SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(6)(2)
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14A-12
UNITED COMMUNITY BANKS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of class of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule O-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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Table of Contents
Page
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS.....................................................................1
PROXY STATEMENT..............................................................................................2
Security Holdings of Certain Beneficial Owners and Management............................................2
Nomination and Election of Directors.....................................................................5
Information About Nominees For Director..................................................................5
Executive Compensation...................................................................................7
Compensation of Directors................................................................................8
Section 16(a) Beneficial Ownership Reporting Compliance..................................................9
Compensation Committee Interlocks and Insider Participation..............................................9
Certain Relationships and Related Transactions...........................................................9
Joint Report On Executive Compensation..................................................................10
Shareholder Return Performance Graph....................................................................12
Meetings and Committees of the Board of Directors.......................................................13
Approval of the 2000 Key Employee Stock Option Plan.....................................................13
Approval to Amend the Articles of Incorporation to Increase the Number of
Authorized Shares of Common Stock..............................................................17
Information Concerning United's Accountants.............................................................19
Shareholder Proposals...................................................................................19
Other Matters That May Come Before the Meeting..........................................................19
UNITED COMMUNITY BANKS, INC.
P.O. BOX 398
BLAIRSVILLE, GA 30514
March 20, 2000
Dear Shareholder:
It is my pleasure to invite you to attend the 2000 Annual Meeting of
shareholders of United Community Banks, Inc. which will be held April 20, 2000
at The Brasstown Valley Resort, Highway 515, Young Harris, Georgia at 2:00 p.m.
Stockholders of record as of March 6, 2000 are entitled to vote at the meeting.
Enclosed with this letter is a copy of our 1999 Annual Report on Form 10-K,
a notice of the meeting, proxy statement and proxy card. The proxy statement
contains information about actions to be taken at the meeting. We encourage you
to review these materials so you will be fully informed about the matters that
will be considered at the meeting.
Whether or not you are able to attend the meeting, please mark, sign and
return the proxy card. If you do attend the meeting and would like to vote in
person, you may do so even if you already sent in a proxy card.
On behalf of the management, employees and directors of United Community
Banks, Inc., I want to thank you for your continued support.
Sincerely,
Jimmy C. Tallent,
President and Chief Executive Officer
UNITED COMMUNITY BANKS, INC.
63 Highway 515
P.O. Box 398
Blairsville, Georgia 30514
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To be Held on April 20, 2000
The annual meeting of shareholders of United Community Banks, Inc. will
be held on April 20, 2000 at 2:00 p.m. at The Brasstown Valley Resort, Highway
515, Young Harris, Georgia, for the following purposes:
1. For the election of twelve directors to constitute the Board
of Directors to serve until the next annual meeting and until
their successors are elected and qualified;
2. To consider a proposal to approve the 2000 Key Employee Stock
Option Plan;
3. To consider a proposal to amend the Restated Articles of
Incorporation of the Company to increase the number of
authorized shares of common stock from 10,000,000 to
50,000,000 shares; and
4. To consider and act upon any other matters that may properly
come before the meeting and any adjournment thereof.
Only shareholders of record at the close of business on March 6, 2000
will be entitled to notice of, and to vote at, the meeting.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the Proxy promptly in the
enclosed business reply envelope. If you attend the meeting you may, if you
wish, withdraw your Proxy and vote in person.
By Order of the Board of Directors,
Jimmy C. Tallent,
President and Chief Executive Officer
March 20, 2000
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| PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY |
| SO THAT YOUR VOTE MAY BE RECORDED AT THE MEETING IF YOU DO |
| NOT ATTEND. |
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-1-
UNITED COMMUNITY BANKS, INC.
63 Highway 515
P.O. Box 398
Blairsville, Georgia 30514
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PROXY STATEMENT
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of United Community Banks, Inc. ("United"
or the "Company") for use at the Annual Meeting of shareholders of United to be
held on April 20, 2000, and any adjournment thereof, for the purposes set forth
in the accompanying notice of the meeting. The expenses of this solicitation,
including the cost of preparing and mailing this Proxy Statement, will be paid
by United. Copies of solicitation materials may be furnished to banks, brokerage
houses and other custodians, nominees and fiduciaries for forwarding to
beneficial owners of shares of United's common stock, and normal handling
charges may be paid for such forwarding services. In addition to solicitations
by mail, directors and regular employees of United may solicit Proxies in person
or by telephone. It is anticipated that this Proxy Statement and the
accompanying Proxy will first be mailed to shareholders on March 20, 2000.
At the meeting, shareholders will elect twelve directors that will
serve a one-year term that will expire at the next annual meeting when their
successors are elected and qualified.
The record of shareholders entitled to vote at the Annual Meeting was
taken as of the close of business on March 6, 2000. On that date, United had
outstanding and entitled to vote 8,034,268 shares of common stock, par value
$1.00 per share (the "Common Stock"), each shareholder entitled to one vote per
share.
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder that attends the meeting and gives oral notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, any Proxy given pursuant to this solicitation may be revoked before
the meeting by delivering an instrument revoking it or a duly executed Proxy
bearing a later date to the Secretary of United. If the Proxy is properly
completed and returned by the shareholder and is not revoked, it will be voted
at the meeting in the manner specified thereon. If the Proxy is returned but no
choices are indicated, it will be voted for (i) all the persons named below
under the caption "Information About Nominees For Director", (ii) the approval
of the 2000 Key Employee Stock Option Plan and (iii) the approval of the
amendment to the Restated Articles of Incorporation.
The percentages outstanding of Common Stock are based on 8,429,090
shares of Common Stock, including 140,000 shares deemed outstanding pursuant to
United's prime plus 1/4% Convertible Subordinated Payable-in-Kind Debentures due
December 31, 2006 ("2006 Debentures") and presently exercisable options to
acquire 254,822 shares.
SECURITY HOLDINGS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 1, 2000 beneficial
ownership of United's Common Stock, by each director or nominee, by each named
executive officer and by all directors and officers as a group. As of February
1, 2000, there were no "persons" (as that term is defined by the SEC) known by
United to be the beneficial owner of more than 5% of United's Common Stock other
than indicated in the table below.
-2-
Number of Shares Percent of
Directors and Nominees Owned Beneficially Class
Jimmy C. Tallent 166,036 <F1> 1.97%
Billy M. Decker 137,722 <F2> 1.63%
Thomas C. Gilliland 182,831 <F3> 2.17%
Robert H. Blalock 41,260 <F4> 0.49%
Robert L. Head, Jr. 672,743 <F5> 7.98%
P.O. Box 147, Blairsville, GA 30514
Charles E. Hill 169,032 <F6> 2.01%
Hoyt O. Holloway 48,085 <F7> 0.57%
P. Deral Horne 25,000 <F8> 0.30%
John R. Martin 57,633 0.68%
Clarence W. Mason, Sr. 30,382 <F9> 0.36%
Zell B. Miller 1,000 0.01%
W.C. Nelson, Jr. 672,622 <F10> 7.98%
P.O. Box 127, Blairsville, GA 30514
Charles E. Parks 102,259 <F11> 1.21%
Tim Wallis 53,829 0.64%
Named Executive Officers
Christopher J. Bledsoe 22,933 <F12> 0.27%
Guy W. Freeman 40,018 <F13> 0.47%
All Directors and Executive Officers as a Group 2,427,235 <F14> 28.80%
(19 persons)
<FN>
<F1> Includes 10,000 shares beneficially owned by Mr. Tallent pursuant to
the 2006 Debentures and 37,000 shares beneficially owned pursuant to
stock options exercisable within 60 days of February 1, 2000.
<F2> Includes 10,000 shares beneficially owned by Mr. Decker pursuant to the
2006 Debentures and 13,600 shares beneficially owned pursuant to stock
options exercisable within 60 days of February 1, 2000. Does not
include 9,613 shares owned by Mr. Decker's wife, as to which he
disclaims beneficial ownership.
<F3> Includes 6,270 shares beneficially owned by Mr. Gilliland as custodian
for his children, 10,000 shares beneficially owned pursuant to the 2006
Debentures and 22,200 shares beneficially owned pursuant to stock
options exercisable within 60 days of February 1, 2000.
<F4> Includes 80 shares owned by Mr. Blalock's minor children and 30,993
shares owned by Blalock Insurance Agency, Inc., a company owned by Mr.
Blalock.
<F5> Includes 96,555 shares beneficially owned by a trust over which Mr.
Head has voting power and 10,000 shares owned pursuant to the 2006
Debentures. Does not include 18,465 shares owned by Mr. Head's wife,
for which he disclaims beneficial ownership.
<F6> Includes 10,000 shares beneficially owned by Mr. Hill pursuant to the
2006 Debentures. Does not include 77,455 shares owned by Mr. Hill's
wife, as to which he disclaims beneficial ownership.
-3-
<F7> Includes 10,000 shares beneficially owned pursuant to the 2006
Debentures and 35,565 beneficially owned by Holloway Motors, Inc., a
company wholly owned by Mr. Holloway. Does not include 485 shares owned
by Mr. Holloway's wife, for which he disclaims beneficial ownership.
<F8> Includes 10,000 shares beneficially owned by Mr. Horne pursuant to the
2006 Debentures. Does not include 1,920 shares owned by Mr. Horne's
wife, as to which he disclaims beneficial ownership.
<F9> Includes 10,000 shares beneficially owned by Mr. Mason pursuant to the
2006 Debentures. Does not include 16,958 shares owned by Mr. Mason's
wife, as to which he disclaims beneficial ownership.
<F10> Includes 10,000 shares owned pursuant to the 2006 Debentures. Does not
include 15,005 shares owned by Mr. Nelson's wife, as to which he
disclaims beneficial ownership.
<F11> Includes 10,000 shares beneficially owned by Mr. Parks pursuant to the
2006 Debentures.
<F12> Includes 6,000 shares beneficially owned by Mr. Bledsoe pursuant to the
2006 Debentures and 9,800 shares beneficially owned pursuant to stock
options exercisable within 60 days of February 1, 2000.
<F13> Includes 6,000 shares beneficially owned by Mr. Freeman pursuant to the
2006 Debentures and 20,500 shares beneficially owned pursuant to stock
options exercisable within 60 days of February 1, 2000.
<F14> Includes 106,500 shares beneficially owned pursuant to stock options
exercisable within 60 days of February 1, 2000 and 112,000 shares
beneficially owned pursuant to the 2006 Debentures.
</FN>
-4
NOMINATION AND ELECTION OF DIRECTORS
(Proposal 1)
The Bylaws of United provide that the number of directors may range
from eight to fourteen directors. The Board of Directors of United has set the
number of directors at twelve. The number of directors may be increased or
decreased from the foregoing from time to time by the Board of Directors by
amendment of the Bylaws, but no decrease shall have the effect of shortening the
term of an incumbent director. The terms of office for directors continue until
the next annual meeting and until their successors are elected and qualified.
During 1999, P. Deral Horne reached the mandatory retirement age as
established in the Bylaws and, accordingly, will not stand for re-election. John
R. Martin has decided to not stand for re-election. In addition, in December
1999 the Board of Directors elected Tim Wallis as a director. Mr. Wallis
previously served as a director of 1st Floyd Bankshares, which was acquired by
United in August, 1999.
Each Proxy executed and returned by a shareholder will be voted as
specified thereon by the shareholder. If no specification is made, the Proxy
will be voted for the election of the nominees named below to constitute the
entire Board of Directors. If any nominee withdraws or for any reason is not
able to serve as a director, the Proxy will be voted for such other person as
may be designated by the Board of Directors as a substitute nominee, but in no
event will the Proxy be voted for more than twelve nominees. Management of
United has no reason to believe that any nominee will not serve if elected. All
of the nominees, with the exception of Robert H. Blalock, are currently
directors of United.
Directors are elected by a plurality of the votes cast by the holders
of the shares entitled to vote in an election at a meeting at which a quorum is
present. A quorum is present when the holders of a majority of the shares
outstanding on the record date are present at a meeting in person or by proxy.
An abstention and a broker non-vote would be included in determining whether a
quorum is present at a meeting, but would not have an effect on the outcome of a
vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE NOMINEES.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information as of December 31, 1999 has been furnished by
the respective nominees for director. Except as otherwise indicated, each
nominee has been or was engaged in his present or last principal employment, in
the same or a similar position, for more than five years.
Information Director of
Name (Age) About Nominee United Since
---------- ------------- ------------
Jimmy C. Tallent........... President and Chief Executive Officer of United 1987
(47)
Robert H. Blalock.......... Owner of Blalock Insurance Agency, Inc., Clayton, Nominee
(52) Georgia
Billy M. Decker............ Senior Vice President and Secretary of United 1988
(56)
Thomas C. Gilliland........ Executive Vice President of United and President 1992
(51) of Peoples Bank of Fannin County
-5-
Robert L. Head, Jr......... Chairman of the Board of Directors of United; 1988
(60) Owner of Head Construction Company,
Head-Westgate Corp., a commercial construction
company, and Mountain Building Supply, in
Blairsville, Georgia
Charles E. Hill............ Retired Director of Pharmacy at Union General 1988
(62) Hospital in Blairsville, Georgia
Hoyt O. Holloway........... Owner of H&H Farms, a poultry farm in Blue Ridge, 1993
(59) Georgia
Clarence W. Mason, Sr...... Owner of Mason Lawn and Garden, in Blue Ridge, 1992
(62) Georgia
Zell B. Miller............. Governor of Georgia from 1991 to 1999 1999
(68)
W. C. Nelson, Jr........... Vice Chairman of the Board of United; Owner of 1988
(55) Nelson Tractor Company in Blairsville, Georgia
Charles E. Parks........... Former Owner of Parks Lumber Co., Murrayville, 1997
(69) Georgia
Tim Wallis................. Owner of Wallis Printing Co., Rome, Georgia 1999
(48)
================================================================================
There are no family relationships between any director, executive
officer or nominee for director of United or any of its subsidiaries.
================================================================================
-6-
EXECUTIVE COMPENSATION
The following table provides information regarding the compensation paid or
accrued by United and its Subsidiaries for the fiscal years ended December 31,
1997, 1998 and 1999, to or on behalf of the Chief Executive Officer and the four
other most highly compensated executive officers. These individuals are referred
to in this Proxy Statement as "Named Executive Officers."
Long-Term
Annual Compensation Compensation
----------------------------------------------------- ----------------
Securities All
Name and Principal Offices Underlying Other
Held During 1999 Year Salary Bonus Other Options Compensation
--------------------------- ------- ------------ ----------- ------------ ---------------- ------------
Jimmy C. Tallent...................... 1999 $236,500 $150,000 $45,100<F1> 8,750 $22,293<F2>
President and Chief Executive 1998 $231,125 $100,000 $36,900<F1> 8,750 $29,118
Officer of United 1997 $215,000 $ 90,000 $32,875<F1> 8,750 $27,058
Thomas C. Gilliland................... 1999 $167,500 $ 55,000 $ 9,400<F1> 5,250 $15,075<F3>
President and Chief Executive 1998 $165,000 $ 45,000 $ 5,400<F1> 5,250 $ 8,250
Officer of Peoples Bank of Fannin 1997 $157,500 $ 42,500 $ 5,400<F1> 5,250 $13,388
County; Executive Vice President of
United
Billy M. Decker....................... 1999 $122,700 $ 32,000 $18,600<F1> 2,000 $11,043<F3>
Senior Vice President and Secretary 1998 $121,450 $ 30,000 $18,600<F1> 2,500 $14,817
of United 1997 $117,700 $ 30,000 $18,600<F1> 3,500 $14,359
Guy W. Freeman........................ 1999 $165,000 $ 75,000 $ 7,300<F1> 4,000 $14,850<F3>
President and Chief Executive 1998 $158,550 $ 50,000 $ 7,300<F1> 4,000 $19,343
Officer of Carolina Community Bank; 1997 $139,200 $ 40,000 $ 7,000<F1> 10,000 $16,892
Senior Vice President of United
Christopher J. Bledsoe................ 1999 $120,000 $ 35,000 -- 3,500 $11,250<F3>
Senior Vice President and Chief 1998 $116,250 $ 27,500 -- 3,500 $14,183
Financial Officer of United 1997 $102,500 $ 25,000 -- 3,500 $12,505
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<FN>
<F1> Directors' fees for service on United's bank subsidiaries' boards of
directors. Other perquisites do not meet the Securities and Exchange
Commission threshold for disclosure, which is the lesser of $50,000 or
10% of the total salary and bonus for any named executive.
<F2> Represents a contribution by United of $21,285 on behalf of Mr. Tallent
to United's Profit Sharing Plan and insurance premiums of $1,008 paid by
United Community Bank on behalf of Mr. Tallent on a life insurance
policy.
<F3> Represents United's contribution on behalf of the named individual to
United's Profit Sharing Plan, assuming a contribution equal to 4% of
the individual base compensation. The final profit sharing percentage
contributions in 1999 have not been finalized as of the date of this
proxy statement.
</FN>
United has never granted restricted stock, stock appreciation rights or
similar awards to any of its present or past executive officers, other than
awards of stock options under the 1995 United Community Banks Key Employee Stock
Option Plan (the "1995 Plan"). Proposal 2 of this proxy statement is for
consideration of the 2000 Key Employee Stock Option Plan (the "2000 Plan") that
will provide for grants of restricted stock.
COMPENSATION OF DIRECTORS
Directors of United, other than a President or Vice President of a bank
subsidiary who serves on United's Board of Directors, received $2,000 per board
meeting attended during 1999. Certain members of United's Board of Directors
also serve as members of one or more of the Boards of Directors of United's bank
subsidiaries, for which they are compensated by the bank subsidiaries.
-7-
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock options
granted to the Named Executive Officers under the 1995 Plan during fiscal year
1999 and the projected value of those options at assumed annual rates of
appreciation.
- ------------------------------------------------------------------------------------- ---------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Individual Grants Appreciation
for Option Term(2)
- ------------------------------------------------------------------------------------- ---------------------------
Number of
Securities Percent of Total
Underlying Options Granted
Options to Employees in Expiration
Name Granted <F1> Fiscal Year Date 5% 10%
- ----------------------------- --------------- -------------------- ------------------ ------------- -------------
Jimmy C. Tallent 8,750 10.6% 1/1/09 $ 220,113 $557,810
Thomas C. Gilliland 5,250 6.4% 1/1/09 $ 132,068 $334,686
Billy M. Decker 2,000 2.4% 1/1/09 $ 50,312 $127,499
Guy W. Freeman 4,000 4.9% 1/1/09 $ 100,623 $254,999
Christopher J. Bledsoe 3,500 4.3% 1/1/09 $ 88,045 $223,124
- --------------------------
<FN>
<F1> 20% of the options were vested at the date of grant and an additional 20%
vest at each of the first four anniversaries of the date of grant. The
exercise price of the options is $40.00 per share, the fair market value on
the date of grant of the options.
<F2> "Potential Realizable Value" is disclosed in response to SEC regulations
that require such disclosure for illustration only. The values disclosed
are not intended to be, and should not be interpreted as, representations
or projections of the future value of United's Common Stock or of the stock
price. Amounts are calculated at 5% and 10% assumed appreciation of the
value of the Common Stock (compounded annually over the option term) and
are not intended to forecast actual expected future appreciation, if any,
of the Common Stock. The potential realizable value to the optionee is the
difference between the exercise price and the appreciated stock price at
the assumed annual rates of appreciation multiplied by the number of shares
underlying the options.
</FN>
-8-
OPTION FISCAL YEAR-END VALUES
Shown below is information with respect to options exercised during
1999 and unexercised options to purchase the Common Stock granted under the 1999
Plan to the Named Executive Officers and held by them at December 31, 1999.
- ---------------------------- ---------------- --------------- ----------------------------- ----------------------------
Value of Unexercised in
# Shares Number of Unexercised the Money Options at
Acquired on $ Value Options at Fiscal Year End Fiscal Year End <F2>
Name Exercise Realized <F1> Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------- ---------------- --------------- ----------------------------- ----------------------------
Jimmy C. Tallent - - 30,000/17,500 $718,500/$189,000
Thomas C. Gilliland - - 18,000/10,500 $431,000/$113,400
Billy M. Decker - - 11,300/5,200 $282,000/$66,000
Guy W. Freeman - - 16,200/10,300 $368,000/$132,000
Christopher J. Bledsoe 5,000 $204,000 7,000/7,000 $127,400/$75,600
- ---------------------------- ---------------- --------------- ----------------------------- ----------------------------
- -------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Market price at time of exercise less option exercise price.
<F2> Based on $42.00 per share, the last sale price known to United during 1999.
United's Common Stock is not publicly traded.
</FN>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires United's executive officers, directors and persons who own more
than ten percent (10%) of United's Common Stock to file with the Securities and
Exchange Commission ("SEC") reports of ownership and changes in ownership. Based
solely on its review of the forms filed with the SEC and representations of
reporting persons, United believes that everyone who was an executive officer,
director or greater than 10% beneficial owner at any time during 1999 complied
with all filing requirements applicable to them during 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of United reviewed the compensation of Messrs.
Tallent, Gilliland, Freeman, Decker and Bledsoe and of United's other executive
officers for the 1999 fiscal year. Although all members of the Board of
Directors participated in deliberations regarding the salaries of executive
officers, none of such officers participated in any decisions regarding his own
compensation as an executive officer.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Robert L. Head, Jr., Chairman of the Board of Directors of United,
is the owner of a construction company that United and two of its bank
subsidiaries hired during the course of the year to perform various construction
projects totaling approximately $1.1 million.
The Banks have had, and expect to have in the future, banking
transactions in the ordinary course of business with directors and officers of
United and their associates, including corporations in which such officers or
directors are shareholders, directors and/or officers, on the same terms
(including interest rates and collateral) as those prevailing at the time for
comparable transactions with unaffiliated third parties. Such transactions have
not involved more than the normal risk of collectability or presented other
unfavorable features.
-9-
JOINT REPORT ON EXECUTIVE COMPENSATION
General
Under rules established by the SEC, United is required to provide
certain information with respect to compensation provided to United's President
and Chief Executive Officer and to United's other executive officers. The SEC
regulations require a report setting forth a description of United's executive
compensation policy in general and the considerations that led to the
compensation decisions affecting Messrs. Tallent, Gilliland, Decker, Freeman and
Bledsoe. In fulfillment of this requirement, the Board of Directors and
Compensation Committee has prepared the following report for inclusion in this
Proxy Statement.
The fundamental policy of United's compensation program is to offer
competitive compensation and benefits for all employees, including the President
and Chief Executive Officer and the other officers of United, in order to
compete for and retain talented personnel who will lead United in achieving
levels of financial performance which enhance shareholder value. United's
executive compensation package historically has consisted of salary, annual
incentive compensation, matching profit sharing contributions and other
customary fringe benefits. The grant of stock options under the 1995 Plan is
also a part of United's compensation package for certain executive officers,
including the Named Executive Officers.
Salary
All members of the Board of Directors of United participated in
deliberation regarding salaries of executive officers. Although subjective in
nature, factors considered by the Board in setting the salaries of executive
officers (other than Mr. Tallent) were Mr. Tallent's recommendations,
compensation paid by comparable banks to their executive officers (although such
information was obtained informally and United did not attempt to pay any
certain percentage of salary for comparable positions with other banks), each
executive officer's performance, contribution to United, tenure in his or her
position, and internal comparability considerations. The Board of Directors set
the salary of Mr. Tallent based on Mr. Tallent's salary during the preceding
fiscal year, his tenure, the salaries of chief executive officers of comparable
banks (although such information was obtained informally and United did not
attempt to pay any certain percentage of salary for a comparable position with
other banks) and the increase in earnings of United in recent years. The Board
did not assign relative weights to the factors considered in setting salaries of
executive officers, including Mr. Tallent.
Annual Incentive Compensation
Annual incentive compensation for 1999, paid in the form of a cash
bonus during the fourth quarter of the fiscal year, was based on annual
financial results of United's bank subsidiaries, including general targets with
respect to net income and return on average assets. Cash bonuses were granted by
the Board to Mr. Tallent, and the Board set a range of bonuses (based on a
percentage of salary) for all employees other than Mr. Tallent, within which
range Mr. Tallent determined each officer's bonus, based on individual
performance.
1995 Plan
Options to acquire 82,300 shares of Common Stock were awarded under the
1995 Plan in fiscal 1999, including options to acquire 23,500 shares of Common
Stock awarded to the Named Executive Officers by the Compensation Committee.
-10-
United Community Banks, Inc. Board of Directors
Jimmy C. Tallent P. Deral Horne
Billy M. Decker John R. Martin
Thomas C. Gilliland Clarence W. Mason, Sr.
Robert L. Head, Jr. Zell B. Miller
Charles E. Hill W. C. Nelson, Jr.
Hoyt O. Holloway Charles E. Parks
Tim Wallis
Compensation Committee of the Board of Directors
Robert L. Head, Jr. John R. Martin
Charles E. Hill Clarence W. Mason, Sr.
Hoyt O. Holloway Zell B. Miller
P. Deral Horne W. C. Nelson, Jr.
Charles E. Parks Tim Wallis
-11-
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on United's Common Stock against the
cumulative total return on The Nasdaq Stock Market (U.S. Companies) Index and
The Nasdaq Bank Stocks Index for the period of five fiscal years commencing
January 1, 1995 and ending on December 31, 1999. This graph was prepared at
United's request by Research Data Group, San Francisco, California. United's
Common Stock is not publicly traded; therefore, the total shareholder return is
based on stock trades known to United during the periods presented.
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN*
AMONG UNITED COMMUNITY BANKS, INC.
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ BANK INDEX
_______________________________________
GRAPHICS APPEARS HERE IS REPRESENTED
IN THE TABULAR CHART BELOW
_______________________________________
_____________________________________________________________________________________________
| | | |
| | | CUMULATIVE TOTAL RETURN |
|__________________________________|__|_____________________________________________________|
| | | | | | | |
| | | 12/94 | 12/95 | 12/96 | 12/97 | 12/98 | 12/99 |
|__________________________________|__|________|________|________|________|________|________|
| | | | | | | | |
| UNITED COMMUNITY BANKS, INC. | | 100 | 161 | 212 | 305 | 408 | 430 |
|__________________________________|__|________|________|________|________|________|________|
| | | | | | | | |
| NASDAQ STOCK MARKET (U.S.) | | 100 | 141 | 174 | 213 | 300 | 542 |
|__________________________________|__|________|________|________|________|________|________|
| | | | | | | | |
| NASDAQ BANK | | 100 | 149 | 197 | 329 | 327 | 314 |
|__________________________________|__|________|________|________|________|________|________|
* $100 INVESTED ON 12/31/4IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
-12-
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The United Board of Directors held three meetings during 1999. All of
the directors attended at least seventy-five percent (75%) of the meetings of
the Board and meetings of the committees of the Board on which they sat that
were held during their tenure as directors.
The Board of Directors does not have a standing nominating committee.
The compensation committee of the Board of Directors is comprised of all members
of the Board who are not employees of the bank subsidiaries of United. The
compensation committee makes compensation decisions for executive officers and
key employees and administers the 1995 Plan.
The Board of Directors formed an audit committee at the December 1999
meeting. The audit committee is comprised of directors Holloway, Miller and
Nelson. The audit committee will be responsible for recommending the selection
of independent auditors; meeting with the independent auditors to review the
scope and results of the audit; reviewing with management and the internal
auditor the system of internal control and internal audit reports; ensuring that
the books, records and external financial reports of the Company are in
accordance with generally accepted accounting principles; and, reviewing all
reports of examination made by regulatory authorities and ascertaining that any
and all operational deficiencies are satisfactorily corrected. The audit
committee met one time during 1999.
APPROVAL OF THE 2000 KEY EMPLOYEE STOCK OPTION PLAN
(Proposal 2)
The Board of Directors of United has adopted, subject to shareholder
approval, the 2000 Plan, effective December 8, 1999. United's shareholders
previously approved the 1995 Plan to promote the interests of the Company by
providing an incentive for key employees to improve shareholder value through
profitable growth of the Company and remain in the employ of United and to
further aid management in the recruitment and retention of capable personnel of
a caliber required to ensure future success. The 2000 Plan has been adopted by
the Board of Directors to serve these same purposes, and the Board of Directors
believes that the accomplishment of these purposes will result in increased
shareholder value.
At the Annual Meeting, the shareholders of United will be asked to
approve the 2000 Plan. Approval of the 2000 Plan is required to provide the
option recipients with the favorable tax treatment afforded incentive stock
options ("ISOs") under Section 422 of the Internal Revenue Code (the "Code").
The 2000 Plan will be approved upon the affirmative vote of a majority of the
shares represented at the meeting at which a quorum is present. An abstention or
broker non-vote would be included in determining whether a quorum is present at
a meeting, but would not have the effect on the outcome of a vote. Unless
otherwise instructed, the persons name on the enclosed proxy card will vote
shares represented by properly executed proxies in favor of the 2000 plan.
Shareholder approval of the 2000 Plan is also sought in order to
qualify the 2000 Plan under Section 162(m) of the Internal Revenue Code and to
thereby allow the Company to deduct for federal income tax purposes all
compensation paid under the 2000 Plan to Named Executive Officers (generally,
the executive officers who would be listed for a fiscal year in the summary
compensation table appearing herein).
SUMMARY OF THE 2000 PLAN
GENERAL
The purpose of the 2000 Plan is to secure for United and its
shareholders the benefits of the incentive inherent in stock ownership in the
Company by key employees who perform services for the Company and its
subsidiaries, who are largely responsible for its future growth and continued
success. The 2000 Plan is further intended to provide flexibility to the Company
in its ability to motivate, attract and retain the services of individuals upon
whose judgment, interest and special effort the successful conduct of its
operation largely depends. The 2000 Plan became effective on December 8, 1999
and will continue in effect, unless earlier terminated, until December 7, 2009.
-13-
However, awards issued pursuant to the 2000 Plan prior to the relevant
termination date which have not expired or otherwise terminated as of such date
may be exercised after such time in accordance with their terms.
A maximum of 490,000 shares of Common Stock are available for the grant
of stock options under the 2000 Plan; provided that if the number of United's
issued and outstanding shares of Common Stock is increased after December 8,
1999, the maximum number of shares for which awards may be granted under the
2000 Plan shall be increased such that the ratio of the number of shares
available for grant to outstanding shares remains the same as the ratio of the
shares available to grant under the 2000 Plan to outstanding shares that existed
on December 8, 1999. Outstanding shares shall for the purposes of such
calculation include the number of shares into which other securities or
instruments issued by United are currently convertible (e.g., convertible
preferred stock or convertible debentures, but not outstanding options to
acquire stock). The maximum number of shares available for grant as ISOs under
the 2000 Plan is 400,000 shares.
The 2000 Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"), nor is it subject to Section
401 of the Internal Revenue Code of 1986, as amended (the "Code").
A summary of the more important provisions of the 2000 Plan is set
forth below. This summary does not purport to be complete, and reference to the
full text of the 2000 Plan should be made for further information. A copy of the
Plan is attached hereto as Appendix A.
ADMINISTRATION
The 2000 Plan is administered by the Compensation Committee of the
Board of Directors of the Company, or by any other Committee appointed by the
Board that is granted authority to administer the Plan (the "Committee"). The
members of the Committee serve at the pleasure of the Board of Directors.
Each employee of the Company (including an employee who is a member of
the Board) or of a subsidiary whose judgment, initiative and efforts contribute
or may be expected to contribute materially to the successful performance of the
Company or any subsidiary, is eligible to participate in the Plan. The Committee
is empowered to select the individuals who will participate in the Plan (the
"Participants"), the form and amount of the awards, the dates of grant and the
terms and provisions of each award, and to interpret the Plan and any agreement
entered into pursuant to the Plan. All decisions and determinations of the
Committee in the administration of the Plan and on all questions concerning the
Plan are final and conclusive. Participants in the Plan are selected in the
discretion of the Committee.
Awards granted under the Plan will be evidenced by a written agreement
(the "Award Agreement") in such form and containing such terms and conditions
(which need not be identical for all Award Agreements) as the Committee
determines, so long as the Award Agreement is in compliance with the terms of
the Plan.
TERMS OF GRANT AND EXERCISE OF AWARDS
STOCK OPTIONS. Stock options granted under the Plan may be incentive
stock options ("ISOs") or nonqualified stock options ("NQSOs" and, collectively
with ISOs, "Options"). An Option entitles a Participant to purchase shares of
Common Stock from the Company at the option price. The exercise price of an ISO
may not be less than the fair market value of the Common Stock on the date of
the grant, or less than 110% of the fair market value if the Participant owns
more than 10% of the total combined voting power of all classes of stock of the
Company. The exercise price of non-qualified stock options may be equal to, less
than, or more than the fair market value of the common stock on the date that
the option is awarded. The maximum number of Shares subject to options which can
be granted under the 2000 Plan during any calendar year to any individual is
200,000 shares.
Full payment of the option price must be made when an Option is
exercised. The purchase price may be paid in cash or in such other form of
consideration as the Committee may approve, which may include shares of Common
Stock valued at their fair market value on the date of exercise, or by any other
means which the Committee determines to be consistent with the Plan's purpose
and applicable law.
Options granted under the 2000 Plan will be exercisable, in whole or in
part, by the option holder upon such terms and conditions as may be determined
by the Committee. Options vest according to the schedule provided for by the
-14-
Committee in the corresponding Award Agreement and are not exercisable later
than 10 years after the date of grant, but any incentive stock option granted to
a Participant who owns more than 10% of the combined voting power of all classes
of stock of the Company will not be exercisable after the expiration of 5 years
after the date the option is granted. Incentive stock options are also subject
to the further restriction that the aggregated fair market value, determined as
of the date of grant, of common stock as to which any incentive stock option
first becomes exercisable in any calendar year is limited to $100,000 per
recipient. To the extent that Options granted pursuant to the Plan exceed such
amount (or otherwise fail to qualify as ISOs), they will constitute NQSOs.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation
rights separately or in connection with another stock incentive, and the
Committee may provide that the holder may exercise them at any time or that they
will be paid at a certain time or times or upon the occurrence or non-occurrence
of certain events. Stock appreciation rights may be settled in shares of common
stock or in cash, according to terms established by the Committee with respect
to any particular award. The maximum number of stock appreciation rights which
can be granted under the 2000 Plan during any calendar year to any individual is
200,000.
RESTRICTED STOCK; STOCK AWARDS. Participants may also be awarded shares
of Common Stock pursuant to a stock award. The Committee, in its discretion, may
prescribe that a Participant's rights in a stock award shall be nontransferable
or forfeitable or both unless certain conditions are satisfied. These conditions
may include, for example, a requirement that the Participant continue employment
with the Company for a specified period or that the Company or the Participant
achieve stated objectives. In addition, the restrictions may lapse
incrementally.
At the time a grant of restricted stock is made, the Committee shall
establish a period or periods of time (the "Restricted Period") applicable to
such grant which, unless the Committee otherwise provides, shall not be less
than one year. Subject to certain provisions, at the end of the Restricted
Period, all restrictions shall lapse and the restricted stock shall vest in the
Participant. The Committee may, in its discretion, shorten or terminate the
Restricted Period, or waive any conditions for the lapse or termination of
restrictions with respect to all or any portion of the restricted stock at any
time after the date the grant is made.
Upon a grant of restricted stock, a stock certificate representing the
number of shares of restricted stock granted to the Participant shall be
registered in the Participant's name and shall be held in custody by the Company
or a bank selected by the Committee for the Participant's account. Following
such registration, the Participant shall, subject to certain restrictions, have
the rights and privileges of a shareholder as to such restricted stock,
including the right to receive dividends and to vote such restricted stock,
except that the right to receive cash dividends shall be the right to receive
such dividends either in cash currently or by payment in restricted stock, as
the Committee shall determine. The maximum number of Shares of Restricted Stock
or Stock Awards which can be granted under the 2000 Plan during any calendar
year to any individual is 200,000.
PERFORMANCE SHARE AWARDS. The Plan also provides for the award of
performance shares. A performance share award entitles the Participant to
receive a payment equal to the fair market value of a specified number of shares
of Common Stock if certain performance standards are met. The Committee will
prescribe the requirements that must be satisfied before a performance share
award is earned. The performance share requirements may include, for example, a
requirement that the Participant continue employment with the Company for a
specified period or that the Company or the Participant achieve stated
objectives. To the extent that performance shares are earned, the obligation may
be settled in cash, in Common Stock or by a combination of the two.
No Participant shall have, as a result of receiving a performance share
award, any rights as a shareholder until and to the extent that the performance
shares are earned and Common Stock is transferred to such Participant. If the
Award Agreement so provides, a Participant may receive a cash payment equal to
the dividends that would have been payable with respect to the number of shares
of Common Stock covered by an award between (a) the date that the performance
shares are awarded and (b) the date that a transfer of Common Stock to the
Participant, cash settlement, or combination thereof is made pursuant to the
performance share award.
TERMINATION OF AWARDS.
The terms of an award may provide that it will terminate, among other
reasons, upon the holder's termination of employment or other status with United
-15-
or its subsidiaries, upon a specified date, upon the holder's death or
disability, or upon the occurrence of a change in control. Also, the Committee
may, within the terms of the 2000 Plan, provide in the Award Agreement for the
acceleration of vesting for any of the above reasons.
AMENDMENT AND TERMINATION OF 2000 PLAN; ADJUSTMENT OF SHARES
The Board of Directors may at any time terminate, suspend or amend the
Plan, but certain amendments will not become effective without shareholder
approval. Generally, the Board or the Committee may not adversely affect the
rights of a holder of an award without the holder's consent. The Committee may,
in such manner as it shall determine in its sole discretion, appropriately
adjust the number of shares subject to awards under the 2000 Plan and the
purchase price per share and the aggregate number of shares available for
issuance under the 2000 Plan in the event of any stock dividend issued by the
Company, recapitalization of the Company's capital structure or exchange of the
outstanding shares of Common Stock for shares of another class or company.
EXPENSES
The Company pays the administrative costs of the 2000 Plan, including
the expenses of the Committee and the costs of issuing and delivering the shares
subject to the Plan.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the IRC denies a deduction by an employer for certain
compensation in excess of $1.0 million per year paid by a publicly traded
corporation to the Named Executive Officers at the end of the taxable year.
Compensation with respect to stock options, including upon exercise of an NQSO
or upon a disqualifying disposition of an ISO, as described below under "Certain
Federal Income Tax Consequences", or other compensation pursuant to the 2000
Plan, will be excluded from this deduction limit if it satisfies certain
requirements. The requirements include: (i) the stock option or right must be
granted at an exercise price not lower than fair market value at date of grant
(or the award must be made on account of the attainment of performance goals
that meet the requirements of Section 162(m)); (ii) the stock option grant or
other stock award must be made by a committee composed of two or more "outside
directors" within the meaning of Section 162(m); (iii) the plan under which the
award is granted must state the maximum number of shares with respect to which
options or rights may be granted during a specified period to any individual;
and (iv) the material terms pursuant to which the compensation is to be paid
must be disclosed to, and approved by, shareholders in a separate vote prior to
payment. The 2000 Plan meets the requirements of paragraphs (i) through (iii)
above, and approval of the 2000 Plan by the Company's shareholders is being
proposed in order to comply with requirement (iv), so that compensation with
respect to stock options and stock awards may be excluded from the deduction
limit under 162(m) of the IRC.
FEDERAL INCOME TAX EFFECTS
The federal, state and local income tax consequences associated with
the grant or purchase of Common Stock or Options under the Plan will depend upon
each individual Participant's circumstances. Each Participant should seek the
advice of a qualified tax adviser regarding the tax consequences of
participation in the Plan.
The statements pertaining to the federal income tax consequences
regarding participation in the Plan are based upon the Code, regulations
promulgated by the Internal Revenue Service (the "IRS") thereunder, published
revenue rulings issued by the IRS, and case law as of the date hereof. Such laws
and regulations are subject to change. Such statements reflect existing law and
reasonable interpretations thereof and do not, in any instance, purport to
indicate the trend of the law in the future. As a result, no assurance can be
given that there will be no statutory, judicial or administrative changes that
would modify these summaries and/or statements. No ruling from the IRS or any
state agency has been requested and no ruling has been issued with respect to
any transactions described herein.
OPTIONS. There are generally no federal tax consequences either to the
employee receiving Options (the "Optionee") or to the Company upon the grant of
an Option. Upon exercise of an ISO, the Optionee will not recognize any income
and the Company will not be entitled to a deduction for tax purposes, although
such exercise may give rise to a liability for the Optionee under the
-16-
alternative minimum tax provisions of the Code. Generally, if the Optionee
disposes of shares acquired upon exercise of an ISO within two (2) years of the
date of grant or one (1) year of the date of exercise, the Optionee will
recognize ordinary compensation income and the Company will be entitled to a
deduction for tax purposes in the taxable year in which such disposition
occurred in the amount of the excess of the fair market value of the shares of
Common Stock on the date of exercise over the option exercise price (or the gain
on sale, if less). Otherwise, the Company will not be entitled to any deduction
for tax purposes upon disposition of such shares, and the entire gain for the
Optionee will be treated as a capital gain. On exercise of a NQSO, the amount by
which the fair market value of the Common Stock on the date of exercise exceeds
the option exercise price will generally be taxable to the Optionee as
compensation income and will generally be deductible for tax purposes by the
Company. The disposition of shares of Common Stock acquired upon exercise of a
NQSO will generally result in a capital gain or loss for the Optionee, but will
have no tax consequences for the Company.
STOCK AWARDS; RESTRICTED STOCK. With respect to outright grants of
Common Stock under the Plan, the Company is of the opinion that the Participant
will realize compensation income at the time of grant in an amount equal to the
fair market value of the Common Stock less any amount paid for such Common
Stock. The Company is also of the opinion that it will be entitled to a
deduction under the Code in the amount and at the time that compensation income
is realized by the Participant.
With respect to the grant of restricted stock under the Plan, the
Company is of the opinion that the Participant will realize compensation income
in an amount equal to the fair market value of the restricted stock (whether
received as a grant or as a dividend), less any amount paid for such restricted
stock, at the time when the Participant's rights with respect to such restricted
stock are no longer subject to a substantial risk of forfeiture, unless the
Participant elected, pursuant to a special election provided in the Code, to be
taxed on the restricted stock at the time it was granted or received as a
dividend, as the case may be. Dividends paid to the Participant during the
Restricted Period will be taxable as compensation income, rather than as
dividend income, unless the election referred to above was made. The Company is
also of the opinion that it will be entitled to a deduction under the Code in
the amount and at the time that compensation income is realized by the
Participant.
PERFORMANCE SHARE AWARDS. Unless an election is made under Section
83(b) of the Code, a Participant will recognize income on account of the
settlement of a performance share award. The amount of such income will be equal
to any cash that is paid and the fair market value of Common Stock (on the date
that the shares are first transferable or not subject to a substantial risk of
forfeiture) that is received in settlement of the award, and the Company will
generally be entitled to claim a deduction of such amount for tax purposes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
APPROVAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(Proposal 3)
The Board of Directors of United believes that it would be in the best
interest of United and its shareholders that the Restated Articles of
Incorporation be amended to increase the number of shares of Common Stock, $1.00
par value, from the 10,000,000 shares currently authorized to 50,000,000. The
number of shares outstanding as of December 31, 1999 was 8,034,268. United
currently has 288,004 shares reserved for issuance in connection with the 1995
Plan and 52,898 shares reserved for issuance in connection with the stock option
plan of 1st Floyd Bankshares, which was assumed by United under the terms of the
merger agreement. An additional 500,000 shares will be reserved in connection
with the approval of the 2000 Plan referenced in Proposal 2. Accordingly, United
currently has a total of 1,224,830 authorized but unissued shares of Common
Stock uncommitted to any specific purpose.
-17-
PURPOSE OF AUTHORIZING ADDITIONAL COMMON STOCK
The Board of Directors believes that it is in the best interest of
United to increase the number of authorized shares of Common Stock, since of the
10,000,000 shares currently authorized, 8,775,170 are outstanding or have been
reserved for issuance as of December 31, 1999, assuming that Proposal 2 of this
proxy is approved. The Board of Directors believes that the 1,224,830 shares
remaining available for use are insufficient to enable the Board of Directors to
act quickly to take advantage of various business opportunities, including
acquisitions, financings, raising additional capital, stock splits and
dividends, compensation plans and other corporate purposes. United entered into
agreements to acquire North Point Bancshares, Inc., Dawsonville, Georgia, on
February 9, 2000, pursuant to which United would issue 958,211 shares of Common
Stock and Independent Bancshares, Inc., Powder Springs, Georgia, on February 10,
2000, pursuant to which United would issue 870,598 shares of Common Stock. The
consummation of both acquisitions is conditioned upon shareholder approval of
increasing the authorized shares of Common Stock from 10,000,000 to 50,000,000.
United also is currently planning an offering of approximately 315,790 shares of
Common Stock in the second quarter of 2000 for approximately $12,000,000 to
provide more capital for its subsidiary banks.
Effect of Proposal
If this proposal is approved, the Board of Directors will have the
authority to issue the additional authorized shares to those persons and for the
consideration as it may determine without further action by the shareholders.
Any issues of additional Common Stock could have the effect of discouraging an
attempt to acquire control of United. For example, stock could be issued to
persons, firms or entities known to be friendly to management. An issuance of
Common Stock at a price below the book value per share will have a dilutive
effect on the book value of the outstanding shares and may also have a dilutive
effect on earnings per share and the relative voting power of current
shareholders. The issuance of Common Stock in a merger or acquisition may also
have a dilutive effect. Except as set forth in the preceding paragraph, United
does not currently have any material commitments, arrangements or understanding
which would require the issuance of additional shares of Common Stock.
The Board of Directors does not believe that an increase in the number
of authorized shares of Commons Stock will have a significant impact on any
attempt to gain control of United. It is possible, however, that the
availability of authorized but unissued shares of Common Stock could discourage
third parties from attempting to gain control since the Board could authorize
the issuance of shares of Common Stock in a manner that could dilute the voting
power of a person attempting to acquire control of United, increase the cost of
acquiring such control or otherwise hinder such efforts. The Board is not aware
of any present threat or attempt to gain control of United and this Proposal 3
is not in response to any such action. Furthermore, this Proposal 3 is not being
presented with the intent that it be utilized as a type of anti-takeover device.
Assuming that this Proposal is adopted, the text of the first paragraph
of Article V in United's Restated Articles of Incorporation would be as set
forth in the attached Appendix B.
Vote Required for Approval
The affirmative vote of holders of a majority of the shares of Common
Stock outstanding on the record date is required to approve the amendment. An
abstention or broker non-vote would be included in determining whether a quorum
is present at a meeting, but would not have an effect on the outcome of a vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR THIS PROPOSAL.
-18-
INFORMATION CONCERNING UNITED'S ACCOUNTANTS
Porter Keadle Moore, LLP ("Porter Keadle") was the principal
independent public accountant for United during the year ended December 31,
1999. Representatives of Porter Keadle are expected to be present at the annual
meeting and will have the opportunity to make a statement if they desire to do
so and to respond to appropriate questions. United anticipates that Porter
Keadle will be United's accountants for the 2000 fiscal year.
SHAREHOLDER PROPOSALS
No proposals by non-management have been presented for consideration at the
Annual Meeting. United expects that its 2001 Annual Meeting will be held in
April 2001. Any proposals by non-management shareholders intended for
presentation at the 2001 Annual Meeting must be received by United at its
principal executive offices, attention of the Secretary, no later than November
20, 2000 in order to be included in the proxy material for that Meeting. United
must be notified of any other shareholder proposal intended to be presented for
action at the meeting not later than February 3, 2001 or else proxies may be
voted on such proposal at the discretion of the person or persons holding these
proxies.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of United knows of no matters other than those stated above that
are to be brought before the meeting. If any other matters should be presented
for consideration and voting, however, it is the intention of the persons named
in the enclosed Proxy to vote in accordance with their judgment as to what is in
the best interest of United.
By Order of the Board of Directors,
Jimmy C. Tallent
President and Chief Executive Officer
-19-
COMMON STOCK
OF UNITED COMMUNITY BANKS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS.
This undersigned hereby appoints Jimmy C. Tallent or Robert L. Head,
Jr. the proxy of the undersigned to vote the Common Stock of the undersigned at
the Annual Meeting of shareholders of UNITED COMMUNITY BANKS, INC. to be held on
April 20, 2000, and any adjournment thereof.
1. Election of Nominees Nominees: Jimmy C. Tallent, Robert H.
Blalock, Billy M. Decker, Thomas C.
Gilliland, Robert L. Head, Jr., Charles
E. Hill, Hoyt O. Holloway, Clarence W.
Mason, Sr., Zell B. Miller, W. C.
Nelson, Jr., Charles E. Parks, and Tim
Wallis
FOR the nominees listed to the right WITHHOLD AUTHORITY
to vote for all nominees
/ / / /
WITHHOLD AUTHORITY
to vote for an individual nominee
/ /
Write name(s) below:
---------------------------
2. Approval of the 2000 Key Employee Stock Option Plan
/ / FOR approval of the 2000 Key Employee Stock Option Plan
/ / AGAINST approval of the 2000 Key Employee Stock Option Plan
3. Approval to Amend the Restated Articles of Incorporation
/ / FOR the proposal to amend the Restated Articles of
Incorporation to increase the number of authorized common
shares from 10,000,000 to 50,000,000
/ / AGAINST the proposal to amend the Restated Articles of
Incorporation to increase the number of authorized common
shares from 10,000,000 to 50,000,000
4. Authority to vote, in the proxies' discretion, upon such other business
as may properly come before the meeting or any postponement or
adjournment thereof
/ / AUTHORITY GRANTED / / AUTHORITY WITHHELD
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders dated March 20, 2000 and the Proxy Statement furnished therewith.
_______________________, 2000
Dated and signed
----------------------------
Signature
----------------------------
Signature
(Signature(s) should agree with the name(s) hereon. Executors, administrators,
trustees, guardians and attorneys should so indicate when signing. For joint
accounts, each owner should sign. Corporations should sign their full corporate
name by a duly authorized officer.)
This proxy is revocable at or at any time prior to the meeting.
Please sign and return this proxy in the accompanying prepaid envelope.
----------
APPENDIX A
UNITED COMMUNITY BANKS, INC.
2000 KEY EMPLOYEE STOCK OPTION PLAN
UNITED COMMUNITY BANKS, INC.
2000 KEY EMPLOYEE STOCK OPTION PLAN
A-(i)
TABLE OF CONTENTS
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION..................................................................1
1.1 Establishment of the Plan...................................................................1
1.2 Purpose of the Plan.........................................................................1
1.3 Duration of the Plan........................................................................1
ARTICLE 2. DEFINITIONS...........................................................................................1
ARTICLE 3. ADMINISTRATION........................................................................................4
3.1 The Committee...............................................................................4
3.2 Authority of the Committee..................................................................4
3.3 Decisions Binding...........................................................................4
ARTICLE 4. SHARES SUBJECT TO THE PLAN............................................................................4
4.1 Number of Shares............................................................................4
4.2 Lapsed Awards...............................................................................5
4.3 Adjustments In Authorized Shares............................................................5
ARTICLE 5. ELIGIBILITY AND PARTICIPATION.........................................................................5
ARTICLE 6. STOCK OPTIONS.........................................................................................5
6.1 Grant of Options............................................................................5
6.2 Agreement...................................................................................5
6.3 Option Price................................................................................5
6.4 Duration of Options.........................................................................6
6.5 Exercise of Options.........................................................................6
6.6 Payment.....................................................................................6
6.7 Limited Transferability.....................................................................6
6.8 Shareholder Rights..........................................................................7
ARTICLE 7. STOCK APPRECIATION RIGHTS.............................................................................7
7.1 Grants of SARs..............................................................................7
7.2 Duration of SARs............................................................................7
7.3 Exercise of SAR.............................................................................7
7.4 Determination of Payment of Cash and/or Common Stock Upon Exercise of SAR...................7
7.5 Nontransferability..........................................................................7
7.6 Shareholder Rights......................................................................... 7
ARTICLE 8. RESTRICTED STOCK; STOCK AWARDS........................................................................7
8.1 Grants......................................................................................7
8.2 Restricted Period; Lapse of Restrictions....................................................8
8.3 Rights of Holder; Limitations Thereon.......................................................8
8.4 Delivery of Unrestricted Shares.............................................................9
8.5 Nonassignability of Restricted Stock........................................................9
A-(ii)
ARTICLE 9. PERFORMANCE SHARE AWARDS..............................................................................9
9.1 Award.......................................................................................9
9.2 Earning the Award...........................................................................9
9.3 Payment.....................................................................................9
9.4 Shareholder Rights..........................................................................9
ARTICLE 10. BENEFICIARY DESIGNATION.............................................................................10
ARTICLE 11. DEFERRALS...........................................................................................10
ARTICLE 12. RIGHTS OF EMPLOYEES.................................................................................10
12.1 Employment................................................................................10
12.2 Participation.............................................................................10
ARTICLE 13. CHANGE IN CONTROL...................................................................................10
13.1 Definition................................................................................10
13.2 Limitation on Awards......................................................................11
ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION.............................................................11
14.1 Amendment, Modification and Termination...................................................11
14.2 Awards Previously Granted.................................................................11
14.3 Compliance With Code Section 162(m).......................................................11
ARTICLE 15. CANCELLATION AND RESCISSION OF AWARD...............................................................12
ARTICLE 16. WITHHOLDING........................................................................................12
16.1 Tax Withholding...........................................................................12
16.2 Share Withholding.........................................................................12
ARTICLE 17. INDEMNIFICATION.....................................................................................12
ARTICLE 18. SUCCESSORS..........................................................................................13
ARTICLE 19. LEGAL CONSTRUCTION..................................................................................13
19.1 Gender and Number.........................................................................13
19.2 Severability..............................................................................13
19.3 Requirements of Law.......................................................................13
19.4 Regulatory Approvals and Listing..........................................................13
19.5 Securities Law Compliance.................................................................13
19.6 Governing Law.............................................................................13
A-(iii)
UNITED COMMUNITY BANKS, INC.
2000 KEY EMPLOYEE STOCK OPTION PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. United Community Banks, Inc., a
Georgia corporation (hereinafter referred to as the "Company"), hereby
establishes a stock option and incentive award plan known as the "United
Community Banks, Inc. 2000 Key Employee Stock Option Plan" (the "Plan"), as set
forth in this document. The Plan permits the grant of Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock, Stock Awards, Performance Share
Awards and Stock Appreciation Rights.
The Plan shall become effective on the date it is approved by the Board
of Directors (the "Effective Date"), subject to approval of the Plan by the
Company's shareholders within the 12-month period immediately thereafter, and
shall remain in effect as provided in Section 1.3.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to secure for the
Company and its shareholders the benefits of the incentive inherent in stock
ownership in the Company by key employees of the Company and its subsidiaries,
who are responsible for its future growth and continued success. The Plan
promotes the success and enhances the value of the Company by linking the
personal interests of Participants (as defined below) to those of the Company's
shareholders, and by providing Participants with an incentive for outstanding
performance. The Plan is further intended to provide flexibility to the Company
in its ability to motivate, attract and retain the services of Participants upon
whose judgment, interest and special effort the successful conduct of its
operation largely depends.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, and shall remain in effect, subject to the right of the Board of Directors
to amend or terminate the Plan at any time pursuant to Article 14, until the day
prior to the tenth (10th) anniversary of the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below:
(a) "AGREEMENT" means an agreement entered into by each
Participant and the Company, setting forth the terms and
provisions applicable to Awards granted to Participants under
this Plan.
(b) "AWARD" means, individually or collectively, a grant under
this Plan of Incentive Stock Options, Nonqualified Stock
Options, Restricted Stock, Stock Awards, Performance Share
Awards or Stock Appreciation Rights.
(c) "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the Exchange
Act.
(d) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
of the Company.
(e) "CAUSE" means: (i) willful misconduct on the part of a
Participant that is materially detrimental to the Company; or
(ii) the conviction of a Participant for the commission of a
felony. The existence of "Cause" under either (i) or (ii)
shall be determined by the Committee. Notwithstanding the
foregoing, if the Participant has entered into an employment
agreement that is binding as of the date of employment
termination, and if such employment agreement defines "Cause,"
and/or provides a means of determining whether "Cause" exists,
such definition of "Cause" and means of determining its
existence shall supersede this provision.
(f) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor act thereto.
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(g) "COMMITTEE" means the committee appointed to administer the
Plan with respect to grants of Awards, as specified in Article
3, and to perform the functions set forth therein.
(h) "COMMON STOCK" means the common stock of the Company, par
value $1.00 per share.
(i) "COMPANY" means United Community Banks, Inc., a Georgia
corporation, or any successor thereto as provided in Article
18.
(j) "CORRESPONDING SAR" means an SAR that is granted in relation
to a particular Option and that can be exercised only upon the
surrender to the Company, unexercised, of that portion of the
Option to which the SAR relates.
(k) "DIRECTOR" means any individual who is a member of the Board
of Directors of the Company.
(l) "DISABILITY" shall have the meaning ascribed to such term in
the Company's long-term disability plan covering the
Participant, or in the absence of such plan, a meaning
consistent with Section 22(e)(3) of the Code.
(m) "EMPLOYEE" means any employee of the Company or the Company's
Subsidiaries. Directors who are not otherwise employed by the
Company or the Company's Subsidiaries are not considered
Employees under this Plan.
(n) "EFFECTIVE DATE" shall have the meaning ascribed to such term
in Section 1.1.
(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
(p) "FAIR MARKET VALUE" shall be determined as follows:
(i) If, on the relevant date, the Shares are traded on a
national or regional securities exchange or on The
Nasdaq Stock Market ("Nasdaq") and closing sale
prices for the Shares are customarily quoted, on the
basis of the closing sale price on the principal
securities exchange on which the Shares may then be
traded or, if there is no such sale on the relevant
date, then on the immediately preceding day on which
a sale was reported;
(ii) If, on the relevant date, the Shares are not listed
on any securities exchange or traded on Nasdaq, but
nevertheless are publicly traded and reported on
Nasdaq without closing sale prices for the Shares
being customarily quoted, on the basis of the mean
between the closing bid and asked quotations in such
other over-the-counter market as reported by Nasdaq;
but, if there are no bid and asked quotations in the
over-the-counter market as reported by Nasdaq on that
date, then the mean between the closing bid and asked
quotations in the over-the-counter market as reported
by Nasdaq on the immediately preceding day such bid
and asked prices were quoted; and
(iii) If, on the relevant date, the Shares are not publicly
traded as described in (i) or (ii), on the basis of
the good faith determination of the Committee.
(q) "INCENTIVE STOCK OPTION" OR "ISO" means an option to purchase
Shares granted under Article 6 which is designated as an
Incentive Stock Option and is intended to meet the
requirements of Section 422 of the Code.
(r) "INITIAL VALUE" means, with respect to a Corresponding SAR,
the Option Price per share of the related Option, and with
respect to an SAR granted independently of an Option, the Fair
Market Value of one share of Common Stock on the date of
grant.
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(s) "INSIDER" shall mean an Employee who is, on the relevant date,
an officer or a director, or a ten percent (10%) beneficial
owner of any class of the Company's equity securities that is
registered pursuant to Section 12 of the Exchange Act or any
successor provision, as "officer" and "director" are defined
under Section 16 of the Exchange Act.
(t) "NAMED EXECUTIVE OFFICER" means, if applicable, a Participant
who, as of the date of vesting and/or payout of an Award is
one of the group of "covered employees," as defined in the
regulations promulgated under Code Section 162(m), or any
successor statute.
(u) "NONQUALIFIED STOCK OPTION" OR "NQSO" means an option to
purchase Shares granted under Article 6, and which is not
intended to meet the requirements of Code Section 422.
(v) "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option.
(w) "OPTION PRICE" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as
determined by the Committee.
(x) "PARTICIPANT" means an Employee of the Company or a Subsidiary
who has been determined by the Committee to contribute
significantly to the profits or growth of the Company and who
has been granted an Award under the Plan which is outstanding.
(y) "PERFORMANCE SHARE AWARD" means an Award, which, in accordance
with and subject to an Agreement, will entitle the
Participant, or his estate or beneficiary in the event of the
Participant's death, to receive cash, Common Stock or a
combination thereof.
(z) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in Section
13(d) thereof.
(aa) "RETIREMENT" shall mean retiring from employment with the
Company or any Subsidiary on or after attaining age sixty five
(65).
(bb) "RESTRICTED STOCK" means an Award of Common Stock granted in
accordance with the terms of Article 8 and the other
provisions of the Plan, and which is nontransferable and
subject to a substantial risk of forfeiture. Shares of Common
Stock shall cease to be Restricted Stock when, in accordance
with the terms hereof and the applicable Agreement, they
become transferable and free of substantial risk of
forfeiture.
(cc) "SAR" means a stock appreciation right that entitles the
holder to receive, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the amount determined
by the Committee and specified in an Agreement. In the absence
of such specification, the holder shall be entitled to receive
in cash, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the excess of the
Fair Market Value on the date of exercise over the Initial
Value. References to "SARs" include both Corresponding SARs
and SARs granted independently of Options, unless the context
requires otherwise.
(dd) "SHARES" means the shares of Common Stock of the Company
(including any new, additional or different stock or
securities resulting from the changes described in Section
4.3).
(ee) "STOCK AWARD" means a grant of Shares under Article 8 that is
not generally subject to restrictions and pursuant to which a
certificate for the Shares is transferred to the Employee.
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(ff) "SUBSIDIARY" means any company during any period in which it
is a "subsidiary corporation" (as that term is defined in Code
Section 424(f)) with respect to the Company.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Board of
Directors or by the Compensation Committee of the Board, or by any other
committee or subcommittee appointed by the Board that is granted authority to
administer the Plan. The members of the Committee shall be appointed from time
to time by, and shall serve at the discretion of, the Board of Directors.
3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
the Committee shall have full power to select the Employees, Directors,
consultants and other persons who perform services for the Company or a
Subsidiary, who are responsible for the future growth and success of the Company
who shall participate in the Plan (who may change from year to year); determine
the size and types of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan (including conditions on the exercisability of
all or a part of an Option or SAR, restrictions on transferability, vesting
provisions on Restricted Stock or Performance Share Awards and the duration of
the Awards); construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend or waive rules and regulations for
the Plan's administration; and (subject to the provisions of Article 14) amend
the terms and conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan,
including accelerating the time any Option or SAR may be exercised and
establishing different terms and conditions relating to the effect of the
termination of employment or other services to the Company. Further, the
Committee shall make all other determinations which may be necessary or
advisable in the Committee's opinion for the administration of the Plan. All
expenses of administering this Plan shall be borne by the Company.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, the shareholders, Employees, Participants and their
estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant of Awards under the Plan shall be
490,000 shares, provided that, if the number of issued and outstanding Shares is
increased after the Effective Date, the maximum number of Shares for which
Awards may be granted under the Plan shall be increased such that the ratio of
the number of shares available for grant to outstanding shares remains the same
as the ratio of the shares available to grant under the Plan to outstanding
shares that existed on the Effective Date. Outstanding shares shall for the
purposes of such calculations include the number of shares into which other
securities or instruments issued by United are currently convertible (e.g.,
convertible preferred stock or convertible debentures, but not outstanding
options to acquire stock). The maximum number of Shares available for grant as
ISOs under the Plan shall equal an aggregate of four hundred thousand (400,000)
Shares. The Shares may, in the discretion of the Company, be either authorized
but unissued Shares or Shares held as treasury shares, including Shares
purchased by the Company, whether on the market or otherwise. The following
rules shall apply for purposes of the determination of the number of Shares
available for grant under the Plan:
(a) The grant of an Option, SAR, Stock Award, Restricted
Stock Award or Performance Share Award shall reduce
the Shares available for grant under the Plan by the
number of Shares subject to such Award.
(b) While an Option, SAR, Stock Award, Restricted Stock
Award or Performance Share Award is outstanding, it
shall be counted against the authorized pool of
Shares, regardless of its vested status.
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4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason, or if Shares are withheld in
payment of the Option Price or for withholding taxes, any Shares subject to such
Award or that are withheld shall again be available for the grant of an Award
under the Plan. However, in the event that prior to the Award's cancellation,
termination, expiration or lapse, the holder of the Award at any time received
one or more "benefits of ownership" pursuant to such Award (as defined by the
Securities and Exchange Commission, pursuant to any rule or interpretation
promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not again be made available for regrant under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number and the Committee shall make
such adjustments as are necessary to insure Awards of whole Shares.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Any key Employee of the Company or any Subsidiary, including any such
Employee who is also a director of the Company or any Subsidiary, whose
judgment, initiative and efforts contribute or may be expected to contribute
materially to the successful performance of the Company or any Subsidiary shall
be eligible to receive an Award under the Plan. In determining the individuals
to whom such an Award shall be granted and the number of Shares which may be
granted pursuant to that Award, the Committee shall take into account the duties
of the respective individual, his or her present and potential contributions to
the success of the Company or any Subsidiary, and such other factors as the
Committee shall deem relevant in connection with accomplishing the purpose of
the Plan.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
An Option may be granted with or without a Corresponding SAR. No Participant may
be granted ISOs (under the Plan and all other incentive stock option plans of
the Company and any Subsidiary) which are first exercisable in any calendar year
for Common Stock having an aggregate Fair Market Value (determined as of the
date an Option is granted) that exceeds One Hundred Thousand Dollars ($100,000).
The preceding annual limit shall not apply to NQSOs. The Committee may grant a
Participant ISOs, NQSOs or a combination thereof, and may vary such Awards among
Participants. The maximum number of Shares subject to Options which can be
granted under the Plan during any calendar year to any individual is 200,000
Shares.
6.2 AGREEMENT. Each Option grant shall be evidenced by an Agreement
that shall specify the Option Price, the duration of the Option, the number of
Shares to which the Option pertains and such other provisions as the Committee
shall determine. The Option Agreement shall further specify whether the Award is
intended to be an ISO or an NQSO. Any portion of an Option that is not
designated as an ISO or otherwise fails or is not qualified as an ISO (even if
designated as an ISO) shall be a NQSO. If the Option is granted in connection
with a Corresponding SAR, the Agreement shall also specify the terms that apply
to the exercise of the Option and Corresponding SAR.
6.3 OPTION PRICE. The Option Price for each grant of an ISO shall not
be less than one hundred percent (100%) of the Fair Market Value of a Share on
the date the Option is granted. In no event, however, shall any Participant who
owns (within the meaning of Section 424(d) of the Code) stock of the Company
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company be eligible to receive an ISO at an Option Price
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less than one hundred ten percent (110%) of the Fair Market Value of a share on
the date the ISO is granted. The Option Price for each grant of a NQSO shall be
established by the Committee and, in its discretion, may be less or more than
the Fair Market Value of a Share on the date the Option is granted. The
Committee is authorized to issue Options, whether ISOs or NQSOs, at an Option
Price in excess of the Fair Market Value on the date the Option is granted (the
so-called "Premium Price" Option) to encourage superior performance.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, shall not be exercisable later
than the fifth (5th) anniversary date of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, including conditions related to
the employment of the Participant with the Company or any Subsidiary, which need
not be the same for each grant or for each Participant. Each Option shall be
exercisable for such number of Shares and at such time or times, including
periodic installments, as may be determined by the Committee at the time of the
grant. The Committee may provide in the Agreement for automatic accelerated
vesting and other rights upon the occurrence of a Change in Control (as defined
in Section 13.1) of the Company. Except as otherwise provided in the Agreement
and Article 13, the right to purchase Shares that are exercisable in periodic
installments shall be cumulative so that when the right to purchase any Shares
has accrued, such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. The exercise or
partial exercise of either an Option or its Corresponding SAR shall result in
the termination of the other to the extent of the number of Shares with respect
to which the Option or Corresponding SAR is exercised.
6.6 PAYMENT. Options shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any Option shall be payable to the
Company in full, either: (a) in cash, (b) cash equivalent approved by the
Committee, (c) if approved by the Committee, by tendering previously acquired
Shares (or delivering a certification of ownership of such Shares) having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price (provided that the Shares which are tendered must have been held by the
Participant for six months, if required for accounting purposes, and for the
period required by law, if any, prior to their tender to satisfy the Option
Price), or (d) by a combination of (a), (b) and (c). The Committee also may
allow cashless exercises as permitted under Federal Reserve Board's Regulation
T, subject to applicable securities law restrictions, or by any other means
which the Committee determines to be consistent with the Plan's purpose and
applicable law. As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to the Participant, in
the Participant's name, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option(s), and may place appropriate
legends on the certificates representing such Shares.
6.7 LIMITED TRANSFERABILITY. If permitted by the Committee in the
Agreement, a Participant may transfer an Option granted hereunder, including,
but not limited to, transfers to members of his or her Immediate Family (as
defined below), to one or more trusts for the benefit of such Immediate Family
members, or to one or more partnerships where such Immediate Family members are
the only partners, if (i) the Participant does not receive any consideration in
any form whatsoever for such transfer, (ii) such transfer is permitted under
applicable tax laws, and (iii) the Participant is an Insider, such transfer is
permitted under Rule 16b-3 of the Exchange Act as in effect from time to time.
Any Option so transferred shall continue to be subject to the same terms and
conditions in the hands of the transferee as were applicable to said Option
immediately prior to the transfer thereof. Any reference in any such Agreement
to the employment by or performance of services for the Company by the
Participant shall continue to refer to the employment of, or performance by, the
transferring Participant. For purposes hereof, "Immediate Family" shall mean the
Participant and the Participant's spouse, children and grandchildren. Any Option
that is granted pursuant to any Agreement that did not initially expressly allow
the transfer of said Option and that has not been amended to expressly permit
such transfer, shall not be transferable by the Participant other than by will
or by the laws of descent and distribution and such Option thus shall be
exercisable in the Participant's lifetime only by the Participant.
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6.8 SHAREHOLDER RIGHTS. No Participant shall have any rights
as a shareholder with respect to Shares subject to his Option until the issuance
of such Shares to the Participant pursuant to the exercise of such Option.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANTS OF SARS. The Committee shall designate Participants to whom
SARs are granted, and will specify the number of Shares of Common Stock subject
to each grant. An SAR may be granted with or without a related Option. All SARs
granted under this Plan shall be subject to an Agreement in accordance with the
terms of this Plan. A payment to the Participant upon the exercise of a
Corresponding SAR may not be more than the difference between the Fair Market
Value of the Shares subject to the ISO on the date of grant and the Fair Market
Value of the Shares on the date of exercise of the Corresponding SAR. The
maximum number of SARs which can be granted under the Plan during any calendar
year to any individual is 200,000 SARs.
7.2 DURATION OF SARS. The duration of an SAR shall be set forth in the
Agreement as determined by the Committee. An SAR that is granted as a
Corresponding SAR shall have the same duration as the Option to which it
relates. An SAR shall terminate due to the Participant's termination of
employment at the same time as the date specified in Article 6 with respect to
Options, regardless of whether the SAR was granted in connection with the grant
of an Option.
7.3 EXERCISE OF SAR. An SAR may be exercised in whole at any time or in
part from time to time and at such times and in compliance with such
requirements as the Committee shall determine as set forth in the Agreement;
provided, however, that a Corresponding SAR that is related to an Incentive
Stock Option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value of the Shares exceeds the Option
Price of the related ISO. An SAR granted under this Plan may be exercised with
respect to any number of whole shares less than the full number of shares for
which the SAR could be exercised. A partial exercise of an SAR shall not affect
the right to exercise the SAR from time to time in accordance with this Plan and
the applicable Agreement with respect to the remaining shares subject to the
SAR. The exercise of either an Option or Corresponding SAR shall result in the
termination of the other to the extent of the number of Shares with respect to
which the Option or its Corresponding SAR is exercised.
7.4 DETERMINATION OF PAYMENT OF CASH AND/OR COMMON STOCK UPON EXERCISE
OF SAR. At the Committee's discretion, the amount payable as a result of the
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. A fractional share shall not be deliverable upon the
exercise of an SAR, but a cash payment shall be made in lieu thereof.
7.5 NONTRANSFERABILITY. Each SAR granted under the Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the SAR is granted, the SAR may
be exercised only by the Participant. No right or interest of a Participant in
any SAR shall be liable for, or subject to any lien, obligation or liability of
such Participant. A Corresponding SAR shall be subject to the same restrictions
on transfer as the ISO to which it relates. Notwithstanding the foregoing, if
the Agreement so provides, a Participant may transfer an SAR (other than a
Corresponding SAR that relates to an Incentive Stock Option) under the same
rules and conditions as are set forth in Section 6.7.
7.6 SHAREHOLDER RIGHTS. No Participant shall have any rights as
a shareholder with respect to Shares subject to an SAR until the issuance of
Shares (if any) to the Participant pursuant to the exercise of such SAR.
ARTICLE 8. RESTRICTED STOCK; STOCK AWARDS
8.1 GRANTS. The Committee may from time to time in its discretion grant
Restricted Stock and Stock Awards to Participants and may determine the number
of Shares of Restricted Stock or Stock Awards to be granted. The Committee shall
determine the terms and conditions of, and the amount of payment, if any, to be
made by the Employee for such Shares or Restricted Stock. A grant of Restricted
Stock may, in addition to other conditions, require the Participant to pay for
such Shares of Restricted Stock, but the Committee may establish a price below
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Fair Market Value at which the Participant can purchase the Shares of Restricted
Stock. Each grant of Restricted Stock shall be evidenced by an Agreement
containing terms and conditions not inconsistent with the Plan as the Committee
shall determine to be appropriate in its sole discretion. The maximum number of
Shares of Restricted Stock or Stock Awards which can be granted under the Plan
during any calendar year to any individual is 200,000 Shares.
8.2 RESTRICTED PERIOD; LAPSE OF RESTRICTIONS. At the time a grant of
Restricted Stock is made, the Committee shall establish a period or periods of
time (the "Restricted Period") applicable to such grant which, unless the
Committee otherwise provides, shall not be less than one year. Subject to the
other provisions of this Article 8, at the end of the Restricted Period all
restrictions shall lapse and the Restricted Stock shall vest in the Participant.
At the time a grant is made, the Committee may, in its discretion, prescribe
conditions for the incremental lapse of restrictions during the Restricted
Period and for the lapse or termination of restrictions upon the occurrence of
other conditions in addition to or other than the expiration of the Restricted
Period with respect to all or any portion of the Restricted Stock. Such
conditions may, but need not, include the following:
(a) The death, Disability or Retirement of the Employee
to whom Restricted Stock is granted, or
(b) The occurrence of a Change in Control (as defined in
Section 13.1).
The Committee may also, in its discretion, shorten or terminate the Restricted
Period, or waive any conditions for the lapse or termination of restrictions
with respect to all or any portion of the Restricted Stock at any time after the
date the grant is made.
8.3 RIGHTS OF HOLDER; LIMITATIONS THEREON. Upon a grant of Restricted
Stock, a stock certificate (or certificates) representing the number of Shares
of Restricted Stock granted to the Participant shall be registered in the
Participant's name and shall be held in custody by the Company or a bank
selected by the Committee for the Participant's account. Following such
registration, the Participant shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to receive
dividends, if and when declared by the Board of Directors, and to vote such
Restricted Stock, except that the right to receive cash dividends shall be the
right to receive such dividends either in cash currently or by payment in
Restricted Stock, as the Committee shall determine, and except further that, the
following restrictions shall apply:
(a) The Participant shall not be entitled to delivery of
a certificate until the expiration or termination of
the Restricted Period for the Shares represented by
such certificate and the satisfaction of any and all
other conditions prescribed by the Committee;
(b) None of the Shares of Restricted Stock may be sold,
transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted
Period and until the satisfaction of any and all
other conditions prescribed by the Committee; and
(c) All of the Shares of Restricted Stock that have not
vested shall be forfeited and all rights of the
Participant to such Shares of Restricted Stock shall
terminate without further obligation on the part of
the Company, unless the Participant has remained an
employee of (or non-Employee Director of or active
consultant providing services to) the Company or any
of its Subsidiaries, until the expiration or
termination of the Restricted Period and the
satisfaction of any and all other conditions
prescribed by the Committee applicable to such Shares
of Restricted Stock. Upon the forfeiture of any
Shares of Restricted Stock, such forfeited Shares
shall be transferred to the Company without further
action by the Participant and shall, in accordance
with Section 4.2, again be available for grant under
the Plan. If the Participant paid any amount for the
Shares of Restricted Stock that are forfeited, the
Company shall pay the Participant the lesser of the
Fair Market Value of the Shares on the date they are
forfeited or the amount paid by the Participant.
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With respect to any Shares received as a result of adjustments under
Section 4.3 hereof and any Shares received with respect to cash dividends
declared on Restricted Stock, the Participant shall have the same rights and
privileges, and be subject to the same restrictions, as are set forth in this
Article 8.
8.4 DELIVERY OF UNRESTRICTED SHARES. Upon the expiration or termination
of the Restricted Period for any Shares of Restricted Stock and the satisfaction
of any and all other conditions prescribed by the Committee, the restrictions
applicable to such Shares of Restricted Stock shall lapse and a stock
certificate for the number of Shares of Restricted Stock with respect to which
the restrictions have lapsed shall be delivered, free of all such restrictions
except any that may be imposed by law, a shareholders' agreement or any other
agreement, to the holder of the Restricted Stock. The Company shall not be
required to deliver any fractional Share but will pay, in lieu thereof, the Fair
Market Value (determined as of the date the restrictions lapse) of such
fractional Share to the holder thereof. Concurrently with the delivery of a
certificate for Restricted Stock, the holder shall be required to pay an amount
necessary to satisfy any applicable federal, state and local tax requirements as
set out in Article 16 below.
8.5 NONASSIGNABILITY OF RESTRICTED STOCK. Unless the Committee provides
otherwise in the Agreement, no grant of, nor any right or interest of a
Participant in or to, any Restricted Stock, or in any instrument evidencing any
grant of Restricted Stock under the Plan, may be assigned, encumbered or
transferred except, in the event of the death of a Participant, by will or the
laws of descent and distribution.
ARTICLE 9. PERFORMANCE SHARE AWARDS
9.1 AWARD. The Committee may designate Participants to whom Performance
Share Awards will be granted from time to time for no consideration and specify
the number of shares of Common Stock covered by the Award.
9.2 EARNING THE AWARD. A Performance Share Award, or portion thereof,
will be earned, and the Participant will be entitled to receive Common Stock, a
cash payment or a combination thereof, only upon the achievement by the
Participant, the Company, or a Subsidiary of such performance objectives as the
Committee, in its discretion, shall prescribe on the date of grant.
The Committee may in determining whether performance targets have been
met adjust the Company's financial results to exclude the effect of unusual
charges or income items or other events, including acquisitions or dispositions
of businesses or assets, restructurings, reductions in force, currency
fluctuations or changes in accounting, which are distortive of financial results
(either on a segment or consolidated basis). In addition, the Committee will
adjust its calculations to exclude the effect on financial results of changes in
the Code or other tax laws, or the regulations relating thereto.
9.3 PAYMENT. In the discretion of the Committee, the amount payable
when a Performance Share Award is earned may be settled in cash, by the grant of
Common Stock or a combination of cash and Common Stock. The aggregate Fair
Market Value of the Common Stock received by the Participant pursuant to a
Performance Share Award, together with any cash paid to the Participant, shall
be equal to the aggregate Fair Market Value, on the date the Performance Shares
are earned, of the number of Shares of Common Stock equal to each Performance
Share earned. A fractional Share will not be deliverable when a Performance
Share Award is earned, but a cash payment will be made in lieu thereof.
9.4 SHAREHOLDER RIGHTS. No Participant shall have, as a result of
receiving a Performance Share Award, any rights as a shareholder until and to
the extent that the Performance Shares are earned and Common Stock is
transferred to such Participant. If the Agreement so provides, a Participant may
receive a cash payment equal to the dividends that would have been payable with
respect to the number of Shares of Common Stock covered by the Award between (a)
the date that the Performance Shares are awarded and (b) the date that a
transfer of Common Stock to the Participant, cash settlement, or combination
thereof is made pursuant to the Performance Share Award. A Participant may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of a
Performance Share Award or the right to receive Common Stock thereunder other
than by will or the laws of descent and distribution. After a Performance Share
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Award is earned and paid in Common Stock, a Participant will have all the rights
of a shareholder with respect to the Common Stock so awarded; provided that the
restrictions of Section 19.4 or any shareholders' agreement or other agreement
shall, if applicable, continue to apply.
ARTICLE 10. BENEFICIARY DESIGNATION
To the extent applicable, each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant, in writing, with the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate. If required, the spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of a beneficiary
or beneficiaries other than the spouse.
ARTICLE 11. DEFERRALS
The Committee may permit a Participant to defer to another plan or
program such Participant's receipt of Shares or cash that would otherwise be due
to such Participant by virtue of the exercise of an Option, the vesting of
Restricted Stock, or the earning of a Performance Share Award. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company or a Subsidiary to terminate any Participant's
employment by, or performance of services for, the Company at any time, nor
confer upon any Participant any right to continue in the employ or service of
the Company or a Subsidiary. For purposes of the Plan, transfer of employment of
a Participant between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment.
12.2 PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
13.1 DEFINITION. For purposes of the Plan, a "Change in Control"
means any of the following events:
(a) The acquisition (other than from the Company) by any
Person of Beneficial Ownership of twenty percent
(20%) or more of the combined voting power of the
Company's then outstanding voting securities;
provided, however, that for purposes of this Section
13.1, Person shall not include any person who on the
date hereof owns ten percent (10%) or more of the
Company's outstanding securities, and a Change in
Control shall not be deemed to occur solely because
twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities is
acquired by (i) a trustee or other fiduciary holding
securities under one (1) or more employee benefit
plans maintained by the Company or any of its
subsidiaries, or (ii) any corporation, which,
immediately prior to such acquisition, is owned
directly or indirectly by the shareholders of the
Company in the same proportion as their ownership of
stock in the Company immediately prior to such
acquisition.
(b) Approval by shareholders of the Company of (1) a
merger or consolidation involving the Company if the
shareholders of the Company, immediately before such
merger or consolidation do not, as a result of such
merger or consolidation, own, directly or indirectly,
more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of
the corporation resulting from such merger or
consolidation in substantially the same proportion as
their ownership of the combined voting power of the
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voting securities of the Company outstanding
immediately before such merger or consolidation, or
(2) a complete liquidation or dissolution of the
Company or an agreement for the sale or other
disposition of all or substantially all of the assets
of the Company.
(c) A change in the composition of the Board such that
the individuals who, as of the Effective Date,
constitute the Board (such Board shall be hereinafter
referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the
Board; provided, however, for purposes of this
Section 13.1 that any individual who becomes a member
of the Board subsequent to the Effective Date whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of those individuals who are members of the
Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a
member of the Incumbent Board; but, provided,
further, that any such individual whose initial
assumption of office occurs as a result of either an
actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act, including any successor to
such Rule), or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board, shall not be so
considered as a member of the Incumbent Board.
13.2 LIMITATION ON AWARDS. Notwithstanding any other provisions of the
Plan and unless provided otherwise in the Agreement, if the right to receive or
benefit from any Award under this Plan, either alone or together with payments
that a Participant has the right to receive from the Company or a Subsidiary,
would constitute a "parachute payment" (as defined in Section 280G of the Code),
all such payments shall be reduced to the largest amount that will result in no
portion being subject to the excise tax imposed by Section 4999 of the Code.
ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION
14.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may, at any
time and from time to time, alter, amend, suspend or terminate the Plan in whole
or in part; provided, that, unless approved by the holders of a majority of the
total number of Shares of the Company represented and voted at a meeting at
which a quorum is present, no amendment shall be made to the Plan if such
amendment would (a) materially modify the eligibility requirements provided in
Article 5; (b) increase the manner in which the total number of Shares which may
be granted under the Plan is determined (except as provided in Section 4.3); (c)
extend the term of the Plan; or (d) amend the Plan in any other manner which the
Board, in its discretion, determines should become effective only if approved by
the shareholders even if such shareholder approval is not expressly required by
the Plan or by law.
14.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award. The Committee shall, with the written consent of
the Participant holding such Award, have the authority to cancel Awards
outstanding and grant replacement Awards therefor.
14.3 COMPLIANCE WITH CODE SECTION 162(M). At all times when the
Committee determines that compliance with Code Section 162(m) is required or
desired, all Awards granted under this Plan to Named Executive Officers shall
comply with the requirements of Code Section 162(m). In addition, in the event
that changes are made to Code Section 162(m) to permit greater flexibility with
respect to any Award or Awards under the Plan, the Committee may, subject to
this Article 14, make any adjustments it deem appropriate.
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ARTICLE 15. CANCELLATION AND RESCISSION OF AWARDS
The Committee may provide in the Award Agreement that if, at any time
during the period that any Award is or may yet become exercisable in whole or in
part, or at any time within six (6) months prior to, or after, the termination
of employment with the Company, a Participant engages in any "Detrimental
Activity" (as defined below), the Committee may, notwithstanding any other
provision in this Plan to the contrary, cancel, rescind, suspend, withhold or
otherwise restrict or limit any unexpired, unpaid or deferred Award as of the
first date the Participant engages in the Detrimental Activity, unless sooner
terminated by operation of another term of this Plan or any other agreement.
Without limiting the generality of the foregoing, the Agreement may provide that
the Participant shall also pay to the Company any gain realized by the
Participant from exercising all or any portion of the Awards hereunder during a
period beginning six (6) months prior to, or after, the date on which the
Participant enters into such activity.
For purposes of this Agreement, "Detrimental Activity" shall mean to
include any of the following: (i) engaging in any commercial activity in
competition with any part of the business of the Company; (ii) diverting or
attempting to divert from the Company business of any kind, including, without
limitation, interference with any business relationship with suppliers,
customers, licensees, licensors or contractors; (iii) making, or causing or
attempting to cause any other person to make, any statement, either written or
oral, or conveying any information about the Company which is disparaging or
which in any way reflects negatively upon the Company; (iv) engaging in any
other activity that is inimical, contrary or harmful to the interests of the
Company, including influencing or advising any person who is employed by or in
the service of the Company to leave such employment or service to compete with
the Company or to enter into the employment or service of any actual or
prospective competitor of the Company, or influencing or advising any competitor
of the Company to employ or to otherwise engage the services of any person who
is employed by the Company or in the service of the Company, or improperly
disclosing or otherwise misusing any confidential information regarding the
Company; or (v) the refusal or failure of a Participant to provide, upon the
request of the Company, a certification, in a form satisfactory to the Company,
that he or she is in full compliance with the terms and conditions of the Plan;
provided, that the Committee may provide in the Agreement that only certain of
the restrictions provided above apply for purposes of the Award Agreement.
Should any provision to this Article 15 be held to be invalid or
illegal, such illegality shall not invalidate the whole of this Article 15, but,
rather, the Plan shall be construed as if it did not contain the illegal part or
narrowed to permit its enforcement, and the rights and obligations of the
parties shall be construed and enforced accordingly.
ARTICLE 16. WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising in connection with an Award under this Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options, or upon any other taxable event arising as a result of
Awards granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All elections shall be irrevocable, made in writing, signed by the Participant,
and elections by Insiders shall additionally comply with all legal requirements
applicable to Share transactions by such Participants.
ARTICLE 17. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
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or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall be in addition to
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 18. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 19. LEGAL CONSTRUCTION
19.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein shall also include the feminine; the
plural shall include the singular and the singular shall include the plural.
19.2 SEVERABILITY. If any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
19.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
19.4 REGULATORY APPROVALS AND LISTING. The Company shall not be
required to issue any certificate or certificates for Shares under the Plan
prior to (i) obtaining any approval from any governmental agency which the
Company shall, in its discretion, determine to be necessary or advisable, (ii)
the admission of such shares to listing on any national securities exchange or
Nasdaq on which the Company's Shares may be listed, and (iii) the completion of
any registration or other qualification of such Shares under any state or
federal law or ruling or regulation of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or advisable.
To the extent applicable, if required by the then-current Section 16 of
the Exchange Act, any "derivative security" or "equity security" offered
pursuant to the Plan to any Insider may not be sold or transferred for at least
six (6) months after the date of grant of such Award. The terms "equity
security" and "derivative security" shall have the meanings ascribed to them in
the then-current Rule 16(a) under the Exchange Act.
19.5 SECURITIES LAW COMPLIANCE. To the extent applicable, with respect
to Insiders, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provisions of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
19.6 GOVERNING LAW. To the extent not preempted by Federal law,
the Plan, and all agreements hereunder, shall be construed in accordance with
and governed by the laws of the State of Georgia.
AS APPROVED BY THE BOARD OF DIRECTORS OF UNITED COMMUNITY BANKS, INC.
ON DECEMBER 8, 1999.
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APPENDIX B
"The corporation shall have authority to issue 50,000,000 shares of
common stock, $1.00 par value (the "Common Stock") and 10,000,000
shares of preferred stock, $1.00 par value (the "Preferred Stock").
Subject to the provisions of any applicable law or the Bylaws of the
corporation (as from time to time amended) with respect to fixing the
record date for the determination of shareholders entitled to vote, and
except as otherwise provided by any applicable law or the by the
resolution or resolutions of the Board of Directors providing for the
issue of any series of Preferred Stock, the holders of the Common Stock
shall have and possess exclusive voting power and rights for the
election of directors and for all other purposes, with each share being
entitled to one vote."
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