Clayton,
together with the audited financial statements of Clayton, all as
required by the 1933 Act and the rules, regulations and practices
of the SEC, for inclusion in the United Registration Statement. 
The United Registration Statement shall not cover resales of
United Stock by any of the shareholders of Clayton, and United
shall have no obligation to cause the United Registration
Statement to continue to be effective after the Closing or to


                                   -2-

prepare or file any post-effective amendments to the United
Registration Statement after the Closing.

          3.2  MEETING OF SHAREHOLDERS OF CLAYTON.  Clayton shall
call a special meeting of its shareholders (the "Special
Meeting") to be held not more than forty-five (45) days after the
United Registration Statement becomes effective under the 1933
Act for the purpose of submitting the Merger Agreement to such
shareholders for their approval.  In connection with the Special
Meeting, Clayton shall prepare and submit to its shareholders a
notice of meeting, proxy statement and proxy (the "Clayton Proxy
Materials"), which shall include the final prospectus from the
United Registration Statement in the form filed with the SEC.

          3.3  ABSENCE OF BROKERS.  Each party hereto represents
and warrants to the other that no broker, finder or other
financial consultant has acted on its behalf in connection with
this Agreement or the transactions contemplated hereby.  Each
party agrees to indemnify the other and hold and save it harmless
from any claim or demand for commissions or other compensation by
any broker, finder, financial consultant or similar agent
claiming to have been employed by or on behalf of such party.

          3.4  ACCESS TO PROPERTIES, BOOKS, ETC.  Each party
hereto shall allow the other party and its authorized repre-
sentatives full access during normal business hours from and
after the date hereof and prior to the Closing Date to all of the
respective properties, books, contracts, commitments and records
of such party and its subsidiaries and shall furnish the other
party and its authorized representatives such information
concerning its affairs and the affairs of its subsidiaries as the
other party may reasonably request provided that such request
shall be reasonably related to the transactions contemplated by
this Agreement and shall not interfere unreasonably with normal
operations.  Each party shall cause its and its subsidiaries'
personnel, employees and other representatives to assist the
other party in making any such investigation.  During such
investigation, the investigating party and its authorized
representatives shall have the right to make copies of such
records, files, tax returns and other materials as it may deem
advisable and shall advise the other party of those items of
which copies are made.  No investigation made heretofore or
hereafter by either party and its authorized representatives
shall affect the representations and warranties of either such
party hereunder.

          3.5  CONFIDENTIALITY.  Prior to consummation of the
Merger, the parties to this Agreement will provide one another
with information which may be deemed by the party providing the
information to be confidential.  Each party agrees that it will
hold confidential and protect all information provided to it by
the other party to this Agreement or such party's affiliates,
except that the obligations contained in this Section 3.5 shall
not in any way restrict the rights of any party or person to use
information that (i) was known to such party prior to the
disclosure by the other party; (ii) is or becomes generally
available to the public other than by breach of this Agreement;
(iii) is provided by one party for disclosure concerning such
party in the United Registration Statement; or (iv) otherwise be-
comes lawfully available to a party to this Agreement on a
nonconfidential basis from a third party who is not under an


                                   -3-

obligation of confidence to the other party to this Agreement. 
If this Agreement is terminated prior to the Closing, each party
hereto agrees to return all documents, statements and other
written materials, whether or not confidential, and all copies
thereof, provided to it by or on behalf of the other party to
this Agreement.  The provisions of this Section 3.5 shall survive
termination, for any reason whatsoever, of this Agreement, and,
without limiting the remedies of the parties hereto in the event
of any breach of this Section 3.5, the parties hereto will be
entitled to seek injunctive relief against the other party in the
event of a breach or threatened breach of this Section 3.5.

          3.6  FULL COOPERATION. The parties shall cooperate
fully with each other in connection with any acts or actions
required to be taken as part of their respective obligations
under this Agreement.

          3.7  EXPENSES.  All of the expenses incurred by United
in connection with the authorization, preparation, execution and
performance of this Agreement and the Merger Agreement including,
without limitation, all fees and expenses of its agents,
representatives, counsel and accountants and the fees and
expenses related to filing the United Registration Statement and
all regulatory applications with state and federal authorities in
connection with the transactions contemplated hereby and thereby,
shall be paid by United.  All expenses incurred by Clayton in
connection with the authorization, preparation, execution and
performance of this Agreement and the Merger Agreement,
including, without limitation, all fees and expenses of its
agents, representatives, counsel and accountants for Clayton and
the cost of reproducing and mailing the Clayton Proxy Materials,
shall be paid by Clayton.

          3.8  PRESERVATION OF GOODWILL.  Each party hereto shall
use its best efforts to preserve its business organization and
the business organization of its subsidiaries, to keep available
the services of its present employees and of the present
employees of its subsidiaries, and to preserve the goodwill of
customers and others having business relations with such party or
its subsidiaries.

          3.9  APPROVALS AND CONSENTS.  Each party hereto
represents and warrants to and covenants with the other that it
will use its best efforts, and will cause its officers,
directors, employees and agents and its subsidiaries and any
subsidiary's officers, directors, employees and agents to use
their best efforts, to obtain as soon as is reasonably
practicable all approvals and consents of state and federal
departments or agencies required or deemed necessary for
consummation of the transactions contemplated by this Agreement
and the Merger Agreement.

          3.10 AGREEMENT BY CLAYTON EXECUTIVE OFFICERS AND
DIRECTORS.  Contemporaneously with the execution of this
Agreement, each of the directors and executive officers of
Clayton will execute and deliver to United an agreement, the form
of which is attached hereto as Exhibit B, pursuant to which each
of them agrees (i) to recommend to Clayton shareholders approval
of the Merger, (ii) to vote the capital stock of Clayton owned or
controlled by them in favor of the Merger, and (iii) to transfer
or assign shares of United Stock received by them in connection


                                   -4-

with the Merger only in compliance with the 1933 Act, applicable
state securities laws and the rules and regulations promulgated
under either.

          3.11 PRESS RELEASES.  Prior to the Effective Date,
Clayton and United shall agree with each other as to the form and
substance of any press release or other public disclosure
materially related to this Agreement or any other transaction
contemplated hereby; provided, however, that nothing in this
Section 3.11 shall be deemed to prohibit any Party from making
any disclosure which its counsel deems necessary or advisable in
order to satisfy such Party's disclosure obligations imposed by
law.

          3.12 EMPLOYEE BENEFITS AND CONTRACTS.  Following the
Effective Date, United or any Affiliate (within the meaning of
Section 6.5.2(f) below) of United (collectively, the "United
Group") shall provide generally to officers, employees and former
employees of Clayton who continue employment with the United
Group employee benefits on terms and conditions which, when taken
as a whole, are substantially similar to those then currently
provided by the United Group to its other similarly situated
officers, employees and former employees.  For purposes of
eligibility to participate and any vesting determinations in
connection with the provision of any such employee benefits,
service with Clayton prior to the Effective Date shall be
counted.  The United Group shall also honor in accordance with
their terms all employment, severance, consulting, option and
other contracts of a compensatory nature to the extent disclosed
in the Clayton Disclosure Memorandum between Clayton and any
current or former director, officer or employee thereof and no
other contracts of a compensatory nature to the extent disclosed
in the Clayton Disclosure Memorandum between Clayton and any
current or former director, officer or employee thereof and no
other contracts of the types described that are not so disclosed
shall be deemed to be assumed by the United Group by reason of
this Section 3.12.  If, during the calendar year in which falls
the Effective Date, the United Group shall terminate any "group
health plan", within the meaning of Section 4980B(g)(2) of the
Internal Revenue Code, in which one or more Clayton employees
participated immediately prior to the Effective Date (a "Clayton
Plan"), United shall cause any successor group health plan to
waive any underwriting requirements; to give credit for any such
Clayton employee's participation in the Clayton Plan prior to the
Effective Date for purposes of applying any pre-existing
condition limitations set forth therein; and to give credit for
covered expenses paid by any such Clayton employee under a
Clayton Plan prior to the Effective Date towards satisfaction of
any annual deductible limitation and out-of pocket maximum
applied under such successor group health plan.  The United Group
also shall be considered a successor employer for and shall
provide to "qualified beneficiaries", determined immediately
prior to the Effective Date, under any Clayton Plan appropriate
"continuation coverage" (as those terms are defined in Section
4980B of the Internal Revenue Code) following the Effective Date
under either the Clayton Plan or any successor group health plan
maintained by the United Group.

          3.13 INDEMNIFICATION.  (a)  Subject to the conditions
set forth in paragraph (b) below, for a period of six (6) years
after the Effective Date, United shall indemnify, defend, and


                                   -5-

hold harmless each person entitled to indemnification from
Clayton or Clayton Bank (each, an "Indemnified Party") against
all Liabilities arising out of actions or omissions occurring at
or prior to the Effective Date (including, without limitation,
the transactions contemplated by this Agreement) to the full
extent permitted by Georgia Law and Clayton's articles of
incorporation and bylaws, in each case as in effect on the date
hereof, including provisions relating to advances of expenses
incurred in the defense of any litigation.  Without limiting the
foregoing, in any case in which approval by Clayton is required
to effectuate any indemnification, United shall cause Clayton to
direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent
counsel mutually agreed upon between United and the Indemnified
Party.

          (b)  Any Indemnified Party wishing to claim
indemnification under paragraph (a), upon learning of any such
liability or litigation, shall promptly notify United thereof. 
In the event of any such litigation (whether arising before or
after the Effective Date), (i) United or Clayton shall have the
right to assume the defense thereof and United shall not be
liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof,
except that if United or Clayton elects not to assume such
defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between
United or Clayton and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and United or
Clayton shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that United shall be
obligated pursuant to this paragraph (b) to pay for only one firm
of counsel for all Indemnified Parties in any jurisdiction, (ii)
the Indemnified Parties will cooperate in the defense of any such
litigation, and (iii) United shall not be liable for any
settlement effected without its prior written consent and
provided further that Clayton shall not have any obligation
hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination
shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited
by applicable law.

          (c)  For purposes of this Section 3.13, "liability"
shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense
(including, without limitation, costs of investigation,
collection, and defense), claim, deficiency, guaranty, or
endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or
deposit in the ordinary course of business) of any type, whether
accrued, absolute, or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.

          (d)  For purposes of this Section 3.13, "litigation"
shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry,
administrative or other proceeding or notice (written or oral) by


                                   -6-

any Person alleging potential liability, but shall not include
regular, periodic examinations of depository institutions and
their affiliates by regulatory authorities.

          3.14 STOCK OPTION AWARDS AND DEFERRED COMPENSATION. 
Clayton and United agree that (i) Clayton will grant incentive
stock options to J. Mark Smith and Rodney R. Hickox in the same
amounts and on substantially the same terms as described in
Exhibit C and (ii) Clayton will execute a Deferred Compensation
Agreement with each of J. Mark Smith and Rodney R. Hickox on
substantially the same terms as described in Exhibit C.

                            ARTICLE IV

            REPRESENTATIONS AND WARRANTIES OF CLAYTON

          As an inducement to United to enter into this Agreement 
and to consummate the transactions contemplated hereby, Clayton
represents, warrants, covenants and agrees as follows:

          4.1  CLAYTON DISCLOSURE MEMORANDUM.  By June 19,
Clayton will deliver to United a memorandum (the "Clayton
Disclosure Memorandum") containing certain information regarding
Clayton as indicated at various places in this Agreement.  All
information set forth in the Clayton Disclosure Memorandum or in
documents incorporated by reference in the Clayton Disclosure
Memorandum is true, correct and complete, does not omit to state
any fact necessary in order to make the statements therein not
misleading, and shall be deemed for all purposes of this
Agreement to constitute part of the representations and
warranties of Clayton under this Article IV.  The information
contained in the Clayton Disclosure Memorandum shall be deemed to
be part of and qualify all representations and warranties
contained in this Article IV and the covenants in Article V to
the extent applicable.  All information in each of the documents
and other writings furnished to United pursuant to this Agreement
or the Clayton Disclosure Memorandum is or will be true, correct
and complete and does not and will not omit to state any fact
necessary in order to make the statements therein not misleading. 
Clayton shall promptly provide United with written notification
of any event, occurrence or other information necessary to
maintain the Clayton Disclosure Memorandum and all other
documents and writings furnished to United pursuant to this
Agreement as true, correct and complete in all material respects
at all times prior to and including the Closing.  Clayton agrees
that upon receipt of the Clayton Disclosure Memorandum, United
shall have until June 23 to review the Clayton Disclosure
Memorandum and to terminate this Agreement if for any reason in
its sole discretion United believes that proceeding with the
Merger in light of the contents of such memorandum would be
detrimental to United.

          4.2  CORPORATE AND FINANCIAL.

               4.2.1     AUTHORITY.  Subject to the approval of
various state and federal regulators and Clayton Shareholders,
the execution, delivery and performance of this Agreement and the
other transactions contemplated or required in connection
herewith will not, with or without the giving of notice or the
passage of time, or both, (a) violate any provision of federal or
state law applicable to Clayton, the violation of which could be


                                   -7-

reasonably expected to have a material adverse effect on the
business, operations, properties, assets, financial condition or
prospects of Clayton; (b) violate any provision of the articles
of incorporation or bylaws of Clayton; (c) conflict with or
result in a breach of any provision of, or termination of, or
constitute a default under any instrument, license, agreement, or
commitment to which Clayton is a party, which, singly or in the
aggregate, could reasonably be expected to have a material
adverse effect on the business, operations, properties, assets,
financial condition or prospects of Clayton; or (d) constitute a
violation of any order, judgment or decree to which Clayton is a
party, or by which Clayton or any of its assets or properties are
bound.  Assuming this Agreement constitutes the valid and binding
obligation of United, this Agreement constitutes the valid and
binding obligation of Clayton, and is enforceable in accordance
with its terms, except as limited by laws affecting creditors'
rights generally and by the discretion of courts to compel
specific performance.

               4.2.2     CORPORATE STATUS.  Clayton is a business
corporation duly organized, validly existing and in good standing
under the laws of the state of Georgia and has no direct or
indirect subsidiaries other than Clayton Bank.  Clayton Bank is a
banking corporation duly organized and validly existing under the
laws of the State of Georgia.  Clayton and Clayton Bank have all
of the requisite corporate power and authority and are entitled
to own or lease their respective properties and assets and to
carry on their respective businesses as and in the places where
such properties or assets are now owned, leased or operated and
such businesses are now conducted.

               4.2.3     CAPITAL STRUCTURE.  (a)  Clayton has an
authorized capital stock consisting of 10,000,000 shares, $1.00
par value of common stock, of which 400,691 shares of common
stock are issued and outstanding as of the date hereof, and
5,000,000 shares, $1.00 par value of special stock, none of which
is issued and outstanding.  Clayton Bank has an authorized
capital stock consisting solely of 5,000,000 shares of Common
Stock, par value $2.00 ("Clayton Bank Stock"), of which 1 share
is issued and outstanding as of the date hereof.  All of the
outstanding shares of Clayton Stock and Clayton Bank stock are
duly and validly issued, fully paid and non-assessable and were
offered, issued and sold in compliance with all applicable
federal and state securities laws.  No person has any right of
rescission or claim for damages under federal or state securities
laws with respect to the issuance of any shares of Clayton Stock
or Clayton Bank Stock previously issued.  None of the shares of
Clayton Stock or Clayton Bank Stock has been issued in violation
of any preemptive or other rights of its shareholders.  All of
the issued and outstanding shares of Clayton Bank Stock are owned
by Clayton.

               (b)  Except as set forth in the Clayton Disclosure
Memorandum, Clayton does not have outstanding any securities
which are either by their terms or by contract convertible or
exchangeable into capital stock of Clayton, or any other securi-
ties or debt, of Clayton, or any preemptive or similar rights to
subscribe for or to purchase, or any options or warrants or
agreements or understandings for the purchase or the issuance
(contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock or securities


                                   -8-

convertible into its capital stock.  Clayton is not subject to
any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire, or to register, any shares of its
capital stock.

               (c)  There is no agreement, arrangement or under-
standing to which Clayton is a party restricting or otherwise
relating to the transfer of any shares of capital stock of
Clayton.

               (d)  All shares of common stock or other capital
stock, or any other securities or debt, of Clayton, which have
been purchased or redeemed by Clayton have been purchased or
redeemed in accordance with all applicable federal, state and
local laws, rules, and regulations, including, without
limitation, all federal and state securities laws and rules and
regulations of any securities exchange or system on which such
stock, securities or debt are, or at such time were, traded, and
no such purchase or redemption has resulted or will, with the
giving of notice or lapse of time, or both, result in a default
or acceleration of the maturity of, or otherwise modify, any
agreement, note, mortgage, bond, security agreement, loan
agreement or other contract or commitment of Clayton.

          4.2.4     CORPORATE RECORDS.  The stock records and
minute books of Clayton, whether heretofore or hereafter
furnished or made available to United by Clayton, (a) fully and
accurately reflect all issuances, transfers and redemptions of
the Common Stock, (b) correctly show the record addresses and the
number of shares of such stock issued and outstanding on the date
hereof held by the shareholders of Clayton, (c) correctly show
all corporate action taken by the directors and shareholders of
Clayton (including actions taken by consent without a meeting)
and (d) contain true and correct copies or originals of the
respective articles of incorporation and all amendments thereto,
bylaws as amended and currently in force, and the minutes of all
meetings or consent actions of its directors and shareholders. 
No resolutions, regulations or bylaws have been passed, enacted,
consented to or adopted by such directors or shareholders except
those contained in the minute books.  All corporate records have
been maintained in accordance with all applicable statutory
requirements and are complete and accurate.

          4.2.5     TAX RETURNS; TAXES.  (a)  Clayton has duly
filed (i) all required federal and state tax returns and reports,
and (ii) all required returns and reports of other governmental
units having jurisdiction with respect to taxes imposed upon its
income, properties, revenues, franchises, operations or other
assets or taxes imposed which might create a material lien or
encumbrance on any of such assets or affect materially and
adversely its business or operations.  To the knowledge of the
officers of Clayton (the "Clayton Management"), such returns or
reports are, and when filed will be, true, complete and correct,
and Clayton has paid, to the extent such taxes or other
governmental charges have become due, all taxes and other
governmental charges set forth in such returns or reports.  To
the knowledge of the Clayton Management, all federal, state and
local taxes and other governmental charges paid or payable by
Clayton have been paid, or have been accrued or reserved on its
books in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods.  To the


                                   -9-

knowledge of the Clayton Management, adequate reserves for the
payment of taxes have been established on the books of Clayton
for all periods through the date hereof, whether or not due and
payable and whether or not disputed.  Until the Closing Date,
Clayton shall continue to provide adequate reserves for the
payment of expected tax liabilities in accordance with generally
accepted accounting principles applied on a basis consistent with
prior periods.  Clayton has not received any notice of a tax
deficiency or assessment of additional taxes of any kind and, to
the knowledge of the Clayton Management, there is no threatened
claim against Clayton, or to the knowledge of the Clayton
Management, any basis for any such claim, for payment of any
additional federal, state, local or foreign taxes for any period
prior to the date of this Agreement in excess of the accruals or
reserves with respect to any such claim shown in the 1996 Clayton
Financial Statements described in Section 4.2.6 below or
disclosed in the notes with respect thereto.  There are no
waivers or agreements by Clayton for the extension of time for
the assessment of any taxes.  The federal income tax returns of
Clayton have not been examined by the Internal Revenue Service
for any period since January 1, 1993.

          (b)  Except as set forth in the Clayton Disclosure
Memorandum, to the knowledge of the Clayton Management, proper
and accurate amounts have been withheld by Clayton from its
employees for all periods in full and complete compliance with
the tax withholding provisions of applicable federal, state and
local tax laws, and proper and accurate federal, state and local
tax returns have been filed by Clayton for all periods for which
returns were due with respect to withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and
payable have been paid in full.

          4.2.6     FINANCIAL STATEMENTS.  Clayton has delivered
to United true, correct and complete copies of (i) the audited
financial statements of Clayton for the years ended December 31,
1994, 1995 and 1996, including balance sheets, statements of
income, statements of shareholders' equity, statements of cash
flows and related notes (the audited financial statements for the
year ended December 31, 1996 being referred to as the "1996
Clayton Financial Statements") and (ii) unaudited financial
statements of Clayton for the period ended March 31, 1997,
including a balance sheet, statement of income and related notes. 
All of such financial statements have been prepared in accordance
with generally accepted accounting principles consistently
applied and present fairly the assets, liabilities and financial
condition of Clayton as of the dates indicated therein and the
results of its operations for the respective periods then ended.

          4.2.7     REGULATORY REPORTS.  Clayton has made
available to United for review and inspection the year-end Report
of Condition and year-end Report of Income and Dividends as filed
by Clayton Bank with the Federal Deposit Insurance Corporation
(the "FDIC") for each of the three years ended December 31, 1996,
1995 and 1994, together with all such other reports filed for the
same three-year period with the FDIC, and the Department of
Banking and Finance of the State of Georgia (the "Department of
Banking"), and other applicable regulatory agencies and the Form
F.R. Y-6 filed by Clayton with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") for each of the
three years ended December 31, 1996, 1995 and 1994 (collectively,


                                   -10-

the "Clayton Reports").  All of the Clayton Reports, as amended,
have been prepared in accordance with applicable rules and
regulations applied on a basis consistent with prior periods and
contain in all material respects all information required to be
presented therein in accordance with such rules and regulations.

          4.2.8     ACCOUNTS.  The Clayton Disclosure Memorandum
contains a list of each and every bank and other institution in
which Clayton maintains an account or safety deposit box, the ac-
count numbers, and the names of all persons who are presently
authorized to draw thereon, have access thereto or give in-
structions regarding distribution of funds or assets therein.

          4.2.9     NOTES AND OBLIGATIONS.  (a) Except as set
forth in the Clayton Disclosure Memorandum or as provided for in
the loss reserve described in subsection (b) below, all notes
receivable or other obligations owned by Clayton or due to it
shown in the 1996 Clayton Financial Statements and any such notes
receivable and obligations on the date hereof and on the Closing
Date are and will be genuine, legal, valid and collectible
obligations of the respective makers thereof and are not and will
not be subject to any offset or counterclaim.  Except as set
forth in subsection (b) below, all such notes and obligations are
evidenced by written agreements, true and correct copies of which
will be made available to United for examination prior to the
Closing Date.  All such notes and obligations were entered into
by Clayton in the ordinary course of its business and in
compliance with all applicable laws and regulations.

          (b)  Clayton has established a loss reserve in the 1996
Clayton Financial Statements and as of the date of this Agreement
and will establish a loan loss reserve as of the Closing Date
which is adequate to cover anticipated losses which might result
from such items as the insolvency or default of borrowers or
obligors on such loans or obligations, defects in the notes or
evidences of obligation (including losses of original notes or
instruments), offsets or counterclaims properly chargeable to
such reserve, or the availability of legal or equitable defenses
which might preclude or limit the ability of Clayton to enforce
the note or obligation, and the representations set forth in
subsection (a) above are qualified in their entirety by the
aggregate of such loss reserve.  Except as described in the
Clayton Disclosure Memorandum, at the Closing Date, the ratio of
the loss reserve, established on such date in good faith by
Clayton, to total loans outstanding at such time shall not exceed
the ratio of the loan loss reserve to the total loans outstanding
as reflected in the 1996 Clayton Financial Statements,
established on or before such date in good faith by Clayton, in
accordance with generally accepted accounting principles.

          4.2.10    LIABILITIES.  Clayton has no debt, liability
or obligation of any kind required to be shown pursuant to
generally accepted accounting principles on the consolidated
balance sheet of Clayton, whether accrued, absolute, known or
unknown, contingent or otherwise, including, but not limited to
(a) liability or obligation on account of any federal, state or
local taxes or penalty, interest or fines with respect to such
taxes, (b) liability arising from or by virtue of the distri-
bution, delivery or other transfer or disposition of goods,
personal property or services of any type, kind or variety, (c)
unfunded liabilities with respect to any pension, profit sharing


                                   -11-

or employee stock ownership plan, whether operated by Clayton or
any other entity covering employees of Clayton, or (d)
environmental liabilities, except (i) those reflected in the 1996
Clayton Financial Statements, and (ii) as disclosed in the
Clayton Disclosure Memorandum.

          4.2.11    ABSENCE OF CHANGES.  Except as specifically
provided for in this Agreement or specifically set forth in the
Clayton Disclosure Memorandum, since December 31, 1996:

          (a)  there has been no change in the business, assets,
liabilities, results of operations or financial condition of
Clayton, or in any of its relationships with customers,
employees, lessors or others, other than changes in the ordinary
course of business, none of which individually or in the
aggregate has had, or which the Clayton Management believes may
have, a material adverse effect on such businesses or properties;

          (b)  there has been no material damage, destruction or
loss to the assets, properties or business of Clayton, whether or
not covered by insurance, which has had, or which the Clayton
Management believes may have, an adverse effect thereon;

          (c)  the business of Clayton has been operated in the
ordinary course, and not otherwise;

          (d)  the properties and assets of Clayton used in its
business have been maintained in good order, repair and
condition, ordinary wear and tear excepted;

          (e)  the books, accounts and records of Clayton have
been maintained in the usual, regular and ordinary manner;

          (f)  there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of
the capital stock of Clayton;

          (g)  there has been no increase in the compensation or
in the rate of compensation or commissions payable or to become
payable by Clayton to any director or executive officer, or to
any employee earning $25,000 or more per annum, or any general
increase in the compensation or in the rate of compensation
payable or to become payable to employees of Clayton earning less
than $25,000 per annum ("general increase" for the purpose hereof
meaning any increase generally applicable to a class or group of
employees, but not including increases granted to individual
employees for merit, length of service, change in position or
responsibility or other reasons applicable to specific employees
and not generally to a class or group thereof), or any director,
officer, or employee hired at a salary in excess of $25,000 per
annum, or any increase in any payment of or commitment to pay any
bonus, profit sharing or other extraordinary compensation to any
employee;

          (h)  there has been no change in the articles of
incorporation or bylaws of Clayton;

          (i)  there has been no labor dispute, unfair labor
practice charge or employment discrimination charge, nor, to the
knowledge of Clayton, any organizational effort by any union, or
institution or threatened institution, of any effort, complaint


                                   -12-

or other proceeding in connection therewith, involving Clayton,
or affecting its operations;

          (j)  there has been no issuance, sale, repurchase,
acquisition, or redemption by Clayton of any of its capital
stock, bonds, notes, debt or other securities, and there has been
no modification or amendment of the rights of the holders of any
outstanding capital stock, bonds, notes, debt or other securities
thereof;

          (k)  there has been no mortgage, lien or other
encumbrance or security interest (other than liens for current
taxes not yet due or purchase money security interests arising in
the ordinary course of business) created on or in (including
without limitation, any deposit for security consisting of) any
asset or assets of Clayton or assumed by it with respect to any
asset or assets;

          (l)  there has been no indebtedness or other liability
or obligation (whether absolute, accrued, contingent or
otherwise) incurred by Clayton which would be required to be
reflected on a balance sheet of Clayton prepared as of the date
hereof in accordance with generally accepted accounting
principles applied on a consistent basis, except as incurred in
the ordinary course of business;

          (m)  no obligation or liability of Clayton has been
discharged or satisfied, other than in the ordinary course of
business;

          (n)  there have been no sales, transfers or other
dispositions of any asset or assets of Clayton, other than sales
in the ordinary course of business; and

          (o)  there has been no amendment, termination or waiver
of any right of Clayton under any contract or agreement or
governmental license, permit or permission which has had or may
have an adverse effect on its business or properties.

          4.2.12    LITIGATION AND PROCEEDINGS.  Except as set
forth on the Clayton Disclosure Memorandum, there are no actions,
decrees, suits, counterclaims, claims, proceedings or
governmental actions or investigations, pending or, to the
knowledge of Clayton, threatened against, by or affecting
Clayton, or any officer, director, employee or agent in such
person's capacity as an officer, director, employee or agent of
Clayton or relating to the business or affairs of Clayton, in any
court or before any arbitrator or governmental agency, and no
judgment, award, order or decree of any nature has been rendered
against or with respect thereto by any agency, arbitrator, court,
commission or other authority, nor does Clayton have any
unasserted contingent liabilities which might have an adverse
effect on its assets or on the operation of its businesses or
which might prevent or impede the consummation of the
transactions contemplated by this Agreement.

          4.2.13    PROXY MATERIALS.  Neither the Clayton Proxy
Materials nor other materials furnished by Clayton to the Clayton
shareholders in connection with the transactions contemplated by
this Agreement or the Merger Agreement, or in any amendments
thereof or supplements thereto, will, at the times such documents


                                   -13-

are distributed to the holders of shares of Clayton Stock and
through the acquisition of shares of Clayton Stock by United
pursuant to the Merger, contain with respect to Clayton any
untrue statement of a material fact or omit to state any
information required to be stated therein or omit to state any
material fact necessary in order to make the statements therein,
in light of the circumstances under which they are made with
respect to Clayton, not misleading.

     4.3  BUSINESS OPERATIONS.

          4.3.1     CUSTOMERS.  Clayton has no knowledge of any
presently existing facts which could reasonably be expected to
result in the loss of any material borrower or depositor or in
Clayton's inability to collect amounts due therefrom or to return
funds deposited thereby, except as set forth on the Clayton
Disclosure Memorandum.

          4.3.2     PERMITS; COMPLIANCE WITH LAW.  (a) Clayton
has all permits, licenses, approvals, authorizations and
registrations under all federal, state, local and foreign laws
required for Clayton to carry on its business as presently
conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect,
and no suspension or cancellation of any of them is pending or,
to the knowledge of Clayton, threatened.

          (b)  Clayton has complied with all laws, regulations,
and orders applicable to it or its business, except for any non-
compliance which would not have a material adverse effect on
Clayton.  The Clayton Disclosure Memorandum contains a list of
any known violations of such laws, regulations, ordinances or
rules by any present officer, director, or employee of Clayton
which occurred since December 31, 1991, and which resulted in any
order, proceeding, judgment or decree which would be required to
be disclosed pursuant to Item 401(f) of Regulation S-K
promulgated by the Securities and Exchange Commission if Clayton
had been subject to the reporting requirements under the 1933 Act
or the Securities Exchange Act of 1934.  No past violation of any
such law, regulation, ordinance or rule has occurred which could
impair the right or ability of Clayton to conduct its business.

          (c)  Except as set forth in the Clayton Disclosure
Memorandum, no notice or warning from any governmental authority
with respect to any failure or alleged failure of Clayton to
comply in any respect with any law, regulation or order has been
received, nor is any such notice or warning proposed or, to the
knowledge of Clayton, threatened.

          4.3.3     ENVIRONMENTAL.  (a) Except as set forth in
the Clayton Disclosure Memorandum, Clayton 

               (i)  has not caused or permitted, and has no
          knowledge of any claim regarding the environmental
          condition of the property or the generation,
          manufacture, use, or handling or the release or
          presence of, any hazardous substances or hazardous
          wastes, including petroleum, on, in, under or from any
          properties or facilities currently owned or leased by
          Clayton or adjacent to any properties so owned or
          leased; and


                                   -14-

               (ii) has complied in all material respects with,
          and has kept all records and made all filings or
          reports required by, and is otherwise in compliance
          with all applicable federal, state and local laws,
          regulations, orders, permits and licenses relating to
          the generation, treatment, manufacture, use, handling,
          release or presence of any hazardous substances or
          hazardous wastes, including petroleum and asbestos, on,
          in, under or from any properties or facilities
          currently owned or leased by Clayton.

          (b)  Except as set forth in the Clayton Disclosure
Memorandum, neither Clayton nor any of its officers, directors,
employees or agents, in the course of such individual's employ-
ment by Clayton, has given advice with respect to, or
participated in any respect in, the management or operation of
any entity or concern whose business relates in any way to the
generation, storage, handling, disposal, transfer, production,
use or processing of hazardous substances or hazardous wastes,
including petroleum, nor to Clayton's knowledge has Clayton
foreclosed on any property on which there is a threatened release
of any hazardous substances or hazardous wastes, including
petroleum, or on which there has been such a release and full
remediation has not been completed, or any property on which
contained (non-released) hazardous substances or hazardous
wastes, including petroleum, are or were located.

          (c)  Except as set forth in the Clayton Disclosure
Memorandum, neither Clayton, nor any of its officers, directors,
employees, or agents, is aware of, has been told of, or has
observed, the presence of any hazardous substance or hazardous
wastes, including petroleum, on, in, under, or around property on
which Clayton holds a legal or security interest, in violation
of, or creating liability under, federal, state, or local
environmental statutes, regulations, or ordinances.

          (d)  The term hazardous substances or hazardous waste
does not include those substances which are normally and
reasonably used in connection with the occupancy or operation of
office buildings (such as cleaning fluids, and supplies normally
used in the day to day operation of business offices).

          4.3.4     INSURANCE.  The Clayton Disclosure Memorandum
contains a complete list and description (including the expira-
tion date, premium amount and coverage thereunder) of all
policies of insurance and bonds presently maintained by, or
providing coverage for, Clayton or any of its officers, directors
and employees, all of which are, and will be maintained through
the Closing Date, in full force and effect, together with a
complete list of all pending claims under any of such policies or
bonds.  All terms, obligations and provisions of each of such
policies and bonds have been complied with, all premiums due
thereon have been paid, and no notice of cancellation with
respect thereto has been received.  Except as set forth in the
Clayton Disclosure Memorandum, such policies and bonds provide
adequate coverage to insure the properties and businesses of
Clayton and the activities of its officers, directors and
employees against such risks and in such amounts as are prudent
and customary.  Clayton will not as of the Closing Date have any
liability for premiums or for retrospective premium adjustments
for any period prior to the Closing Date.  Clayton has heretofore


                                   -15-

made, or will hereafter make, available to United a true, correct
and complete copy of each insurance policy and bond in effect
since January 1, 1991 with respect to the business and affairs of
Clayton.

     4.4  PROPERTIES AND ASSETS.

          4.4.1     CONTRACTS AND COMMITMENTS.  The Clayton
Disclosure Memorandum contains a list identifying and briefly
describing all written contracts, purchase orders, agreements,
security deeds, guaranties or commitments to which Clayton is a
party or by which it may be bound involving the payment or
receipt, actual or contingent, of more than $25,000 or having a
term or requiring performance over a period of more than ninety
(90) days.  Each such contract, agreement, guaranty and
commitment of Clayton is in full force and effect and is valid
and enforceable in accordance with its terms, and constitutes a
legal and binding obligation of the respective parties thereto
and is not the subject of any notice of default, termination,
partial termination or of any ongoing, pending, completed or
threatened investigation, inquiry or other proceeding or action
that may give rise to any notice of default, termination or
partial termination.  Clayton has complied in all material
respects with the provisions of such contracts, agreements,
guaranties and commitments.  A true and complete copy of each
such document has been or will be made available to United for
examination.

          4.4.2     LICENSES; INTELLECTUAL PROPERTY.  Clayton has
all patents, trademarks, trade names, service marks, copyrights,
trade secrets and know-how reasonably necessary to conduct its
business as presently conducted and, except as described in the
Clayton Disclosure Memorandum, Clayton is not a party, either as
licensor or licensee, to any agreement for any patent, process,
trademark, service mark, trade name, copyright, trade secret or
other confidential information and there are no rights of third
parties with respect to any trademark, service mark, trade
secrets, confidential information, trade name, patent, patent
application, copyright, invention, device or process owned or
used by Clayton or presently expected to be used by either of
them in the future.  All patents, copyrights, trademarks, service
marks, trade names, and applications therefor or registrations
thereof, owned or used by Clayton, are listed in the Clayton
Disclosure Memorandum.  Clayton has complied with all applicable
laws relating to the filing or registration of "fictitious names"
or trade names.

          4.4.3     PERSONAL PROPERTY.  Clayton has good and
marketable title to all of its personalty, tangible and
intangible, reflected in the 1996 Clayton Financial Statements
(except as since sold or otherwise disposed of by it in the
ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those
referred to in the notes to the 1996 Clayton Financial Statements
as securing specified liabilities (with respect to which no
default exists or, to the knowledge of Clayton, is claimed to
exist), (ii) those described in the Clayton Disclosure Memorandum
and (iii) liens for taxes not due and payable.

          4.4.4     CLAYTON LEASES.  (a)  All leases (the
"Clayton Leases") pursuant to which Clayton is lessor or lessee


                                   -16-

of any real or personal property (such property, the "Leased
Property") are valid and enforceable in accordance with their
terms; there is not under any of the Clayton Leases any default
or, to the knowledge of Clayton, any claimed default by Clayton,
or event of default or event which with notice or lapse of time,
or both, would constitute a default by Clayton and in respect of
which adequate steps have not been taken to prevent a default on
its part from occurring.

          (b)  The copies of the Clayton Leases heretofore or
hereafter furnished or made available by Clayton to United are
true, correct and complete, and the Clayton Leases have not been
modified in any respect other than pursuant to amendments, copies
of which have been concurrently delivered or made available to
United, and are in full force and effect in accordance with their
terms.

          (c)  Except as set forth in the Clayton Disclosure
Memorandum, there are no contractual obligations, agreements in
principle or present plans for Clayton to enter into new leases
of real property or to renew or amend existing Clayton Leases
prior to the Closing Date.

          4.4.5     REAL PROPERTY.  (a)  Clayton does not own any
interest in any real property (other than as lessee) except as
set forth in the Clayton Disclosure Memorandum (such properties
being referred to herein as "Clayton Realty").  Except as
disclosed in the Clayton Disclosure Memorandum, Clayton has good
title to the Clayton Realty and the titles to the Clayton Realty
are covered by title insurance policies providing coverage in the
amount of the original purchase price, true, correct and complete
copies of which have been or will be furnished to United with the
Clayton Disclosure Memorandum.  Clayton has not encumbered the
Clayton Realty since the effective dates of the respective title
insurance policies.

          (b)  Except as set forth in the Clayton Disclosure
Memorandum, the interests of Clayton in the Clayton Realty and in
and under each of the Clayton Leases are free and clear of any
and all liens and encumbrances and are subject to no present
claim, contest, dispute, action or, to the knowledge of Clayton,
threatened action at law or in equity.

          (c)  The present and past use and operations of, and
improvements upon, the Clayton Realty and all real properties
leased by Clayton (the "Clayton Leased Real Properties") are in
compliance in all material respects with all applicable building,
fire, zoning and other applicable laws, ordinances and
regulations and with all deed restrictions of record, no notice
of any violation or alleged violation thereof has been received,
and to the knowledge of Clayton there are no proposed changes
therein that would affect the Clayton Realty, the Clayton Leased
Real Properties or their uses.

          (d)  Except as set forth in the Clayton Disclosure
Memorandum, no rent has been paid in advance and no security
deposit has been paid by, nor is any brokerage commission payable
by or to, Clayton with respect to any Lease pursuant to which it
is lessor or lessee.

          (e)  Clayton is not aware of any proposed or pending


                                   -17-
  
change in the zoning of, or of any proposed or pending
condemnation proceeding with respect to, any of the Clayton
Realty or the Clayton Leased Real Properties which may adversely
affect the Clayton Realty or the Clayton Leased Real Properties
or the current or currently contemplated use thereof.

          (f)  The buildings and structures owned, leased or used
by Clayton are, taken as a whole, in good operating order (except
for ordinary wear and tear), usable in the ordinary course of
business, and are sufficient and adequate to carry on the
business and affairs of Clayton.

     4.5  EMPLOYEES AND BENEFITS.

          4.5.1     DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. 
Except as set forth in the Clayton Disclosure Memorandum, no
director, officer, or employee of Clayton serves, or in the past
five years has served, as a director or officer of any other
corporation on behalf of or as a designee of Clayton or any of
its subsidiaries.

          4.5.2     EMPLOYEE BENEFITS. (a)  Except as set forth
in the Clayton Disclosure Memorandum, Clayton does not provide
and is not obligated to provide, directly or indirectly, any
benefits for employees, including, without limitation, any
pension, profit sharing, stock option, retirement bonus,
hospitalization, medical, insurance, vacation or other employee
benefits under any practice, agreement or understanding.

          (b)  The Clayton Disclosure Memorandum lists separately
any employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") sponsored by Clayton (collectively, "ERISA Plans"). 
True, correct and complete copies of all ERISA Plans and, to the
extent applicable, all related trust agreements, insurance
contracts, summary plan descriptions, Internal Revenue Service
determination letters and filings, the past three years of
actuarial reports and valuations, annual reports and Form 5500
filings (including attachments), and any other related documents
requested by United or its counsel have been, or prior to the
Closing Date will be, made available to United.

          (c)  Clayton is not currently and has never been in the
past required to contribute to a multiemployer plan as defined in
Section 3(37)(A) of ERISA.  Clayton does not maintain or
contribute to, nor within the past six years has it maintained or
contributed to, an employee pension benefit plan as defined in
Section 3(2) of ERISA that is or was subject to Title IV of
ERISA.

          (d)  Each ERISA Plan has been operated and administered
in all material respects in accordance with, and has been amended
to comply with (unless such amendment is not yet required), all
applicable laws, rules and regulations, including, without
limitation, ERISA, the Internal Revenue Code of 1986, as amended
("Code"), and the regulations issued under ERISA and the Code. 
With respect to each ERISA Plan, other than routine claims for
benefits submitted in the ordinary course of the benefits
process, no litigation or administrative or other proceeding is
pending or, to the knowledge of Clayton, threatened involving
such ERISA Plan or any of its fiduciaries.  With respect to each


                                   -18-
  
ERISA Plan, neither Clayton nor any of its directors, officers,
employees or agents, nor to Clayton's knowledge, any "party in
interest" or "disqualified person" (as such terms are defined in
Section 3(14) of ERISA and Section 4975 of the Code) has been
engaged in or been a party to any transaction relating to the
ERISA Plan which would constitute a breach of fiduciary duty
under ERISA or a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code),
unless such transaction is specifically permitted under Sections
407 or 408 of ERISA, Section 4975 of the Code or a class or
administrative exemption issued by the Department of Labor.  Each
ERISA Plan that is a group health plan within the meaning of
Section 607(l) of ERISA and Section 4980B of the Code is in
material compliance with the continuation coverage requirements
of Section 501 of ERISA and Section 4980B of the Code. 

          (e)  Of the ERISA Plans, the "employee pension benefit
plans" within the meaning of Section 3(2) of ERISA (collectively,
the Employee Pension Benefit Plans") are separately identified on
the Clayton Disclosure Memorandum.  With respect to each Employee
Pension Benefit Plan, except as set forth on the Clayton
Disclosure Memorandum: (i) such Employee Pension Benefit Plan
constitutes a qualified plan within the meaning of Section 401(a)
of the Code and the trust is exempt from federal income tax under
Section 501(a) of the Code; (ii) all contributions required by
such plan have been made or will be made on a timely basis; and
(iii) no termination, partial termination or discontinuance of
contributions has occurred without a determination by the IRS
that such action does not affect the tax-qualified status of such
plan.

          (f)  As of the Closing Date, with respect to each ERISA
Plan, Clayton will have provided adequate reserves, or insurance
or qualified trust funds, to provide for all payments and
contributions required, or reasonably expected to be required, to
be made under the provisions of such ERISA Plan or required to be
made under applicable laws, rules and regulations, with respect
to any period prior to the Closing Date to the extent reserves
are required under generally accepted accounting principles,
based on an actuarial valuation satisfactory to the actuaries of
Clayton representing a projection of claims expected to be
incurred under such ERISA Plan.

          (g)  Except as disclosed on the Clayton Disclosure
Memorandum, Clayton does not provide and has no obligation to
provide benefits, including, without limitation, death, health or
medical benefits (whether or not insured) with respect to current
or former employees of Clayton beyond their retirement or other
termination of service with Clayton other than (i) coverage
mandated by applicable Law, (ii) benefits under the Employee
Pension Benefit Plans, or (iii) benefits the full cost of which
is borne by the current or former employee or his beneficiary.

          (h)  Neither this Agreement nor any transaction
contemplated hereby will (i) entitle any current or former
employee, officer or director of Clayton to severance pay,
unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase
the amount of compensation or benefits due any such employee,
officer or director.



                                   -19-
  
          4.5.3     LABOR-RELATED MATTERS.  Except as described
in the Clayton Disclosure Memorandum, Clayton is not, and has not
been, a party to any collective bargaining agreement or agreement
of any kind with any union or labor organization or to any
agreement with any of its employees which is not terminable at
will or upon ninety (90) days notice at the election of, and
without cost or penalty to, Clayton.  Clayton has not received at
any time in the past five (5) years, any demand for recognition
from any union, and no attempt has been made, or will have been
made as of the Closing Date, to organize any of its employees. 
Clayton has complied in all material respects with all obliga-
tions under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other
federal, state and local labor laws and regulations applicable to
employees.  There are no unfair labor practice charges pending or
threatened against Clayton, and there are, and in the past three
(3) years there have been, no charges, complaints, claims or
proceedings, no slowdowns or strikes pending or threatened
against, or involving, as the case may be, Clayton with respect
to any alleged violation of any legal duty (including but not
limited to any wage and hour claims, employment discrimination
claims or claims arising out of any employment relationship) by
Clayton as to any of its employees or as to any person seeking
employment therefrom, and no such violations exist.

          4.5.4     RELATED PARTY TRANSACTIONS.  Except for (a)
loans and extensions of credit made on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions by Clayton
with other persons who are not affiliated with Clayton, and which
do not involve more than the normal risk of repayment or present
other unfavorable features, (b) deposits, all of which are on
terms and conditions identical to those made available to all
customers of Clayton at the time such deposits were entered into,
and (c) transactions specifically described in the Clayton
Disclosure Memorandum, there are no contracts with or commitments
to present or former 5% or greater shareholders, directors,
officers, or employees involving the expenditure after December
31, 1991 of more than $60,000 as to any one individual, including
with respect to any business directly or indirectly controlled by
any such person, or $100,000 for all such contracts or
commitments in the aggregate for all such individuals (other than
contracts or commitments relating to services to be performed by
any officer, director or employee as a currently-employed
employee of Clayton).

     4.6  OTHER MATTERS.

          4.6.1     REGULATORY REPORTS.  Clayton will make
available to United for review and inspection all applications,
reports or other documents filed by it for each of its past three
full fiscal years with any regulatory or governmental agencies. 
All of such applications, reports and other documents have been
prepared in accordance with applicable rules and regulations of
the regulatory agencies with which they were filed.

          4.6.2     APPROVALS, CONSENTS AND FILINGS.  Except for
the approval of the Federal Reserve and the Department of
Banking, or as set forth in the Clayton Disclosure Memorandum,
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby or thereby


                                   -20-
  
will (a) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or
regulatory authority, or (b) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Clayton, or any
of Clayton's assets.

          4.6.3     DEFAULT.  (a)  Except for those consents
described in or set forth pursuant to Section 4.6.2 above,
neither the execution of this Agreement nor consummation of the
transactions contemplated herein (i) constitutes a breach of or
default under any contract or commitment to which Clayton is a
party or by which Clayton or its properties or assets are bound,
(ii) does or will result in the creation or imposition of any
security interest, lien, encumbrance, charge, equity or
restriction of any nature whatsoever in favor of any third party
upon any assets of Clayton, or (iii) constitutes an event
permitting termination of any agreement or the acceleration of
any indebtedness of Clayton.

          (b)  Clayton is not in default under its articles of
incorporation or bylaws or under any term or provision of any
security deed, mortgage, indenture or security agreement or of
any other contract or instrument to which Clayton is a party or
by which it or any of its property is bound.

          4.6.4     REPRESENTATIONS AND WARRANTIES.  No repre-
sentation or warranty contained in this Article IV or in any
written statement delivered by or at the direction of Clayton
pursuant hereto or in connection with the transactions contem-
plated hereby contains or shall contain any untrue statement, nor
shall such representations and warranties taken as a whole omit
any statement necessary in order to make any statement not
misleading.  Copies of all documents that have been or will be
furnished to United in connection with this Agreement or pursuant
hereto are or shall be true, correct and complete.

                            ARTICLE V

          CONDUCT OF BUSINESS OF CLAYTON PENDING CLOSING

          Except as expressly otherwise provided herein, Clayton
covenants and agrees that, without the prior written consent of
United, between the date hereof and the Closing Date:

          5.1  CONDUCT OF BUSINESS.  Clayton will conduct its
business only in the ordinary course, without the creation of any
indebtedness for borrowed money (other than deposit and similar
accounts and customary credit arrangements between banks in the
ordinary course of business).

          5.2  MAINTENANCE OF PROPERTIES.  Clayton will maintain
its properties and assets in good operating condition, ordinary
wear and tear excepted.

          5.3  INSURANCE.  Clayton will maintain and keep in full
force and effect all of the insurance referred to in Section
4.3.4(b) hereof or other insurance equivalent thereto in all
material respects.

          5.4  CAPITAL STRUCTURE.  No change will be made in the
authorized or issued capital stock or other securities of


                                   -21-
  
Clayton, and Clayton will not issue or grant any right or option
to purchase or otherwise acquire any of the capital stock or
other securities of Clayton.

          5.5  DIVIDENDS.  No dividend, distribution or payment
will be declared or made in respect to the Clayton Stock and
Clayton will not, directly or indirectly, redeem, purchase or
otherwise acquire any of its capital stock.

          5.6  AMENDMENT OF ARTICLES; CORPORATE EXISTENCE. 
Clayton will not amend its articles of incorporation or bylaws,
and Clayton will maintain its corporate existence and powers.

          5.7  NO ACQUISITIONS.  Clayton shall not acquire by
merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other entity or
division thereof or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to
it.

          5.8  NO DISPOSITIONS.  Clayton will not sell, mortgage,
lease, buy or otherwise acquire, transfer or dispose of any real
property or interest therein (except for sales in the ordinary
course of business) and Clayton will not, except in the ordinary
course of business, sell or transfer, mortgage, pledge or subject
to any lien, charge or other encumbrance any other tangible or
intangible asset.

          5.9  BANKING ARRANGEMENTS.  No change will be made in
the banking and safe deposit arrangements referred to in Section
4.2.8 hereof.

          5.10 CONTRACTS.  Except for renewals of existing
contracts in effect as of the date hereof, or entering into a
contract for the purpose of substituting a vendor under any such
existing contract, Clayton will not enter into any contract of
the kind described in Section 4.4.1 hereof.

          5.11 BOOKS AND RECORDS.  The books and records of
Clayton will be maintained in the usual, regular and ordinary
course.

          5.12 ADVICE OF CHANGES.  Clayton shall promptly advise
United orally and in writing of any change or event having, or
which the Clayton Management believes could have, a material
adverse effect on the assets, liabilities, business, operations
or financial condition of Clayton.

                            ARTICLE VI

             REPRESENTATIONS AND WARRANTIES OF UNITED

          As an inducement to Clayton to enter into this
Agreement  and to consummate the transactions contemplated
hereby, United represents, warrants, covenants and agrees as
follows:

          6.1  UNITED DISCLOSURE MEMORANDUM.  By June 19, United
will deliver to Clayton a memorandum (the "United Disclosure
Memorandum") containing certain information regarding United as


                                   -22-
  
indicated at various places in this Agreement.  All information
set forth in the United Disclosure Memorandum or in documents
incorporated by reference in the United Disclosure Memorandum is
true, correct and complete, does not omit to state any fact
necessary in order to make the statements therein not misleading,
and shall be deemed for all purposes of this Agreement to
constitute part of the representations and warranties of United
under this Article VI.  The information contained in the United
Disclosure Memorandum shall be deemed to be part of and qualify
all representations and warranties contained in this Article VI
and the covenants in Article VII to the extent applicable.  All
information in each of the documents and other writings furnished
to Clayton pursuant to this Agreement or the United Disclosure
Memorandum is or will be true, correct and complete and does not
and will not omit to state any fact necessary in order to make
the statements therein not misleading.  United shall promptly
provide Clayton with written notification of any event,
occurrence or other information necessary to maintain the United
Disclosure Memorandum and all other documents and writings
furnished to Clayton pursuant to this Agreement as true, correct
and complete in all material respects at all times prior to and
including the Closing.  United agrees that upon receipt of the
United Disclosure Memorandum, Clayton shall have until June 23 to
review the United Disclosure Memorandum and to terminate this
Agreement if for any reason in its sole discretion Clayton
believes that proceeding with the Merger in light of the contents
of such memorandum would be detrimental to Clayton.

     6.2  CORPORATE AND FINANCIAL.

          6.2.1     AUTHORITY.  Subject to the approval of
various state and federal regulators, the execution, delivery and
performance of this Agreement and the other transactions
contemplated or required in connection herewith will not, with or
without the giving of notice or the passage of time, or both, (a)
violate any provision of federal or state law applicable to
United, the violation of which could be reasonably expected to
have a material adverse effect on the business, operations,
properties, assets, financial condition or prospects of United;
(b) violate any provision of the articles of incorporation or
bylaws of United; (c) conflict with or result in a breach of any
provision of, or termination of, or constitute a default under
any instrument, license, agreement, or commitment to which United
is a party, which, singly or in the aggregate, could reasonably
be expected to have a material adverse effect on the business,
operations, properties, assets, financial condition or prospects
of United; or (d) constitute a violation of any order, judgment
or decree to which United is a party, or by which United or any
of its assets or properties are bound.  Assuming this Agreement
constitutes the valid and binding obligation of Clayton, this
Agreement constitutes the valid and binding obligation of United,
and is enforceable in accordance with its terms, except as
limited by laws affecting creditors' rights generally and by the
discretion of courts to compel specific performance.

          6.2.2     CORPORATE STATUS.  United is a business
corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia and has no direct or
indirect subsidiaries, which are material to United, other than
United Community Bank, Blairsville, Georgia ("United Bank"),
Towns County Bank, Hiawassee, Georgia ("Towns"), Peoples Bank of


                                   -23-
  
Fannin County, Blue Ridge, Georgia ("Fannin"), White County Bank,
Cleveland, Georgia ("White"), Carolina Community Bank, Murphy,
North Carolina ("Carolina"), and United Family Finance Company,
Blairsville, Georgia (the "Finance Company") (collectively the
"United Subsidiaries.")  The United Subsidiaries are banking
corporations, except for the Finance Company, which is a business
corporation, all of which are duly organized, validly existing
and in good standing under the laws of the State of Georgia with
respect to United Bank, Towns, Fannin, White, and the Finance
Company, and the State of North Carolina with respect to
Carolina.  United and the United Subsidiaries are entitled to own
or lease their respective properties and to carry on their
respective businesses in the places where such properties are now
owned, leased or operated and such businesses are now conducted.

          6.2.3     CAPITAL STRUCTURE.  (a)  United has an
authorized capital stock consisting solely of 10,000,000 shares
of common stock, par value $1.00 per share, of which 6,956,748
shares are issued and outstanding as of the date hereof including
140,000 deemed outstanding pursuant to United's prime plus 1/4%
Convertible Subordinated Debentures due December 31, 2006 (the
"2006 Debentures") and presently exercisable options to acquire
77,900 shares (the "Stock Options") and 10,000,000 shares of
Preferred Stock, none of which is outstanding.  All of the issued
and outstanding shares of United Stock and the United
Subsidiaries capital stock (the "United Subsidiaries Stock") is
duly and validly issued, fully paid and nonassessable and was
offered, issued and sold in compliance with all applicable
federal or state securities laws.  No person has any right of
rescission or claim for damages under federal or state securities
laws with respect to the issuance of shares of United Stock or
any of the shares of United Subsidiaries Stock previously issued. 
None of the shares of United Stock has been issued in violation
of the preemptive or other rights of any shareholder of United. 
None of the shares of the United Subsidiaries Stock was issued in
violation of the preemptive or other rights of any shareholder of
the United Subsidiaries.  All of the issued and outstanding
shares of the United Subsidiaries Stock are owned by United.

          (b)  Except for the 2006 Debentures and the Stock
Options and as set forth in the United Disclosure Memorandum,
United does not have outstanding any securities which are either
by their terms or by contract convertible or exchangeable into
United Stock, or any other securities or debt, of United, or any
preemptive or similar rights to subscribe for or to purchase, or
any options or warrants or agreements or understandings for the
purchase or the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock or securities convertible into its capital stock. 
United is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire, or to register, any
shares of its capital stock.

          (c)  There is no agreement, arrangement or under-
standing to which United is a party restricting or otherwise
relating to the transfer of any shares of United Stock.

          (d)  All shares of common stock or other capital stock,
or any other securities or debt, of United, which have been
purchased or redeemed by United have been purchased or redeemed
in accordance with all applicable federal, state and local laws,


                                   -24-
  
rules, and regulations, including, without limitation, all
federal and state securities laws and rules and regulations of
any securities exchange or system on which such stock, securities
or debt are, or at such time were, traded, and no such purchase
or redemption has resulted or will, with the giving of notice or
lapse of time, or both, result in a default or acceleration of
the maturity of, or otherwise modify, any agreement, note,
mortgage, bond, security agreement, loan agreement or other
contract or commitment of United.

          6.2.4     CORPORATE RECORDS.  The stock records and
minute books of United, whether heretofore or hereafter furnished
or made available to Clayton by United, (a) fully and accurately
reflect all issuances, transfers and redemptions of the Common
Stock, (b) correctly show the record addresses and the number of
shares of such stock issued and outstanding on the date hereof
held by the shareholders of United, (c) correctly show all
corporate action taken by the directors and shareholders of
United (including actions taken by consent without a meeting) and
(d) contain true and correct copies or originals of the
respective articles of incorporation and all amendments thereto,
bylaws as amended and currently in force, and the minutes of all
meetings or consent actions of its directors and shareholders. 
No resolutions, regulations or bylaws have been passed, enacted,
consented to or adopted by such directors or shareholders except
those contained in the minute books.  All corporate records have
been maintained in accordance with all applicable statutory
requirements and are complete and accurate.

          6.2.5     TAX RETURNS; TAXES.  (a)  United has duly
filed (i) all required federal and state tax returns and reports,
and (ii) all required returns and reports of other governmental
units having jurisdiction with respect to taxes imposed upon its
income, properties, revenues, franchises, operations or other
assets or taxes imposed which might create a material lien or
encumbrance on any of such assets or affect materially and
adversely its business or operations.  To the knowledge of the
officers of United (the "United Management"), such returns or
reports are, and when filed will be, true, complete and correct,
and United has paid, to the extent such taxes or other
governmental charges have become due, all taxes and other
governmental charges set forth in such returns or reports.  To
the knowledge of the United Management, all federal, state and
local taxes and other governmental charges paid or payable by
United have been paid, or have been accrued or reserved on its
books in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods.  To the
knowledge of the United Management, adequate reserves for the
payment of taxes have been established on the books of United for
all periods through the date hereof, whether or not due and
payable and whether or not disputed.  Until the Closing Date,
United shall continue to provide adequate reserves for the
payment of expected tax liabilities in accordance with generally
accepted accounting principles applied on a basis consistent with
prior periods.  United has not received any notice of a tax
deficiency or assessment of additional taxes of any kind and, to
the knowledge of the United Management, there is no threatened
claim against United, or to the knowledge of the United
Management, any basis for any such claim, for payment of any
additional federal, state, local or foreign taxes for any period
prior to the date of this Agreement in excess of the accruals or


                                   -25-
  
reserves with respect to any such claim shown in the 1996 United
Financial Statements described in Section 6.2.6 below or
disclosed in the notes with respect thereto.  There are no
waivers or agreements by United for the extension of time for the
assessment of any taxes.  The federal income tax returns of
United have not been examined by the Internal Revenue Service for
any period since January 1, 1993.

          (b)  Except as set forth in the United Disclosure
Memorandum, to the knowledge of the United Management, proper and
accurate amounts have been withheld by United from its employees
for all periods in full and complete compliance with the tax
withholding provisions of applicable federal, state and local tax
laws, and proper and accurate federal, state and local tax re-
turns have been filed by United for all periods for which returns
were due with respect to withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and
payable have been paid in full.

          6.2.6     FINANCIAL STATEMENTS.  United has delivered
to Clayton true, correct and complete copies of (i) the audited
financial statements of United for the years ended December 31,
1994, 1995 and 1996, including balance sheets, statements of
income, statements of shareholders' equity, statements of cash
flows and related notes (the audited financial statements for the
year ended December 31, 1996 being referred to as the "1996
United Financial Statements") and (ii) unaudited financial
statements of United for the period ended March 31, 1997,
including a balance sheet, statement of income and related notes. 
All of such financial statements have been prepared in accordance
with generally accepted accounting principles consistently
applied and present fairly the assets, liabilities and financial
condition of United as of the dates indicated therein and the
results of its operations for the respective periods then ended.

          6.2.7     REGULATORY REPORTS. United has made
available to Clayton for review and inspection the year-end
Report of Condition and year-end Report of Income and Dividends
as filed by the United banking subsidiaries with the FDIC for
each of the three years ended December 31, 1996, 1995 and 1994,
together with all such other reports filed for the same three-
year period with the FDIC, and the Department of Banking, and
other applicable regulatory agencies and the Form F.R. Y-6 filed
by United with the Federal Reserve for each of the three years
ended December 31, 1996, 1995 and 1994 (collectively, the "United
Reports").  All of the United Reports, as amended, have been
prepared in accordance with applicable rules and regulations
applied on a basis consistent with prior periods and contain in
all material respects all information required to be presented
therein in accordance with such rules and regulations.

          6.2.8     ACCOUNTS.  The United Disclosure Memorandum
contains a list of each and every bank and other institution in
which United maintains an account or safety deposit box, the ac-
count numbers, and the names of all persons who are presently
authorized to draw thereon, have access thereto or give in-
structions regarding distribution of funds or assets therein.

          6.2.9     NOTES AND OBLIGATIONS.  (a) Except as set
forth in the United Disclosure Memorandum or as provided for in
the loss reserve described in subsection (b) below, all notes


                                   -26-
  
receivable or other obligations owned by United or due to it
shown in the 1996 United Financial Statements and any such notes
receivable and obligations on the date hereof and on the Closing
Date are and will be genuine, legal, valid and collectible
obligations of the respective makers thereof and are not and will
not be subject to any offset or counterclaim.  Except as set
forth in subsection (b) below, all such notes and obligations are
evidenced by written agreements, true and correct copies of which
will be made available to Clayton for examination prior to the
Closing Date.  All such notes and obligations were entered into
by United in the ordinary course of its business and in
compliance with all applicable laws and regulations. 

          (b)  United has established a loss reserve in the 1996
United Financial Statements and as of the date of this Agreement
and will establish a loan loss reserve as of the Closing Date
which is adequate to cover anticipated losses which might result
from such items as the insolvency or default of borrowers or
obligors on such loans or obligations, defects in the notes or
evidences of obligation (including losses of original notes or
instruments), offsets or counterclaims properly chargeable to
such reserve, or the availability of legal or equitable defenses
which might preclude or limit the ability of United to enforce
the note or obligation, and the representations set forth in
subsection (a) above are qualified in their entirety by the
aggregate of such loss reserve.  Except as described in the
United Disclosure Memorandum, at the Closing Date, the ratio of
the loss reserve, established on such date in good faith by
United, to total loans outstanding at such time shall not exceed
the ratio of the loan loss reserve to the total loans outstanding
as reflected in the 1996 United Financial Statements, established
on or before such date in good faith by United, in accordance
with generally accepted accounting principles.

          6.2.10    LIABILITIES.  United has no debt, liability
or obligation of any kind required to be shown pursuant to
generally accepted accounting principles on the consolidated
balance sheet of United, whether accrued, absolute, known or
unknown, contingent or otherwise, including, but not limited to
(a) liability or obligation on account of any federal, state or
local taxes or penalty, interest or fines with respect to such
taxes, (b) liability arising from or by virtue of the distri-
bution, delivery or other transfer or disposition of goods,
personal property or services of any type, kind or variety, (c)
unfunded liabilities with respect to any pension, profit sharing
or employee stock ownership plan, whether operated by United or
any other entity covering employees of United, or (d)
environmental liabilities, except (i) those reflected in the 1996
United Financial Statements, and (ii) as disclosed in the United
Disclosure Memorandum.

          6.2.11    ABSENCE OF CHANGES.  Except as specifically
provided for in this Agreement or specifically set forth in the
United Disclosure Memorandum, since December 31, 1996:

          (a)  there has been no change in the business, assets,
liabilities, results of operations or financial condition of
United, or in any of its relationships with customers, employees,
lessors or others, other than changes in the ordinary course of
business, none of which individually or in the aggregate has had,
or which the United Management believes may have, a material


                                   -27-
  
adverse effect on such businesses or properties;

          (b)  there has been no material damage, destruction or
loss to the assets, properties or business of United, whether or
not covered by insurance, which has had, or which the United
Management believes may have, an adverse effect thereon;

          (c)  the business of United has been operated in the
ordinary course, and not otherwise;

          (d)  the properties and assets of United used in its
business have been maintained in good order, repair and
condition, ordinary wear and tear excepted;

          (e)  the books, accounts and records of United have
been maintained in the usual, regular and ordinary manner;

          (f)  there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of
the capital stock of United;

          (g)  there has been no increase in the compensation or
in the rate of compensation or commissions payable or to become
payable by United to any director or executive officer, or to any
employee earning $25,000 or more per annum, or any general
increase in the compensation or in the rate of compensation
payable or to become payable to employees of United earning less
than $25,000 per annum ("general increase" for the purpose hereof
meaning any increase generally applicable to a class or group of
employees, but not including increases granted to individual
employees for merit, length of service, change in position or
responsibility or other reasons applicable to specific employees
and not generally to a class or group thereof), or any director,
officer, or employee hired at a salary in excess of $25,000 per
annum, or any increase in any payment of or commitment to pay any
bonus, profit sharing or other extraordinary compensation to any
employee;

          (h)  there has been no change in the articles of
incorporation or bylaws of United;

          (i)  there has been no labor dispute, unfair labor
practice charge or employment discrimination charge, nor, to the
knowledge of United, any organizational effort by any union, or
institution or threatened institution, of any effort, complaint
or other proceeding in connection therewith, involving United, or
affecting its operations;

          (j)  there has been no mortgage, lien or other
encumbrance or security interest (other than liens for current
taxes not yet due or purchase money security interests arising in
the ordinary course of business) created on or in (including
without limitation, any deposit for security consisting of) any
asset or assets of United or assumed by it with respect to any
asset or assets;

          (k)  there has been no indebtedness or other liability
or obligation (whether absolute, accrued, contingent or
otherwise) incurred by United which would be required to be
reflected on a balance sheet of United prepared as of the date
hereof in accordance with generally accepted accounting


                                   -28-
  
principles applied on a consistent basis, except as incurred in
the ordinary course of business;

          (l)  no obligation or liability of United has been
discharged or satisfied, other than in the ordinary course of
business;

          (m)  there have been no sales, transfers or other
dispositions of any asset or assets of United, other than sales
in the ordinary course of business; and

          (n)  there has been no amendment, termination or waiver
of any right of United under any contract or agreement or
governmental license, permit or permission which has had or may
have an adverse effect on its business or properties.

          6.2.12    LITIGATION AND PROCEEDINGS.  Except as set
forth on the United Disclosure Memorandum, there are no actions,
decrees, suits, counterclaims, claims, proceedings or
governmental actions or investigations, pending or, to the
knowledge of United, threatened against, by or affecting United,
or any officer, director, employee or agent in such person's
capacity as an officer, director, employee or agent of United or
relating to the business or affairs of United, in any court or
before any arbitrator or governmental agency, and no judgment,
award, order or decree of any nature has been rendered against or
with respect thereto by any agency, arbitrator, court, commission
or other authority, nor does United have any unasserted
contingent liabilities which might have an adverse effect on its
assets or on the operation of its businesses or which might
prevent or impede the consummation of the transactions contem-
plated by this Agreement.

     6.3  BUSINESS OPERATIONS.

          6.3.1     CUSTOMERS.  United has no knowledge of any
presently existing facts which could reasonably be expected to
result in the loss of any material borrower or depositor or in
United's inability to collect amounts due therefrom or to return
funds deposited thereby, except as set forth on the United
Disclosure Memorandum.

          6.3.2     PERMITS; COMPLIANCE WITH LAW.  (a) United has
all permits, licenses, approvals, authorizations and
registrations under all federal, state, local and foreign laws
required for United to carry on its business as presently
conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect,
and no suspension or cancellation of any of them is pending or,
to the knowledge of United, threatened.

          (b)  United has complied with all laws, regulations,
and orders applicable to it or its business, except for any non-
compliance which would not have a material adverse effect on
United.  The United Disclosure Memorandum contains a list of any
known violations of such laws, regulations, ordinances or rules
by any present officer, director, or employee of United which
occurred since December 31, 1991, and which resulted in any
order, proceeding, judgment or decree which would be required to
be disclosed pursuant to Item 401(f) of Regulation S-K
promulgated by the Securities and Exchange Commission if United


                                   -29-
  
had been subject to the reporting requirements under the 1933 Act
or the Securities Exchange Act of 1934.  No past violation of any
such law, regulation, ordinance or rule has occurred which could
impair the right or ability of United to conduct its business.

          (c)  Except as set forth in the United Disclosure
Memorandum, no notice or warning from any governmental authority
with respect to any failure or alleged failure of United to
comply in any respect with any law, regulation or order has been
received, nor is any such notice or warning proposed or, to the
knowledge of United, threatened.

          6.3.3     ENVIRONMENTAL.  (a) Except as set forth in
the United Disclosure Memorandum, United 

               (i)  has not caused or permitted, and has no
          knowledge of any claim regarding the environmental
          condition of the property or the generation,
          manufacture, use, or handling or the release or
          presence of, any hazardous substances or hazardous
          wastes, including petroleum, on, in, under or from any
          properties or facilities currently owned or leased by
          United or adjacent to any properties so owned or
          leased; and

               (ii) has complied in all material respects with,
          and has kept all records and made all filings or
          reports required by, and is otherwise in compliance
          with all applicable federal, state and local laws,
          regulations, orders, permits and licenses relating to
          the generation, treatment, manufacture, use, handling,
          release or presence of any hazardous substances or
          hazardous wastes, including petroleum and asbestos, on,
          in, under or from any properties or facilities
          currently owned or leased by United.

          (b)  Except as set forth in the United Disclosure
Memorandum, neither United nor any of its officers, directors,
employees or agents, in the course of such individual's employ-
ment by United, has given advice with respect to, or participated
in any respect in, the management or operation of any entity or
concern whose business relates in any way to the generation,
storage, handling, disposal, transfer, production, use or
processing of hazardous substances or hazardous wastes, including
petroleum, nor to United's knowledge has United foreclosed on any
property on which there is a threatened release of any hazardous
substances or hazardous wastes, including petroleum, or on which
there has been such a release and full remediation has not been
completed, or any property on which contained (non-released)
hazardous substances or hazardous wastes, including petroleum,
are or were located.

          (c)  Except as set forth in the United Disclosure
Memorandum, neither United, nor any of its officers, directors,
employees, or agents, is aware of, has been told of, or has
observed, the presence of any hazardous substance or hazardous
wastes, including petroleum, on, in, under, or around property on
which United holds a legal or security interest, in violation of,
or creating liability under, federal, state, or local
environmental statutes, regulations, or ordinances.



                                   -30-
  
          (d)  The term hazardous substances or hazardous waste
does not include those substances which are normally and
reasonably used in connection with the occupancy or operation of
office buildings (such as cleaning fluids, and supplies normally
used in the day to day operation of business offices).

          6.3.4     INSURANCE.  The United Disclosure Memorandum
contains a complete list and description (including the expira-
tion date, premium amount and coverage thereunder) of all
policies of insurance and bonds presently maintained by, or
providing coverage for, United or any of its officers, directors
and employees, all of which are, and will be maintained through
the Closing Date, in full force and effect, together with a
complete list of all pending claims under any of such policies or
bonds.  All terms, obligations and provisions of each of such
policies and bonds have been complied with, all premiums due
thereon have been paid, and no notice of cancellation with
respect thereto has been received.  Except as set forth in the
United Disclosure Memorandum, such policies and bonds provide
adequate coverage to insure the properties and businesses of
United and the activities of its officers, directors and
employees against such risks and in such amounts as are prudent
and customary.  United will not as of the Closing Date have any
liability for premiums or for retrospective premium adjustments
for any period prior to the Closing Date.  United has heretofore
made, or will hereafter make, available to Clayton a true,
correct and complete copy of each insurance policy and bond in
effect since January 1, 1991 with respect to the business and
affairs of United.

     6.4  PROPERTIES AND ASSETS.

          6.4.1     CONTRACTS AND COMMITMENTS.  The United
Disclosure Memorandum contains a list identifying and briefly
describing all written contracts, purchase orders, agreements,
security deeds, guaranties or commitments to which United is a
party or by which it may be bound involving the payment or
receipt, actual or contingent, of more than $25,000 or having a
term or requiring performance over a period of more than ninety
(90) days.  Each such contract, agreement, guaranty and
commitment of United is in full force and effect and is valid and
enforceable in accordance with its terms, and constitutes a legal
and binding obligation of the respective parties thereto and is
not the subject of any notice of default, termination, partial
termination or of any ongoing, pending, completed or threatened
investigation, inquiry or other proceeding or action that may
give rise to any notice of default, termination or partial
termination.  United has complied in all material respects with
the provisions of such contracts, agreements, guaranties and
commitments.  A true and complete copy of each such document has
been or will be made available to Clayton for examination.

          6.4.2     LICENSES; INTELLECTUAL PROPERTY.  United has
all patents, trademarks, trade names, service marks, copyrights,
trade secrets and know-how reasonably necessary to conduct its
business as presently conducted and, except as described in the
United Disclosure Memorandum, United is not a party, either as
licensor or licensee, to any agreement for any patent, process,
trademark, service mark, trade name, copyright, trade secret or
other confidential information and there are no rights of third
parties with respect to any trademark, service mark, trade


                                   -31-
  
secrets, confidential information, trade name, patent, patent
application, copyright, invention, device or process owned or
used by United or presently expected to be used by either of them
in the future.  All patents, copyrights, trademarks, service
marks, trade names, and applications therefor or registrations
thereof, owned or used by United, are listed in the United
Disclosure Memorandum.  United has complied with all applicable
laws relating to the filing or registration of "fictitious names"
or trade names.

          6.4.3     PERSONAL PROPERTY.  United has good and
marketable title to all of its personalty, tangible and
intangible, reflected in the 1996 United Financial Statements
(except as since sold or otherwise disposed of by it in the
ordinary course of business), free and clear of all encumbrances,
liens or charges of any kind or character, except (i) those
referred to in the notes to the 1996 United Financial Statements
as securing specified liabilities (with respect to which no
default exists or, to the knowledge of United, is claimed to
exist), (ii) those described in the United Disclosure Memorandum
and (iii) liens for taxes not due and payable.

          6.4.4     UNITED LEASES.  (a)  All leases (the "United
Leases") pursuant to which United is lessor or lessee of any real
or personal property (such property, the "United Leased
Property") are valid and enforceable in accordance with their
terms; there is not under any United Leases any default or, to
the knowledge of United, any claimed default by United, or event
of default or event which with notice or lapse of time, or both,
would constitute a default by United and in respect of which
adequate steps have not been taken to prevent a default on its
part from occurring.

          (b)  The copies of the United Leases heretofore or
hereafter furnished or made available by United to Clayton are
true, correct and complete, and the United Leases have not been
modified in any respect other than pursuant to amendments, copies
of which have been concurrently delivered or made available to
Clayton, and are in full force and effect in accordance with
their terms.

          (c)  Except as set forth in the United Disclosure
Memorandum, there are no contractual obligations, agreements in
principle or present plans for United to enter into new leases of
real property or to renew or amend existing United Leases prior
to the Closing Date.

          6.4.5     REAL PROPERTY.  (a)  United does not own any
interest in any real property (other than as lessee) except as
set forth in the United Disclosure Memorandum (such properties
being referred to herein as "United Realty").  Except as
disclosed in the United Disclosure Memorandum, United has good
title to the United Realty and the titles to the United Realty
are covered by title insurance policies providing coverage in the
amount of the original purchase price, true, correct and complete
copies of which have been or will be furnished to Clayton with
the United Disclosure Memorandum.  United has not encumbered the
United Realty since the effective dates of the respective title
insurance policies.

          (b)  Except as set forth in the United Disclosure


                                   -32-
  
Memorandum, the interests of United in the United Realty and in
and under each of the United Leases are free and clear of any and
all liens and encumbrances and are subject to no present claim,
contest, dispute, action or, to the knowledge of United,
threatened action at law or in equity.

          (c)  The present and past use and operations of, and
improvements upon, the United Realty and all real properties
leased by United (the "United Leased Real Properties") are in
compliance in all material respects with all applicable building,
fire, zoning and other applicable laws, ordinances and
regulations and with all deed restrictions of record, no notice
of any violation or alleged violation thereof has been received,
and to the knowledge of United there are no proposed changes
therein that would affect the United Realty, the United Leased
Real Properties or their uses.

          (d)  Except as set forth in the United Disclosure
Memorandum, no rent has been paid in advance and no security
deposit has been paid by, nor is any brokerage commission payable
by or to, United with respect to any United Lease pursuant to
which it is lessor or lessee.

          (e)  United is not aware of any proposed or pending
change in the zoning of, or of any proposed or pending
condemnation proceeding with respect to, any of the United Realty
or the United Leased Real Properties which may adversely affect
the United Realty or the United Leased Real Properties or the
current or currently contemplated use thereof.

          (f)  The buildings and structures owned, leased or used
by United are, taken as a whole, in good operating order (except
for ordinary wear and tear), usable in the ordinary course of
business, and are sufficient and adequate to carry on the
business and affairs of United.

     6.5  EMPLOYEES AND BENEFITS.

          6.5.1     DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. 
Except as set forth in the United Disclosure Memorandum, no
director, officer, or employee of United serves, or in the past
five years has served, as a director or officer of any other
corporation on behalf of or as a designee of United or any of its
subsidiaries.

          6.5.2     EMPLOYEE BENEFITS.  (a)  Except as set forth
in the United Disclosure Memorandum, United does not provide and
is not obligated to provide, directly or indirectly, any benefits
for employees, including, without limitation, any pension, profit
sharing, stock option, retirement bonus, hospitalization,
medical, insurance, vacation or other employee benefits under any
practice, agreement or understanding.

          (b)  The United Disclosure Memorandum lists separately
any employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (collectively, "ERISA Plans").  True, correct and
complete copies of all ERISA Plans and, to the extent applicable,
all related trust agreements, insurance contracts, summary plan
descriptions, Internal Revenue Service determination letters and
filings, the past three years of actuarial reports and


                                   -33-
  
valuations, annual reports and Form 5500 filings (including
attachments), and any other related documents requested by
Clayton or its counsel have been, or prior to the Closing Date
will be, made available to Clayton.

          (c)  United is not currently and has never been in the
past required to contribute to a multiemployer plan as defined in
Section 3(37)(A) of ERISA.  United does not maintain or
contribute to, nor within the past six years has it maintained or
contributed to, an employee pension benefit plan as defined in
Section 3(2) of ERISA that is or was subject to Title IV of
ERISA.

          (d)  Each ERISA Plan has been operated and administered
in all material respects in accordance with, and has been amended
to comply with (unless such amendment is not yet required), all
applicable laws, rules and regulations, including, without
limitation, ERISA, the Internal Revenue Code of 1986, as amended
("Code"), and the regulations issued under ERISA and the Code. 
With respect to each ERISA Plan, other than routine claims for
benefits submitted in the ordinary course of the benefits
process, no litigation or administrative or other proceeding is
pending or, to the knowledge of United, threatened involving such
ERISA Plan or any of its fiduciaries.  With respect to each ERISA
Plan, neither United nor any of its directors, officers,
employees or agents, nor to United's knowledge, any "party in
interest" or "disqualified person" (as such terms are defined in
Section 3(14) of ERISA and Section 4975 of the Code) has been
engaged in or been a party to any transaction relating to the
ERISA Plan which would constitute a breach of fiduciary duty
under ERISA or a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code),
unless such transaction is specifically permitted under Sections
407 or 408 of ERISA, Section 4975 of the Code or a class or
administrative exemption issued by the Department of Labor.  Each
ERISA Plan that is a group health plan within the meaning of
Section 607(l) of ERISA and Section 4980B of the Code is in
compliance with the continuation coverage requirements of Section
501 of ERISA and Section 4980B of the Code. 

          (e)  Of the ERISA Plans, the "employee pension benefit
plans" within the meaning of Section 3(2) of ERISA (collectively,
the Employee Pension Benefit Plans") are separately identified on
the United Disclosure Memorandum.  With respect to each Employee
Pension Benefit Plan, except as set forth on the United
Disclosure Memorandum: (i) such Employee Pension Benefit Plan
constitutes a qualified plan within the meaning of Section 401(a)
of the Code and the trust is exempt from federal income tax under
Section 501(a) of the Code; (ii) all contributions required by
such plan have been made; and (iii) no termination, partial
termination or discontinuance of contributions has occurred
without a determination by the IRS that such action does not
affect the tax-qualified status of such plan.

          (f)  As of the Closing Date, with respect to each ERISA
Plan, United will have provided adequate reserves, or insurance
or qualified trust funds, to provide for all payments and
contributions required, or reasonably expected to be required, to
be made under the provisions of such ERISA Plan or required to be
made under applicable laws, rules and regulations, with respect
to any period prior to the Closing Date to the extent reserves


                                   -34-
  
are required under generally accepted accounting principles,
based on an actuarial valuation satisfactory to the actuaries of
United representing a projection of claims expected to be
incurred under such ERISA Plan.

          (g)  Except as disclosed on the United Disclosure
Memorandum, United does not provide and has no obligation to
provide benefits, including, without limitation, death, health or
medical benefits (whether or not insured) with respect to current
or former employees of United beyond their retirement or other
termination of service with United other than (i) coverage
mandated by applicable Law, (ii) benefits under the Employee
Pension Benefit Plans, or (iii) benefits the full cost of which
is borne by the current of former employee or his beneficiary.

          (h)  Neither this Agreement nor any transaction
contemplated hereby will (i) entitle any current or former
employee, officer or director of United to severance pay,
unemployment compensation or any similar or other payment, or
(ii) accelerate the time of payment or vesting of, or increase
the amount of compensation or benefits due any such employee,
officer or director.

          6.5.3     LABOR-RELATED MATTERS.  Except as described
in the United Disclosure Memorandum, United is not, and has not
been, a party to any collective bargaining agreement or agreement
of any kind with any union or labor organization or to any
agreement with any of its employees which is not terminable at
will or upon ninety (90) days notice at the election of, and
without cost or penalty to, United.  United has not received at
any time in the past five (5) years, any demand for recognition
from any union, and no attempt has been made, or will have been
made as of the Closing Date, to organize any of its employees. 
United has complied in all material respects with all obligations
under the National Labor Relations Act, as amended, the Age
Discrimination in Employment Act, as amended, and all other
federal, state and local labor laws and regulations applicable to
employees.  There are no unfair labor practice charges pending or
threatened against United, and there are, and in the past three
(3) years there have been, no charges, complaints, claims or
proceedings, no slowdowns or strikes pending or threatened
against, or involving, as the case may be, United with respect to
any alleged violation of any legal duty (including but not
limited to any wage and hour claims, employment discrimination
claims or claims arising out of any employment relationship) by
United as to any of its employees or as to any person seeking
employment therefrom, and no such violations exist.

          6.5.4     RELATED PARTY TRANSACTIONS.  Except for (a)
loans and extensions of credit made on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions by United with
other persons who are not affiliated with United, and which do
not involve more than the normal risk of repayment or present
other unfavorable features, (b) deposits, all of which are on
terms and conditions identical to those made available to all
customers of United at the time such deposits were entered into,
and (c) transactions specifically described in the United
Disclosure Memorandum, there are no contracts with or commitments
to present or former 5% or greater shareholders, directors,
officers, or employees involving the expenditure after December


                                   -35-
  
31, 1991 of more than $60,000 as to any one individual, including
with respect to any business directly or indirectly controlled by
any such person, or $100,000 for all such contracts or
commitments in the aggregate for all such individuals (other than
contracts or commitments relating to services to be performed by
any officer, director or employee as a currently-employed
employee of United).

     6.6  OTHER MATTERS.

          6.6.1     REGULATORY REPORTS.  United will make
available to Clayton for review and inspection all applications,
reports or other documents filed by it for each of its past three
full fiscal years with any regulatory or governmental agencies. 
All of such applications, reports and other documents have been
prepared in accordance with applicable rules and regulations of
the regulatory agencies with which they were filed.

          6.6.2     APPROVALS, CONSENTS AND FILINGS.  Except for
the approval of the Federal Reserve and the Department of
Banking, or as set forth in the United Disclosure Memorandum,
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby or thereby
will (a) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or
regulatory authority, or (b) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to United, or any
of United's assets.

          6.6.3     DEFAULT.  (a)  Except for those consents
described in or set forth pursuant to Section 6.6.2 above,
neither the execution of this Agreement nor consummation of the
transactions contemplated herein (i) constitutes a breach of or
default under any contract or commitment to which United is a
party or by which United or its properties or assets are bound,
(ii) does or will result in the creation or imposition of any
security interest, lien, encumbrance, charge, equity or
restriction of any nature whatsoever in favor of any third party
upon any assets of United, or (iii) constitutes an event
permitting termination of any agreement or the acceleration of
any indebtedness of United.

          (b)  United is not in default under its articles of
incorporation or bylaws or under any term or provision of any
security deed, mortgage, indenture or security agreement or of
any other contract or instrument to which United is a party or by
which it or any of its property is bound.

          6.6.4     REPRESENTATIONS AND WARRANTIES.  No repre-
sentation or warranty contained in this Article VI or in any
written statement delivered by or at the direction of United
pursuant hereto or in connection with the transactions contem-
plated hereby contains or shall contain any untrue statement, nor
shall such representations and warranties taken as a whole omit
any statement necessary in order to make any statement not
misleading.  Copies of all documents that have been or will be
furnished to Clayton in connection with this Agreement or
pursuant hereto are or shall be true, correct and complete.

          6.6.5     UNITED STOCK.  The shares of United Stock to
be issued and delivered to Clayton Shareholders pursuant to the


                                   -36-
  
terms of the Merger Agreement, when so issued and delivered, will
be validly, authorized and issued, fully paid and non-assessable,
and no shareholder of United will have any preemptive rights with
respect thereto.


                           ARTICLE VII

          CONDUCT OF BUSINESS OF UNITED PENDING CLOSING

          Except as expressly otherwise provided herein, United
covenants and agrees that, without the prior written consent of
Clayton, between the date hereof and the Closing Date:

          7.1  CONDUCT OF BUSINESS.  United will conduct its
business only in the ordinary course, without the creation of any
indebtedness for borrowed money (other than deposit and similar
accounts and customary credit arrangements between banks in the
ordinary course of business).

          7.2  MAINTENANCE OF PROPERTIES.  United will maintain
its properties and assets in good operating condition, ordinary
wear and tear excepted.

          7.3  INSURANCE.  United will maintain and keep in full
force and effect all of the insurance referred to in Section
6.3.4(b) hereof or other insurance equivalent thereto in all
material respects.

          7.4  DIVIDENDS.  Except for quarterly dividends in the
amount of $.025 per share, no other dividend, distribution or
payment will be declared or made in respect to the United Stock.

          7.5  CORPORATE EXISTENCE.  United will maintain its
corporate existence and powers.

          7.6  BANKING ARRANGEMENTS.  No change will be made in
the banking and safe deposit arrangements referred to in Section
6.2.8 hereof.

          7.7  BOOKS AND RECORDS.  The books and records of
United will be maintained in the usual, regular and ordinary
course.

          7.7  ADVICE OF CHANGES. United shall promptly advise
Clayton orally and in writing of any change or event having, or
which the United Management believes could have, a material
adverse effect on the assets, liabilities, business, operations
or financial condition of United.

                           ARTICLE VIII

               CONDITIONS TO OBLIGATIONS OF UNITED

          All of the obligations of United under this Agreement
are subject to the fulfillment prior to or at the Closing Date of
each of the following conditions, any one or more of which may be
waived by United:

          8.1  VERACITY OF REPRESENTATIONS AND WARRANTIES.  The
representations and warranties of Clayton contained herein or in


                                   -37-
  
any certificate, schedule or other document delivered pursuant to
the provisions hereof, or in connection herewith, shall be true
in all material respects as of the date when made and shall be
deemed to be made again at and as of the Closing Date and shall
be true in all material respects at and as of such time, except
as a result of changes or events expressly permitted or
contemplated herein.

          8.2  PERFORMANCE OF AGREEMENTS.  Clayton shall have
performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.

          8.3  CERTIFICATES, RESOLUTIONS, OPINION. Clayton shall
have delivered to United:

          (a)  a certificate executed by the President and
    Secretary of Clayton, dated as of the Closing Date, and
    certifying in such detail as United may reasonably request to
    the fulfillment of the conditions specified in Sections 8.1
    and 8.2 hereof;

          (b)  duly adopted resolutions of the Board of Directors
    and shareholders of Clayton certified by the Secretary
    thereof, dated the Closing Date, (i) authorizing and
    approving the execution of this Agreement (with respect to
    the directors of Clayton) and the Merger Agreement (with
    respect to the directors and shareholders of Clayton) and the
    consummation of the transactions contemplated herein and
    therein in accordance with their respective terms and (ii)
    authorizing all other necessary and proper corporate action
    to enable Clayton to comply with the terms hereof and
    thereof;

          (c)  certificates of the valid existence of Clayton and
    the Clayton Bank under the laws of the State of Georgia,
    executed by the Secretary of State and the Department of
    Banking, respectively, and dated not more than five (5)
    business days prior to the Closing Date;

          (d)  certificates from the appropriate public officials
    of the State of Georgia, dated not more than five (5)
    business days prior to the Closing Date, certifying that
    Clayton has filed all corporate tax returns required by the
    laws of such state and has paid all taxes shown thereon to be
    due; and

          (e)  an opinion of Porter Keadle Moore LLP, certified
    public accountants, to the effect that the Merger will be
    accounted for as a "pooling of interests," which opinion will
    be subject only to such qualifications, exceptions and
    factual assumptions as are satisfactory to United.

          (f)  an opinion of Powell, Goldstein, Frazer & Murphy
    LLP, counsel for Clayton, dated the Closing Date, in the form
    attached hereto as Exhibit D.

          8.4  Shareholder Approval. The Merger Agreement shall
have been approved by the vote of the holders of at least a
majority of Clayton Stock.



                                   -38-
  
          8.5  REGULATORY APPROVALS.  United shall have received
from any and all governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this
Agreement and the Merger Agreement, including, but not limited to
the Federal Reserve and the Department of Banking, such consents,
authorizations and approvals as are necessary for the
consummation thereof and all applicable waiting or similar
periods required by law shall have expired.

          8.6  EFFECTIVE REGISTRATION STATEMENT.  The United
Registration Statement shall have been declared effective by the
SEC and no stop order shall have been entered with respect
thereto.

          8.7  CERTIFICATE OF MERGER.  The Secretary of State of
the State of Georgia shall have issued a certificate of merger
with regard to the Merger in accordance with the provisions of
the Georgia Business Corporation Code.

          8.8  ACCOUNTANTS' LETTER.  United shall have received a
letter from Mauldin & Jenkins, dated the Closing Date, to the
effect that:  At the request of Clayton they have carried out
procedures to a specified date not more than five business days
prior to the Closing Date, which procedures did not constitute an
examination in accordance with generally accepted auditing
standards, of the financial statements of Clayton, as follows: 
(a) read the unaudited balance sheets and statements of income of
Clayton from December 31, 1996 through the date of the most
recent monthly financial statements available in the ordinary
course of business; (b) read the minutes of the meetings of
shareholders and Board of Directors of Clayton from December 31,
1996 to said date nor more than five business days prior to the
Closing Date; and (c) consulted with certain officers and
employees of Clayton responsible for financial and accounting
matters and, based on such procedures, nothing has come to their
attention which would cause them to believe that (i) such
unaudited interim balance sheets and statements of income are not
fairly presented in conformity with generally accepted accounting
principles applied on a basis consistent with that of the 1996
Clayton Financial Statements, (ii) as of said date not more than
five business days prior to the Closing Date, the shareholders'
equity, long-term debt, reserve for possible loan losses and
total assets of Clayton, in each case as compared with the
amounts shown in the 1996 Clayton Financial Statements, are not
different except as set forth in such letter, or (iii) for the
period from December 31, 1996 to said date not more than five
business days prior to the Closing Date, the net interest income,
total and per-share amounts of consolidated income (before
extraordinary items) and net income of Clayton, as compared with
the corresponding portion of the preceding 12-month period, are
not different except as set forth in such letter.

                            ARTICLE IX

               CONDITIONS TO OBLIGATIONS OF CLAYTON

          All of the obligations of Clayton under this Agreement
are subject to the fulfillment prior to or at the Closing Date of
each of the following conditions, any one or more of which may be
waived by it:



                                   -39-

          9.1  VERACITY OF REPRESENTATIONS AND WARRANTIES.  The
representations and warranties of United contained herein or in
any certificate, schedule or other document delivered pursuant to
the provisions hereof, or in connection herewith, shall be true
in all material respects as of the date when made and shall be
deemed to be made again at and as of the Closing Date and shall
be true in all material respects at and as of such time, except
as a result of changes or events expressly permitted or
contemplated herein.

          9.2  PERFORMANCE OF AGREEMENTS.  United shall have
performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.

          9.3  CERTIFICATES, RESOLUTIONS, OPINION.  United shall
have delivered to Clayton:

          (a)  a certificate executed by the President and
    Secretary of United, dated the Closing Date, certifying in
    such detail as Clayton may reasonably request to the
    fulfillment of the conditions specified in Sections 9.1 and
    9.2 hereof;

          (b)  duly adopted resolutions of the board of directors
    of United, certified by the Secretary thereof, dated the
    Closing Date, (i) authorizing and approving the execution of
    this Agreement and the Merger Agreement on behalf of United,
    and the consummation of the transactions contemplated herein
    and therein in accordance with their respective terms, and
    (ii) authorizing all other necessary and proper corporate
    actions to enable United to comply with the terms hereof and
    thereof;

          (c)  a certificate of the valid existence of United,
    under the laws of the State of Georgia executed by the
    Secretary of State of the State of Georgia, dated not more
    than five (5) business days prior to the Closing Date;

          (d)  certificates from the appropriate public officials
    of the State of Georgia, dated not more than five (5)
    business days prior to the Closing Date, certifying that
    United has filed all corporate tax returns required by the
    laws of such state and has paid all taxes shown thereon to be
    due; and

          (e)  an opinion of Kilpatrick Stockton LLP, counsel for
    United, dated the Closing Date, in the form attached hereto
    as Exhibit E.

          9.4  SHAREHOLDER APPROVAL.  The Merger Agreement shall
have been approved by the vote of the holders of at least a
majority of Clayton Stock.

          9.5  REGULATORY APPROVALS.  Any and all governmental
authorities, bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement and the Merger
Agreement, including, but not limited to the Federal Reserve and
the Department of Banking, shall have granted such consents,
authorizations and approvals as are necessary for the
consummation hereof and thereof, and all applicable waiting or


                                   -40-
  
similar periods required by law shall have expired.

          9.6  EFFECTIVE REGISTRATION STATEMENT.  The United
Registration Statement shall have been declared effective by the
SEC and no stop order shall have been entered with respect
thereto.

          9.7  TAX OPINION.  Clayton shall have received from
Kilpatrick Stockton LLP its opinion, in form and substance rea-
sonably satisfactory to Clayton, to the effect that:

          (1)  The Merger and the issuance of shares of United
    Stock in connection therewith, as described herein and in the
    Merger Agreement, will constitute a tax-free reorganization
    under Section 368(a)(1)(A) of the Code;

          (2)  No gain or loss will be recognized by holders of
    Clayton Stock upon the exchange of such stock solely for
    United Stock as a result of the Merger; 

          (3)  Gain or loss will be recognized pursuant to
    Section 302 of the Code by holders of Clayton Stock upon
    their receipt of cash in lieu of fractional shares of United
    Stock and upon their exercise of dissenters' rights;

          (4)  No gain or loss will be recognized by Clayton as a
    result of the Merger;

          (5)  The aggregate tax basis of United Stock received
    by shareholders of Clayton pursuant to the Merger will be the
    same as the tax basis of the shares of Clayton Stock
    exchanged therefor decreased by any portion of such tax basis
    allocated to fractional shares of United Stock that are
    treated as redeemed by United; and

          (6)  The holding period of the shares of United Stock
    received by the shareholders of Clayton will include the
    holding period of the shares of Clayton Stock exchanged
    therefor, provided that the stock of Clayton is held as a
    capital asset on the date of the consummation of the Merger.

          9.8  CERTIFICATE OF MERGER.  The Secretary of State of
the State of Georgia shall have issued a certificate of merger
with regard to the Merger in accordance with the provisions of
the Georgia Business Corporation Code.

                                   -41-
  
                            ARTICLE X

                    WARRANTIES, NOTICES, ETC.

          10.1 WARRANTIES.  All statements contained in any
certificate or other instrument delivered by or on behalf of
Clayton or United pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed representations
and warranties hereunder by them.  Unless the context otherwise
requires, the representations and warranties required of Clayton
shall be required to be made, and shall be considered made, on
behalf of both Clayton and its subsidiary Clayton Bank, and the
representations and warranties required of United, shall be
required to be made, and shall be considered made, on behalf of
United and the United Subsidiaries.

          10.2 SURVIVAL OF REPRESENTATIONS.  All representations,
warranties, covenants, and agreements made by either party hereto
in or pursuant to this Agreement or in any instrument, exhibit,
or certificate delivered pursuant hereto shall be deemed to have
been material and to have been relied upon by the party to which
made, but, except as set forth hereafter or specifically stated
in this Agreement, such representations, warranties, covenants,
and agreements shall expire and be of no further force and effect
upon the consummation of the Merger; provided, however, that the
following shall survive consummation of the Merger and the
transactions contemplated hereby:

          (a)  the opinions of counsel referred to in Sections
    8.3(f) and 9.3(e) of this Agreement;

          (b)  any intentional misrepresentation of any material
    fact made by either party hereto in or pursuant to this
    Agreement or in any instrument, document or certificate
    delivered pursuant hereto; and

          (c)  the covenant with respect to the confidentiality
    of certain information contained in Section 3.5 hereof.

          10.3 NOTICES.  All notices or other communications
required or permitted to be given or made hereunder shall be in
writing and delivered personally or sent by pre-paid, first class
certified or registered mail, return receipt requested, or by
facsimile transmission, to the intended recipient thereof at its
address or facsimile number set out below.  Any such notice or
communication shall be deemed to have been duly given immediately
(if given or made in person or by facsimile confirmed by mailing
a copy thereof to the recipient in accordance with this Paragraph
10.3 on the date of such facsimile), or five days after mailing
(if given or made by mail), and in proving same it shall be
sufficient to show that the envelope containing the same was
delivered to the delivery service and duly addressed, or that
receipt of a facsimile was confirmed by the recipient as provided
above.  Either party may change the address to which notices or
other communications to such party shall be delivered or mailed
by giving notice thereof to the other party hereto in the manner
provided herein.

                                   -42-
  
          (a)  To Clayton:         First Clayton Bancshares,Inc.
                                   US 441 & Duval Street
                                   P.O. Box 1250
                                   Clayton, Georgia 30525-9723
                                   Attention:  J. Mark Smith
                                              President
                                   Facsimile:  (706) 782-7107

            With copies to:        Powell, Goldstein, Frazer & Murphy
                                   191 Peachtree Street
                                   Suite 1600
                                   Atlanta, Georgia  30303
                                   Attention:  Walter G. Moeling, IV
                                   Facsimile:  (404) 572-6999

          (b)  To United:          United Community Banks, Inc.
                                   P.O. Box 398
                                   Blairsville, Georgia 30512
                                   Attention:     Jimmy Tallent
                                           President
                                   Facsimile:  (706) 745-1335

           With copies to:         Kilpatrick Stockton LLP
                                   Suite 2800
                                   1100 Peachtree Street
                                   Atlanta, Georgia  303039-4530
                                   Attention:  Richard R. Cheatham
                                   Facsimile:  (404) 815-6555

          10.4 ENTIRE AGREEMENT.  This Agreement and the Merger
Agreement supersede all prior discussions and agreements between
Clayton and United with respect to the Merger and the other
matters contained herein and therein, and this Agreement and the
Merger Agreement contain the sole and entire agreement between
Clayton and United with respect to the transactions contemplated
herein and therein.

          10.5 WAIVER; AMENDMENT.  Prior to or on the Closing
Date, United shall have the right to waive any default in the
performance of any term of this Agreement by Clayton, to waive or
extend the time for the fulfillment by Clayton of any or all of
Clayton' obligations under this Agreement, and to waive any or
all of the conditions precedent to the obligations of United
under this Agreement, except any condition which, if not
satisfied, would result in the violation of any law or applicable
governmental regulation.  Prior to or on the Closing Date,
Clayton shall have the right to waive any default in the
performance of any term of this Agreement by United, to waive or
extend the time for the fulfillment by United of any or all of
United's obligations under this Agreement, and to waive any or
all of the conditions precedent to the obligations of Clayton
under this  Agreement, except any condition which, if not satis-
fied, would result in the violation of any law or applicable
governmental regulation.  This Agreement may be amended by a
subsequent writing signed by the parties hereto, provided,
however, that the provisions of Sections 8.5 and 9.5 requiring


                                   -43-

regulatory approval shall not be amended by the parties hereto
without regulatory approval.

                            ARTICLE XI

                           TERMINATION

          This Agreement may be terminated at any time prior to
or on the Closing Date upon written notice to the other party as
follows, and, upon any such termination of this Agreement,
neither party hereto shall have any liability to the other,
except that the provisions of Section 3.5 hereof shall survive
the termination of this Agreement for any reason.

          11.1 MATERIAL ADVERSE CHANGE.  (a) By United, if, after
the date hereof, a material adverse change in the financial
condition or business of Clayton shall have occurred which change
would reasonably be expected to have a material adverse affect on
the market price of Clayton Stock, or if Clayton shall have
suffered a material loss or damage to any of its properties or
assets, which change, loss or damage materially affects or
impairs its ability to conduct its business.  (b) By Clayton, if,
after the date hereof, a material adverse change in the financial
condition or business of United shall have occurred which change
would reasonably be expected to have a material adverse affect on
the market price of United Stock, or if United shall have
suffered a material loss or damage to any its properties or
assets, which change, loss or damage materially affects or
impairs its ability to conduct its business.

          11.2 NONCOMPLIANCE.  (a) By United, if the terms,
covenants or conditions of this Agreement to be complied with or
performed by Clayton before the Closing shall not have been
substantially complied with or substantially performed at or
before the Closing Date and such noncompliance or nonperformance
shall not have been waived by United.  (b) By Clayton, if the
terms, covenants or conditions of this Agreement to be complied
with or performed by United before the Closing shall not have
been substantially complied with or substantially performed at or
before the Closing Date and such noncompliance or nonperformance
shall not have been waived by Clayton.

          11.3 FAILURE TO DISCLOSE.  (a) By United, if it learns
of any fact or condition not disclosed in this Agreement, the
Clayton Disclosure Memorandum, or the 1996 Clayton Financial
Statements, which was required to be disclosed by Clayton
pursuant to the provisions of this Agreement at or prior to the
date of execution hereof with respect to the business,
properties, assets or earnings of Clayton which materially and
adversely affects such business, properties, assets or earnings
or the ownership, value or continuance thereof.  (b) By Clayton,
if it learns of any fact or condition not disclosed in this
Agreement, the United Disclosure Memorandum, or the 1996 United
Financial Statements, which was required to be disclosed by
United pursuant to the provisions of this Agreement at or prior
to the date of execution hereof with respect to the business,
properties, assets or earnings of United which materially and
adversely affect such business, properties, assets or earnings or
the ownership, value or continuance thereof.

          11.4 ADVERSE PROCEEDINGS.  By either party, if any


                                   -44-
  
action, suit or proceeding shall have been instituted or
threatened against either party to this Agreement to restrain or
prohibit, or to obtain substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated
herein, which, in the good faith opinion of Clayton or United
makes consummation of the transactions herein contemplated
inadvisable.

          11.5 TERMINATION DATE.  By either party, if the Closing
Date shall not have occurred on or before November 30, 1997.

          11.6 DISSENTERS.  By United, if the holders of more
than 15,000 shares of the outstanding Clayton Stock elect to
exercise this statutory right to dissent from the Merger and
demand payment in cash for the "fair value" of their shares

          11.7 SHAREHOLDERS VOTE.  By either party, if the Merger
Agreement is not approved by the Vote of the holders of Clayton
Stock as required by applicable law.

          11.8 ENVIRONMENTAL LIABILITY OF CLAYTON.  By United, if
it learns of any potential liability of Clayton arising from
noncompliance with any federal, state or local environmental law
by Clayton, or any potential liability of Clayton arising from
any environmental condition of the properties or assets of
Clayton, including any properties or assets in which Clayton
holds a security interest.

          11.9 ENVIRONMENTAL LIABILITY OF UNITED.  By Clayton, if
it learns of any potential liability of United arising from
noncompliance with any federal, state or local environmental law
by United, or any potential liability of United arising from any
environmental condition of the properties or assets of United,
including any properties or assets in which United holds a
security interest.

                           ARTICLE XII

                   COUNTERPARTS, HEADINGS, ETC.

          This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.  The headings herein set out are for convenience of
reference only and shall not be deemed a part of this Agreement. 
A pronoun in one gender includes and applies to the other genders
as well.

                           ARTICLE XIII

                          BINDING EFFECT

          This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement may not be
assigned by either party without the prior written consent of the
other.


                                   -45-

                           ARTICLE XIV

                          GOVERNING LAW

          The validity and effect of this Agreement and the
Merger Agreement and the rights and obligations of the parties
hereto and thereto shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia.
                                   -46-
  
          IN WITNESS WHEREOF, Clayton and United have caused this
Agreement to be executed by their respective duly authorized
corporate officers and their respective corporate seals to be
affixed hereto as of the day and year first above written.

                                   FIRST CLAYTON BANCSHARES, INC.



(CORPORATE SEAL)                   By: /s/ John R. Martin
                                         John R. Martin
                                         President
Attest:

/s/ Ronald E. Vandiver
Secretary

                                   UNITED COMMUNITY BANKS, INC.



(CORPORATE SEAL)                   By: /s/ Jimmy Tallent
                                      Jimmy Tallent
                                      President
Attest:

/s/ Billy M. Decker
Secretary
                                  -47-

                            EXHIBIT A

                   AGREEMENT AND PLAN OF MERGER


          THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
made and entered into as of this _____ day of June, 1997, by and
between UNITED COMMUNITY BANKS, INC. ("United") and FIRST CLAYTON
BANCSHARES, INC. ("Clayton"), both Georgia corporations (said
corporations are hereinafter collectively referred to as the
"Constituent Corporations").

                         R E C I T A L S:

          WHEREAS, the authorized capital stock of United
consists of 10,000,000 shares of Common Stock, $1.00 par value
per share (the "United Stock"), of which 6,887,248 shares are
issued and outstanding; and

          WHEREAS, the authorized capital stock of Clayton
consists of 10,000,000 shares of Common Stock, $1.00 par value
per share, of which 400,691 shares are issued and outstanding and
5,000,000 shares of special stock $1.00 par value per share, none
of which is issued and outstanding ("Clayton Stock"); and

          WHEREAS, the respective Boards of Directors of the
Constituent Corporations deem it advisable and in the best
interests of each such corporation and its shareholders that
Clayton merge with United, with United being the surviving
corporation; and

          WHEREAS, the respective Boards of Directors of the
Constituent Corporations, by resolutions duly adopted, have
unanimously approved and adopted this Agreement, and the Board of
Directors of Clayton, by resolution duly adopted, has directed
that this Agreement be submitted to the shareholders of Clayton
for their approval; and

          WHEREAS, United has agreed to issue shares of United
Stock which shareholders of Clayton will be entitled to receive,
according to the terms and conditions contained herein, on or
after the Effective Date (as defined herein) of the merger
provided for herein.

          NOW, THEREFORE, for and in consideration of the
premises and the mutual agreements herein contained, and other
good and valuable consideration, the receipt and adequacy of
which as legally sufficient consideration are hereby
acknowledged, the parties hereto have agreed and do hereby agree,
as follows:

     1.   MERGER.

          Pursuant to and with the effects provided in the
applicable provisions of Article 11 of the Georgia Business
Corporation Code, as amended (Chapter 2 of Title 14 of the
Official Code of Georgia), Clayton (hereinafter sometimes
referred to as the "Merged Corporation") shall be merged with and
into United (the "Merger").  United shall be the surviving
corporation (the "Surviving Corporation") and shall continue
under the name "United Community Banks, Inc.".  On the Effective



  
Date (as defined herein) of the Merger, the individual existence
of the Merged Corporation shall cease and terminate.

     2.   ACTIONS TO BE TAKEN.

          The acts and things required to be done by the Georgia
Business Corporation Code in order to make this Agreement
effective, including the submission of this Agreement to the
shareholders of the Merged Corporation and the filing of the
Certificate of Merger relating hereto in the manner provided in
said Code, shall be attended to and done by the proper officers
of the Constituent Corporations with the assistance of counsel as
soon as practicable.

     3.   EFFECTIVE DATE.

          The Merger shall be effective upon the approval of this
Agreement by the shareholders of the Merged Corporation and the
filing of the Certificate of Merger relating hereto in the manner
provided in the Georgia Business Corporation Code (the "Effective
Date").

     4.   ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION.

          (a)  The Articles of Incorporation of United, as
heretofore amended, shall on the Effective Date be the Articles
of Incorporation of the Surviving Corporation.

          (b)  Until altered, amended or repealed, as therein
provided, the Bylaws of United as in effect on the Effective Date
shall be the Bylaws of the Surviving Corporation.

     5.   MANNER AND BASIS OF CONVERTING SHARES OF CAPITAL STOCK;
CAPITAL STRUCTURE OF THE SURVIVING CORPORATION.

          The manner and basis of converting the shares of
capital stock of each of the Constituent Corporations into shares
of the Surviving Corporation shall be as follows:

          (a)  Upon the Effective Date each of the shares of
Clayton Stock outstanding on the Effective Date shall be
converted into fully paid and nonassessable shares of United
Stock at the rate of 1.6136 shares of United Stock for each
outstanding share of Clayton Stock.  If either party should
change the number of its outstanding shares as a result of a
stock split, stock dividend, or similar recapitalization with
respect to such shares prior to the Effective Date then the
shares to be issued hereunder to holders of Clayton Stock shall
be proportionately adjusted.

          (b)  No scrip or fractional share certificates of
United Stock shall be issued in connection with the Merger and an
outstanding fractional share interest will not entitle the owner
thereof to vote, to receive dividends or to have any of the
rights of a shareholder with respect to such fractional interest. 
In lieu of any fractional interest, there shall be paid in cash
an amount (computed to the nearest cent) equal to such fraction
multiplied by $22.00.

          (c)  As soon as practicable after the Effective Date,


                               -2-
  
each holder as of the Effective Date of any of the shares of
Clayton Stock, upon presentation and surrender of the
certificates representing such shares to United, shall be
entitled to receive in exchange therefor a certificate
representing the number of shares of United Stock to which such
shareholder shall be entitled according to the terms of this
Agreement.  Until such surrender, each such outstanding
certificate which prior to the Effective Date represented Clayton
Stock shall be deemed for all corporate purposes to evidence
ownership of the number of shares of United Stock into which the
same shall have been converted and the right to receive payment
for fractional shares.

          (d)  Upon the Effective Date, each share of United
Stock issued and outstanding immediately prior to the Effective
Date shall continue unchanged and shall continue to evidence a
share of common stock of the Surviving Corporation.

     6.   TERMINATION OF SEPARATE EXISTENCE.

          Upon the Effective Date, the separate existence of the
Merged Corporation shall cease and the Surviving Corporation
shall possess all of the rights, privileges, immunities, powers
and franchises, as well of a public nature as of a private
nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever
account, and all other choses in action, and all and every other
interest of or belonging to or due to each of the Constituent
Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed,
and the title to any real estate or any interest therein, vested
in either of the Constituent Corporations shall not revert or be
in any way impaired by reason of the Merger.  The Surviving
Corporation shall thenceforth be responsible and liable for all
the liabilities, obligations and penalties of each of the
Constituent Corporations; and any claim existing or action or
proceeding, civil or criminal, pending by or against either of
said Constituent Corporations may be prosecuted as if the Merger
had not taken place, or the Surviving Corporation may be
substituted in its place, and any judgment rendered against
either of the Constituent Corporations may thenceforth be
enforced against the Surviving Corporation; and neither the
rights of creditors nor any liens upon the property of either of
the Constituent Corporations shall be impaired by the Merger.

     7.   FURTHER ASSIGNMENTS.

          If at any time the Surviving Corporation shall consider
or be advised that any further assignments or assurances in law
or any other things are necessary or desirable to vest in said
corporation, according to the terms hereof, the title to any
property or rights of the Merged Corporation, the proper officers
and directors of the Merged Corporation shall and will execute
and make all such proper assignments and assurances and do all
things necessary and proper to vest title in such property or
rights in the Surviving Corporation, and otherwise to carry out
the purposes of this Agreement.

                               -3-
  
     8.   CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER.

          This Agreement is subject to, and consummation of the
Merger is conditioned upon, the fulfillment as of the Effective
Date of each of the following conditions:

          (a)  Approval of this Agreement by the affirmative vote
of the holders of a majority of the outstanding voting shares of
Clayton Stock; and

          (b)  All the terms, covenants, agreements, obligations
and conditions of the Agreement and Plan of Reorganization (the
"Acquisition Agreement") of even date herewith by and between
Clayton and United to be complied with, satisfied and performed
on or prior to the Closing Date (as defined therein), shall have
been complied with, satisfied and performed in all material
respects unless accomplishment of such covenants, agreements,
obligations and conditions has been waived by the party benefited
thereby.

     9.   TERMINATION.

          This Agreement may be terminated and the Merger
abandoned in accordance with the terms of the Acquisition
Agreement, at any time before or after adoption of this Agreement
by the directors of either of the Constituent Corporations, not-
withstanding favorable action on the Merger by the shareholders
of the Merged Corporation, but not later than the issuance of the
certificate of merger by the Secretary of State of Georgia with
respect to the Merger in accordance with the provisions of the
Georgia Business Corporation Code.

     10.  COUNTERPARTS; TITLE; HEADINGS.

          This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.  The title of this Agreement and the headings herein
set out are for the convenience of reference only and shall not
be deemed a part of this Agreement.

     11.  AMENDMENTS; ADDITIONAL AGREEMENTS.

          At any time before or after approval and adoption by
the shareholders of Clayton, this Agreement may be modified,
amended or supplemented by additional agreements, articles or
certificates as may be determined in the judgment of the
respective Boards of Directors of the Constituent Corporations to
be necessary, desirable or expedient to further the purposes of
this Agreement, to clarify the intention of the parties, to add
to or modify the covenants, terms or conditions contained herein
or to effectuate or facilitate any governmental approval of the
Merger or this Agreement, or otherwise to effectuate or
facilitate the consummation of the transactions contemplated
hereby; provided, however, that no such modification, amendment
or supplement shall reduce to any extent the consideration into
which shares of Clayton Stock shall be converted in the Merger
pursuant to Section 5 hereof.

                               -4-
  

          IN WITNESS WHEREOF, the Constituent Corporations have
each caused this Agreement to be executed on their respective
behalfs and their respective corporate seals to be affixed hereto
as of the day and year first above written.

                                   UNITED COMMUNITY BANKS, INC.

(CORPORATE SEAL)

                                   By:____________________________
ATTEST:                               Jimmy Tallent
                                      President

______________________________
Secretary


                                   FIRST CLAYTON BANCSHARES, INC.

(CORPORATE SEAL)

                                   By:_____________________________
                                          J. Mark Smith
ATTEST:                                   President

_______________________________
Secretary



                               -5-
  
                            EXHIBIT B


United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512

Gentlemen:

          In connection with the proposed merger (the "Merger")
of First Clayton Bancshares, Inc. ("Clayton") with and into
United Community Banks, Inc. ("United"), pursuant to the
Agreement and Plan of Reorganization of even date herewith among
United and Clayton (the "Reorganization Agreement"), the
undersigned hereby covenants, represents and warrants as follows:

          1.   RECOMMENDATION FOR MERGER AND VOTING OF CLAYTON
STOCK.  The undersigned agrees to recommend to all holders of the
capital stock of Clayton ("Clayton Stock") that they vote in
favor of the Merger.  In addition, the undersigned agrees to vote
any and all shares of Clayton Stock owned or controlled by him in
favor of the Merger.

          2.   COMPLIANCE WITH SECURITIES LAWS.  The undersigned
acknowledges that he will be subject to the restrictions on
resales contained in Rule 145 of the Rules and Regulations of the
Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, as amended, and agrees to sell, transfer or
otherwise dispose of any shares of capital stock of United
("United Stock") received by him pursuant to the Merger only in
compliance with the provisions of such Act and Rule.  The
undersigned acknowledges that United is not under any obligation
to file a registration statement with the SEC covering the
disposition of the undersigned's shares of United Stock to be
received pursuant to the Merger.

          3.   RESTRICTIVE LEGEND.  The undersigned agrees that
the certificates representing shares of United Stock to be issued
to the undersigned pursuant to the Merger will be stamped or
otherwise imprinted with a legend in substantially the following
form:

          The shares represented by this certificate may not be
          sold, transferred or otherwise disposed of except in a
          transaction covered by an effective registration
          statement under the Securities Act of 1933, as amended,
          or in accordance with Rule 145 promulgated thereunder,
          or in accordance with a legal opinion satisfactory to
          the Company that such sale or transfer is otherwise
          exempt from the requirements of such Act.

          4.   INITIAL RESTRICTION ON DISPOSITION.  The
undersigned agrees that the undersigned will not, except by
operation of law, by will or under the laws of descent and
distribution, sell, transfer, or otherwise dispose of the
undersigned's interests in, or reduce the undersigned's risk
relative to, any of the shares of United Stock into which the
undersigned's shares of Clayton Stock are converted upon
consummation of the Merger until such time as United notifies the
undersigned that the requirements of SEC Accounting Series
Release Nos. 130 and 135 ("ASR 130 and 135") have been met.  The



  
undersigned understands that ASR 130 and 135 relate to
publication of financial results of post-Merger combined
operations of United and Clayton.  United agrees that it will
publish such results within 45 days after the end of the first
fiscal quarter of United containing the required period of post-
Merger combined operations and that it will notify the
undersigned promptly following such publication.

                              Sincerely,


                              [Director or Executive Officer]



                            EXHIBIT C

                  FIRST CLAYTON BANCSHARES, INC.

            PROPOSED DEFERRED COMPENSATION AGREEMENTS

                    Summary of Material Terms

                          June 11, 1997

ELIGIBILITY

J. Mark Smith and Rodney Hickox.

DEFERRED COMPENSATION AMOUNTS

Each agreement would provide for a deferred compensation
obligation in the amount of $78,750, payable by First Clayton
Bancshares, Inc. ("First Clayton").

ADJUSTMENT TO OBLIGATION AMOUNTS

There would be no earnings or other type of adjustments to either
deferred compensation obligation.

FUNDING OF OBLIGATION

There would be no funding of either deferred compensation
obligation.  Each is payable from general assets.

PAYMENT OF DEFERRED COMPENSATION OBLIGATIONS

Distribution of each deferred compensation obligation would be
made in cash in a lump sum as soon as practicable after the
earliest to occur of the following events:  (1) passage of ten
years; (2) termination of employment other than for Cause, as
defined herein; or (3) a change in control (other than a change
in the control of First Clayton).  If a participant's termination
of employment is due to death, the obligation would be paid to
the designated beneficiary of the obligee.  "Cause" shall mean: 
(1) conviction of the employee of a felony or (2) conduct by the
employee that results in removal from his position as an employee
of First Clayton pursuant to a written order by any regulatory
agency with authority or jurisdiction over First Clayton or
United Community Banks, Inc. or its subsidiaries.

BENEFITS NOT ASSIGNABLE

No amount payable under either agreement would be assignable,
except to the extent benefits may be conveyed pursuant to the
laws of descent and distribution.

BINDING

Each agreement would be binding upon the successors to First
Clayton.


  
                            EXHIBIT C

                  FIRST CLAYTON BANCSHARES, INC.

              PROPOSED INCENTIVE STOCK OPTION AWARDS

                    Summary of Material Terms

                          June 11, 1997

ELIGIBILITY FOR OPTIONS

J. Mark Smith and Rodney Hickox.

TYPE OF OPTIONS

Incentive stock options.

TERMS OF OPTIONS

Number of Shares.  7,500 option shares each for J. Mark Smith and
Rodney Hickox.

Exercise Price.  $31.50 per share.  Incentive stock options must
have an exercise price equal to fair market value (110% of fair
market value in the case of anyone who owns more than 10% of the
outstanding shares of First Clayton Bancshares, Inc. ("First
Clayton")).

Option Period.  Each option would expire on the earlier of the
tenth anniversary (fifth anniversary in the case of anyone who
owns more than 10% of the outstanding shares of First Clayton) of
the date of grant or three months following the date the optionee
terminates employment, unless the optionee dies while employed,
in which case the option would continue for the original term and
may be exercised, to the extent exercisable, by the optionee's
estate.

Exercisability.  Each option would become exercisable
immediately.

*Payment of Exercise Price.  Each optionee could pay for option
shares by cash, by certified check or by delivery of previously
owned shares or, if available, by cashless exercise through a
broker.

*Change in Corporate Structure.  If First Clayton is not the
surviving corporation in a merger or consolidation, the options
would be assumed by the successor entity.

*Items denoted by an asterisk require Board approval of plan
amendments.


  
                            EXHIBIT D


     (1)  Clayton was duly organized as a corporation, and is
existing and in good standing, under the laws of the State of
Georgia.

     (2)  Clayton the corporate power to execute and deliver the
Agreement and Plan of Reorganization Agreement (the
"Reorganization Agreement") and the Agreement and Plan of Merger
Agreement (the "Merger Agreement"), to perform its obligations
thereunder, to own and use its Assets and to conduct its
business.

     (3)  Clayton has duly authorized the execution and delivery
of the Reorganization Agreement and the Merger Agreement and all
performance by Clayton thereunder, and has duly executed and
delivered the Reorganization Agreement and the Merger Agreement.

     (4)  No consent, approval, authorization or other action
filed by, or filing with, any governmental authority of the
United States or the State of Georgia is required for Clayton's
execution and delivery of the Reorganization Agreement and the
Merger Agreement and consummation of the Transaction, which
consent, approval or authorization has not been previously
received.  

     (5)  The Reorganization Agreement and the Merger Agreement
are enforceable against Clayton.

     (6)  The authorized capital stock of Clayton consists of
10,000,000 shares of Common Stock, $1.00 par value per share, of
which 400,691 shares are issued and outstanding and 5,000,000
shares of special stock, $1.00 par value per share, none of which
is issued and outstanding.  All of the issued and outstanding
capital stock of Clayton has been duly authorized and validly
issued and are fully paid and non-assessable and, to such
counsel's knowledge, there are no outstanding options, warrants,
rights, calls, commitments, conversion rights, plans or other
agreements providing for the purchase or issuance of any
authorized but unissued shares of such capital stock.

  
                            EXHIBIT E


     (1)  United was duly organized as a corporation, and is
existing and in good standing, under the laws of the State of
Georgia.

     (2)  United has the corporate power to execute and deliver
the Agreement and Plan of Reorganization (the "Reorganization
Agreement) and the Agreement and Plan of Merger (the "Merger
Agreement") to perform its obligations thereunder, to own and use
its Assets and to conduct its business.

     (3)  United has duly authorized the execution and delivery
of the Reorganization Agreement and the Merger Agreement and all
performance by United thereunder, and has duly executed and
delivered the Reorganization Agreement and Merger Agreement:

     (4)  No consent, approval, authorization or other action
filed by, or filing with, any governmental authority of the
United States or the State of Georgia is required for United's
execution and delivery of the Reorganization Agreement and the
Merger Agreement and consummation of the Transaction, which
consent, approval or authorization has not been previously
received.

     (5)  The Reorganization Agreement and the Merger Agreement
are enforceable against United.

     (6)  The shares of United Stock to be issued upon
consummation of the Merger have been duly authorized and upon
issuance as contemplated in the Merger Agreement, will be validly
issued, fully paid and non-assessable.

                          FIRST AMENDMENT 
                                 OF 
                AGREEMENT AND PLAN OF REORGANIZATION

          THIS FIRST AMENDMENT (this "Amendment") made and entered
into as of July 24, 1997, by and between FIRST CLAYTON BANCSHARES,
INC., a Georgia business corporation ("Clayton") and UNITED
COMMUNITY BANKS, INC., a Georgia business corporation ("United").

                              RECITALS:

     WHEREAS, Clayton and United entered into a certain Agreement
and Plan of Reorganization dated as of June 12, 1997 pursuant to
which Clayton will merge into United, with United being the
surviving corporation (the "Agreement"); and

     WHEREAS, the parties now desire to amend certain provisions of
the Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 

                                 1. 

     Section 3.14 of the Agreement is hereby deleted in its entirety
and the following inserted in lieu thereof: 

     3.14 STOCK OPTION AWARDS AND DEFERRED COMPENSATION. 
     Clayton and United agree that (i) after the Merger United
     will grant incentive stock options to J. Mark Smith and
     Rodney R. Hickox in the same amounts and on substantially
     the same terms as described in Exhibit C and (ii) Clayton
     will execute a Deferred Compensation Agreement with each
     of J. Mark Smith and Rodney R. Hickox on substantially the
     same terms as described in Exhibit C.

                                 2. 

     Exhibit C of the Agreement entitled First Clayton Bancshares,
Inc. Proposed Deferred Compensation Agreements and First Clayton
Bancshares, Inc. Proposed Incentive Stock Option Awards is hereby
deleted in its entirety and the attached Exhibit A is substituted in
lieu thereof.  

     Except as modified herein, the terms of the Agreement remain in
full force and effect.

     IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written. 

                              FIRST CLAYTON BANCSHARES, INC.



(CORPORATE SEAL)                   By: /s/ John R. Martin
                                          John R. Martin
                                           President
Attest:

/s/ Ronald E. Vindiver
Secretary

                                   UNITED COMMUNITY BANKS,  INC.

(CORPORATE SEAL)                   By: /s/ Jimmy Tallent
                                      Jimmy Tallent
                                      President
Attest:

/s/ Billy M. Decker
Billy M. Decker


                              Exhibit A

                              EXHIBIT C

                   FIRST CLAYTON BANCSHARES, INC.

              PROPOSED DEFERRED COMPENSATION AGREEMENTS

                      Summary of Material Terms

ELIGIBILITY

J. Mark Smith and Rodney Hickox.

DEFERRED COMPENSATION AMOUNTS

Each agreement would provide for a deferred compensation obligation
in the amount of $108,750 payable by First Clayton Bancshares, Inc.
("First Clayton").

ADJUSTMENT TO OBLIGATION AMOUNTS

There would be no earnings or other type of adjustments to either
deferred compensation obligation.

FUNDING OF OBLIGATION

There would be no funding of either deferred compensation
obligation.  Each is payable from general assets.

PAYMENT OF DEFERRED COMPENSATION OBLIGATIONS

Distribution of each deferred compensation obligation would be made
in cash in a lump sum as soon as practicable after the earliest to
occur of the following events:  (1) passage of ten years; (2)
termination of employment other than for Cause, as defined herein;
or (3) a change in control (other than a change in the control of
First Clayton).  If a participant's termination of employment is due
to death, the obligation would be paid to the designated beneficiary
of the obligee.  "Cause" shall mean:  (1) conviction of the employee
of a felony or (2) conduct by the employee that results in removal
from his position as an employee of First Clayton pursuant to a
written order by any regulatory agency with authority or
jurisdiction over First Clayton or United Community Banks, Inc. or
its subsidiaries.

BENEFITS NOT ASSIGNABLE

No amount payable under either agreement would be assignable, except
to the extent benefits may be conveyed pursuant to the laws of
descent and distribution.

BINDING

Each agreement would be binding upon the successors to First
Clayton.

                              EXHIBIT C

                    UNITED COMMUNITY BANKS, INC.

               PROPOSED INCENTIVE STOCK OPTION AWARDS

                      Summary of Material Terms


ELIGIBILITY FOR OPTIONS

J. Mark Smith and Rodney Hickox.

TYPE OF OPTIONS

Incentive stock options to be granted as soon as practicable after
the consummation of the merger of United Community Banks, Inc. and
First Clayton Bancshares, Inc.

TERMS OF OPTIONS

Number of Shares.  12,102 option shares of United Community Banks,
Inc. each for J. Mark Smith and Rodney Hickox.

Exercise Price.  The Exercise Price shall be the fair market value
of the shares at the date of grant.

Option Period.  Each option would expire on the earlier of the tenth
anniversary (fifth anniversary in the case of anyone who owns more
than 10% of the outstanding shares of United) of the date of grant
or three months following the date the optionee terminates
employment, unless the optionee dies while employed, in which case
the option would continue for the original term and may be
exercised, to the extent exercisable, by the optionee's estate.

Exercisability.  Each option would become exercisable immediately.