Registration No. 333-__________
As filed with the Securities and Exchange Commission on March 31, 2000
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-3
Registration Statement
under
the Securities Act of 1933
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UNITED COMMUNITY BANKS, INC.
(Exact name of Registrant as specified in its charter)
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<TABLE>
<CAPTION>
<S> <C> <C>
Georgia 6712 58-1807304
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
Post Office Box 398
63 Highway 515
Blairsville, Georgia 30512
(706) 745-2151
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mr. Christopher J. Bledsoe
Chief Financial Officer
United Community Banks, Inc.
Post Office Box 398
63 Highway 515
Blairsville, Georgia 30512
(706) 745-2151
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
F. Sheffield Hale, Esq.
Kilpatrick Stockton LLP
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309
(404) 815-6500
Approximate date of commencement of the proposed sale to the public: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are being
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434 please check the following box. / /
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Proposed Proposed Amount
Title of Each Class of Proposed Maximum Minimum Maximum of
Securities to be Amount to be Offering Price Aggregate Aggregate Registration
Registered Registered <F1> Per Share Offering Price Offering Price Fee
- ----------------------- ----------------- ----------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Common stock, par 450,000 $38.00 $13,300,000 $17,100,000 $4,514.40
value $1.00 per share
======================= ================= ================= ================= ================== ===================
<FN>
<F1> Estimated solely for the purpose of computing the registration fee
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
UNITED COMMUNITY BANKS, INC.
A Minimum of 350,000 Shares and a Maximum of 450,000 Shares of Common Stock
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United Community Banks, Inc. hereby offers for sale a minimum of
350,000 shares and a maximum of 450,000 shares of our common stock at a price of
$38.00 per share. In the State of Georgia, the common stock offered hereby will
be sold by certain of our executive officers, and no commissions will be paid on
such sales. To comply with securities requirements of the State of North
Carolina, we have engaged Wachovia Securities, Inc. to act as a broker-dealer
for our account in effecting offers and sales of our common stock to investors
in North Carolina. Wachovia Securities will receive a fee of $40,000 for these
services. Subscription proceeds for 350,000 shares must be deposited in an
interest bearing account with SunTrust Bank by the date that is 30 days from the
date of this prospectus unless extended to the date that is up to 90 days from
the date of this prospectus, or the offering will terminate and subscription
funds will be returned to subscribers.
The shares of common stock are being offered first to existing
shareholders for a period commencing on the date of this prospectus and ending
on the close of business on ____________, 2000. Thereafter, the common stock
offered hereby that has not been subscribed will be offered to members of the
general public who are residents of the States of Georgia, North Carolina, and
Tennessee and to existing shareholders. See "The Offering."
Our common stock is not traded on the Nasdaq National Market System or
any national securities exchange; therefore, there is no established public
market for the common stock. The offering price of $38.00 per share of common
stock was determined by our Board of Directors. For information relating to the
factors considered in determining the offering price to the public, see
"Determination of Offering Price."
----------
See "Risk Factors" for a discussion of certain factors
that should be considered in connection with an investment in
the securities offered hereby.
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These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission, nor has
the Securities and Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
----------
The securities offered hereby are not savings or deposit accounts or
other obligations of a bank, and they are not insured by the Bank Insurance Fund
of the Federal Deposit Insurance Corporation or any other government agency.
<TABLE>
<CAPTION>
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Price to Public Underwriting Discounts and Proceeds to United <F1>
Commissions
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share of Common Stock...................... $38.00 <F2> $38.00
Minimum........................................ Not applicable <F2> $13,260,000
Maximum........................................ Not applicable <F2> $17,060,000
==================================================================================================================================
<F1> Before deducting expenses payable by us, estimated at $80,250 but
including the $40,000 payable to Wachovia as provided in footnote 2.
<F2> Wachovia Securities, Inc. will receive a fee of $40,000 for effecting
sales of common stock on our behalf in the State of North Carolina.
</TABLE>
The date of this prospectus is ________, 2000.
<PAGE>
Prospectus Summary
The following summary is qualified in its entirety by the more detailed
information and financial statements, and the notes related thereto, appearing
elsewhere in this prospectus.
The Company
United Community Banks, Inc. is a registered bank holding company based in
Blairsville, Georgia, which commenced operations in 1988 by acquiring 100% of
the outstanding stock of Union County Bank, now known as United Community Bank.
All of our activities are currently conducted by our wholly-owned subsidiaries:
o United Community Bank, Blairsville, Georgia, organized in
1950;
o Carolina Community Bank, Murphy, North Carolina, acquired in
1990
o Peoples Bank, Blue Ridge, Georgia, acquired in 1992;
o Towns County Bank, Hiawassee, Georgia, acquired in 1992;
o White County Bank, Cleveland, Georgia, acquired in 1995;
o First Clayton Bank and Trust, Clayton, Georgia, acquired in
1997;
o Bank of Adairsville, Adairsville, Georgia, acquired in 1999;
and
o 1st Floyd Bank, Rome, Georgia, acquired in 1999.
We operate two consumer finance companies: United Family Finance Co.,
which operates two offices in Georgia, and United Family Finance Co. of North
Carolina, which operates two offices in North Carolina. The Mortgage People
Company, a division of United Community Bank, is a full-service retail mortgage
lending operation approved as a seller/servicer for Federal National Mortgage
Association and Federal Home Mortgage Corporation. In addition, we own an
insurance agency, United Agencies, Inc.
At December 31, 1999, we had total consolidated assets of approximately
$2.1 billion, total loans of approximately $1.4 billion, total deposits of
approximately $1.6 billion, and shareholders' equity of approximately $96.3
million.
Recent Developments
On March 3, 2000, we entered into an agreement to acquire North Point
Bancshares, Inc., Dawsonville, Georgia, in exchange for 958,211 shares of our
common stock. As of December 31, 1999, North Point had $106.5 million in total
consolidated assets, $96.6 million of total deposits, and $9.2 million of total
shareholders' equity.
On March 3, 2000, we entered into an agreement to acquire Independent
Bancshares, Inc., Powder Springs, Georgia, in exchange for 870,598 shares of our
common stock. As of December 31, 1999, Independent had $145.1 million in total
assets, $______ million of total deposits, and $13.1 million of total
shareholders' equity.
At our shareholders' meeting to be held in the second quarter of 2000, our
shareholders will be asked to approve an increase in our authorized common stock
from 10,000,000 shares to 50,000,000 shares to provide sufficient shares to
issue in the North Point and Independent acquisitions. The closings of these
acquisitions are conditioned upon our shareholders' approval of the increase in
common stock. We have sufficient shares of common stock currently available to
issue to subscribers in this offering.
Our executive offices are located at 63 Highway 515, Blairsville, Georgia
30512, and our telephone number is (706) 745-2151.
<PAGE>
The Offering
Common Stock
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<CAPTION>
<S> <C>
Common stock offered.................................... A minimum of 350,000 shares and a maximum of
450,000 shares.
Common stock deemed outstanding before the
offering .......................................... 8,429,090 shares as of March 1, 2000, including
140,000 shares deemed outstanding pursuant to our
debentures that are due December 31, 2006, and
presently exercisable options to acquire 254,822
shares issued pursuant to the our stock option
plan.
Common stock deemed outstanding after the
offering........................................... 8,879,090 shares (including shares underlying the
outstanding debentures and options and assuming
that 450,000 shares are sold in this offering).
Use of Proceeds............................................ To provide capital for our subsidiary banks and
for other corporate purposes. See "Use of
Proceeds."
How to Subscribe........................................... See page 7 for instructions on subscribing for
common stock.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
United Community Banks, Inc.
Summary Consolidated Financial Information
(In thousands, except per share data)
December 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total assets ................................. $2,131,440 $1,591,399 $1,216,693 $926,844 $738,651
Loans, gross ................................. 1,400,360 1,061,165 872,499 662,245 489,260
Deposits ..................................... 1,649,392 1,238,323 1,033,756 809,149 660,146
Trust preferred securities ................... 21,000 21,000 0 0 0
Convertible subordinated debentures .......... 3,500 3,500 3,500 3,500 3,500
Long term debt ............................... 222,255 143,771 31,575 33,515 15,810
Stockholders' equity ......................... $ 96,270 93,836 80,086 62,357 53,126
Income Statement Data
Net interest income .......................... $ 67,974 56,210 45,718 35,461 26,076
Provision for loan losses .................... 5,104 2,612 2,814 1,751 1,128
Non-interest income .......................... 10,836 9,129 7,200 5,866 4,698
Non-interest expense ......................... 54,165 43,964 34,063 26,341 20,165
Income taxes ................................. 5,893 5,990 4,987 4,180 2,634
Net income ................................... $ 13,648 12,773 11,054 9,055 6,847
Per Share Data
Book value<F1>................................ $ 11.98 11.72 10.15 8.21 7.13
Basic net income ............................. 1.70 1.60 1.42 1.22 0.99
Diluted net income ........................... 1.66 1.57 1.40 1.20 0.97
Cash dividends declared ...................... $ 0.20 0.15 0.10 0.10 0.08
Weighted average outstanding shares .......... 8,020 7,973 7,810 7,399 6,919
Ratios
Return on average assets ..................... 0.72% 0.94% 1.03% 1.11% 1.08%
Return on average stockholders' equity ....... 14.33% 14.84% 15.54% 15.64% 15.06%
Net interest margin, taxable equivalent ...... 3.98% 4.60% 4.66% 4.86% 4.65%
Average stockholders' equity to average assets 5.02% 6.35% 6.60% 7.08% 7.20%
Excluding merger-related charges<F2>
Net income ................................... $ 14,803 12,773 11,054 9,055 6,847
Basic net income per share ................... 1.85 1.60 1.42 1.22 0.99
Diluted net income per share.................. $ 1.80 1.57 1.40 1.20 0.97
Return on average assets ..................... 0.78% 0.94% 1.03% 1.11% 1.08%
Return on average stockholders' equity ....... 15.54% 14.84% 15.54% 15.64% 15.06%
- --------------
<FN>
<F1> Represents shareholders' equity divided by the number of outstanding shares
at period end.
<F2> Amounts and ratios exclude the impact of merger-related charges recorded in
1999 totaling $1.2 million, net of tax, in connection with the merger of United
Community Banks, Inc. and 1st Floyd Bankshares, Inc.
</FN>
</TABLE>
3
<PAGE>
Risk Factors
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE
PURCHASING ANY OF THE SECURITIES OFFERED HEREBY.
ARBITRARILY DETERMINED PUBLIC OFFERING PRICE MAY BE HIGHER THAN THE MARKET PRICE
OF THE COMMON STOCK AFTER THE OFFERING
You may not be able to resell the common stock for the offering price
or for any other amount because we arbitrarily determined the offering price.
Our common stock is not traded on the Nasdaq Stock Market or a national
securities exchange; therefore, we could not set the public offering price with
reference to historical measures of our common stock's price performance in an
active trading market. We did not retain an independent investment banking firm
to assist in determining the offering price.
Please note that these securities are not bank accounts or deposits nor
are they insured by the FDIC or any other state or federal agency.
An active trading market may not develop
Your purchase of our common stock may not be a liquid investment
because no public trading market currently exists for our common stock. We are
currently considering listing our stock on the Nasdaq Stock Market. There can be
no assurance as to when, if ever, the stock will be listed. You should consider
carefully the limited liquidity of your investment before purchasing any shares
of our common stock. Wachovia Securities has not undertaken to, and will not,
make a market in our common stock following the offering and we are not aware of
anyone who intends to make a market in our common stock. Factors such as the
limited size of the offering and the fact that our common stock will not be
listed mean that an active and liquid market for our common stock probably will
not develop in the near future. If a trading market does develop, it may not
continue and you may not be able to sell your shares at or above the price at
which these shares are being offered to the public.
The shares of common stock offered hereby will not be subject to any
specific restrictions on transfer (with the exception of securities purchased by
our directors, officers, and other affiliates) and will be freely transferable
immediately upon issuance.
Changes in interest rates may adversely affect our business
Changes in net interest income. Our profitability is significantly
-------------------------------
dependent on net interest income. Net interest income is the difference between
interest income on interest-earning assets, such as loans, and interest expense
on interest-bearing liabilities, such as deposits. Therefore, any change in
general market interest rates, whether as a result of changes in monetary
policies of the Federal Reserve Board or otherwise, can have a significant
effect on net interest income. Our assets and liabilities may react differently
to changes in overall market rates or conditions because there may be mismatches
between the repricing or maturity characteristic of assets and liabilities. As a
result, changes in interest rates can affect net interest income in either a
positive or negative way.
4
<PAGE>
Changes in the yield curve. Changes in the difference between short and
long-term interest rates, commonly known as the yield curve, may also harm our
business. For example, short-term deposits may be used to fund longer-term
loans. When differences between short-term and long-term interest rates shrink
or disappear, the spread between rates paid on deposits and received on loans
could narrow significantly, decreasing our net interest income.
Forward-Looking Statements
This prospectus contains statements about future events and
expectations which are characterized as forward-looking statements.
Forward-looking statements are based on management's beliefs, assumptions, and
expectations of our future economic performance, taking into account the
information currently available to them. These statements are not statements of
historical fact. Forward-looking statements involve risks and uncertainties that
may cause our actual results, performance, or financial condition to differ
materially from the expectations of future results, performance, or financial
condition we express or imply in any forward-looking statements. Factors that
could contribute to these differences include those discussed in "Risk Factors"
and in other sections of this prospectus. The words believe, may, will, should,
anticipate, estimate, expect, intend, objective, seek, strive, or similar words,
or the negatives of these words, identify forward-looking statements. We qualify
any forward-looking statements entirely by these cautionary factors.
The Offering
We are offering for sale to the public a minimum of 350,000 shares and
a maximum of 450,000 shares of common stock at a price of $38.00 per share. In
the States of Georgia and Tennessee, the common stock offered hereby will be
sold by certain of our executive officers, and no commission will be paid on
such sales. To comply with securities requirements of the State of North
Carolina, we have engaged Wachovia Securities, Inc., pursuant to the terms of a
broker-dealer agreement dated March 31, 2000, to act as a broker-dealer for our
account in effecting offers and sales of the common stock to investors in North
Carolina at the public offering price. Wachovia Securities has no obligation to
purchase any of the common stock. At the closing of the offering, Wachovia
Securities will receive a fee of $40,000 for its services. Whether or not the
offering is completed, we will a;sp reo,birse Wachovia Securities for its
reasonable fees and expenses. We will indemnify Wachovia against certain
liabilities, including civil liabilities under the Securities Act.
A minimum of 350,000 shares must be sold in the offering, or it will be
terminated. The offering will terminate on the date that is 30 days from the
date of this prospectus, subject to termination at an earlier date upon
acceptance of subscriptions for all of the securities offered hereby or to
extension for an additional period or periods up to 90 days from the date of
this prospectus at our sole discretion. On the offering termination date,
subscription funds will be returned to subscribers if 350,000 shares have not
been subscribed, and we will receive all interest earned on any funds held by
SunTrust Bank as escrow agent. Our officers will receive no compensation for
selling the shares of common stock, but they will be reimbursed for reasonable
expenses incurred by them in connection with the offering, such as travel,
telephone, and similar expenses. Our affiliates who purchase shares in the
offering have committed to purchase those shares for investment purposes.
5
<PAGE>
How To Subscribe
The shares of common stock offered hereby will be first offered to
current holders of our common stock in proportion to the amount of common stock
owned by each on the date of this prospectus. No later than the close of
business on May __, 2000, our current shareholders who wish to subscribe for
shares of common stock must submit a subscription agreement, attached as Exhibit
A to this prospectus, and a check made payable to SunTrust Bank as escrow agent
in the amount of the purchase price for the shares of common stock they wish to
purchase. The subscription funds will be held in escrow at SunTrust Bank pending
sale of a total of 350,000 shares. The number of shares of common stock
initially subscribed for by each shareholder may not exceed an amount which is
the same percentage of the maximum amount of shares of common stock being
offered hereby, 450,000, as the percentage of outstanding common stock held by
the shareholder on the date of this prospectus (0.056 shares for each 1 share of
common stock owned by the current shareholders rounded to the nearest whole
share). Thereafter, we will offer that number of shares of common stock not
subscribed for by current shareholders and accepted by us to members of the
public who are residents of the States of Georgia, North Carolina, and Tennessee
who may subscribe for blocks of whole shares of common stock consisting of at
least 100 shares (unless otherwise agreed to by us).
Persons who wish to subscribe for shares of common stock must, prior to
the termination of the offering:
6
<PAGE>
(1) Complete the appropriate portions of and sign the
subscription agreement that is attached to this prospectus as
Exhibit A to subscribe for at least 100 shares of common
stock;
(2) Make full payment of the aggregate purchase price for the
shares subscribed in United States currency by check, bank
draft, or money order payable to "SunTrust Bank, as Escrow
Agent for United Community Banks, Inc."; and
(3) Deliver the subscription agreement together with a check
for full payment of the purchase price, to United Community
Banks, Inc., Post Office Box 398, Blairsville, Georgia 30514,
Attention: Lois Rich.
Subscriptions are not binding until accepted by us. We reserve the
right to accept or reject subscriptions, in whole or in part, or to cancel the
offering, in our sole discretion. All subscription payments received by us for
the first 350,000 shares subscribed will be deposited in an interest-bearing
escrow account at SunTrust Bank. If subscription funds for 350,000 shares are
not received by the offering termination date, all subscription funds will be
returned promptly to investors. Once subscription funds for 350,000 shares have
been received and placed in the escrow account, such proceeds and any interest
earned thereon will be made available to us, as will the proceeds of any
subsequent sales of shares.
Certificates representing the common stock purchased in the offering
will be issued by us and mailed to subscribers as soon as practicable after
acceptance of subscriptions. Rejected subscription payments will be returned to
subscribers by mail, as soon as possible, but in no event later than 30 days
after the occurrence of such rejection.
Determination of Offering Price
We determined the offering price for the common stock in light of
factors such as recent sales of the common stock and our earnings during the
year ended December 31, 1999, as well as our prospective earnings, an assessment
of our management, the nature of our assets and liabilities, our future
prospects and those of the banking industry in general, area and national
economic conditions, interest rate environment, market prices of and demand for
securities of institutions engaged in activities similar to our activities, and
a comparison of prices of securities of other financial institutions to their
earnings and book values.
No assurance can be given that investors in the offering will be able
to resell their shares of common stock at a price equal to or greater than the
offering price set forth on the cover page of this prospectus or that such price
necessarily indicates the fair market value of the common stock.
Market For and Price Range of Common Stock
Since we began operations as a holding company in 1988, there has been
no established market for our common stock. As of March 1, 2000, 8,429,090
shares of common stock were issued and outstanding, including 140,000 shares
deemed outstanding pursuant to outstanding debentures and presently exercisable
options to acquire 254,822 shares.
7
<PAGE>
We are aware of approximately 118 sales of common stock in 2000 as of
March 1, aggregating approximately 17,533 shares in blocks ranging from 1 to
1,000 shares at prices ranging from $40.00 per share to $50.00 per share. We are
aware of approximately 551 sales of common stock in 1999, aggregating
approximately 168,000 shares in blocks ranging from one share to 4,136 shares at
prices ranging from $35.00 per share to $55.00 per share, and of approximately
435 sales of common stock in 1998, aggregating approximately 170,000 shares in
blocks ranging from one share to 4,000 shares at prices ranging from $25.00 per
share to $50.00 per share. At December 31, 1999, there were 3,530 holders of
record of common stock.
It is not expected that any active public market for the common stock
will develop as a result of the completion of the offering or otherwise.
Use of Proceeds
The net proceeds from the sale of the shares of common stock offered
hereby are estimated to be $17 million after the deduction of estimated offering
expenses, assuming the entire amount of common stock offered for sale hereby is
subscribed. We intend to use these proceeds to provide capital for our
subsidiary banks and for other corporate purposes including reduction of our
debt.
Capitalization
The following table sets forth our consolidated capitalization at
December 31, 1999, and as adjusted at that date to give effect to the sale of
350,000 and 450,000 shares of common stock and the application of the estimated
resulting net proceeds as described in "Use of Proceeds." This table should be
reviewed in conjunction with our Consolidated Financial Statements and the
related notes thereto appearing elsewhere in this prospectus.
8
<PAGE>
<TABLE>
<CAPTION>
December 31, 1999
Dollars in thousands
Actual 350,000 Shares 450,000 Shares
As Adjusted<F1> As Adjusted<F1>
-------------- ------------------- -----------------
<S> <C> <C> <C>
Long-Term Debt $222,255 $222,255 $222,255
Convertible Subordinated Debentures 3,500 3,500 3,500
Guaranteed preferred beneficial interests in Company's junior 21,000 21,000 21,000
subordinated debentures (Trust Preferred Securities)
Stockholders' Equity:
Preferred Stock, $1.00 par value; 10,000,000 shares - - -
authorized, no shares issued and outstanding
Common stock, $1.00 par value; 10,000,000 shares 8,034 8,384 8,484
authorized, 8,034,268 shares issued and outstanding,
8,384,268 and 8,484,268 shares issued and outstanding, as
adjusted for the 350,000 and 450,000 shares offered hereby
Capital surplus 30,310 43,140 46,840
Retained earnings 66,606 66,606 66,606
Accumulated other comprehensive income (loss) (8,680) (8,680) (8,680)
-------------- ------------------- -----------------
Total stockholders' equity 96,270 109,450 113,250
-------------- ------------------- -----------------
Total capitalization $343,025 $356,205 $360,005
============== =================== =================
- -------------------------
<FN>
<F1>Gives effect to the application of the net proceeds of the offering.
</FN>
</TABLE>
Dividends
We paid cash dividends of $0.20 per share of common stock to
shareholders of record in 1999 and $0.15 per share of common stock to
shareholders of record in 1998. On April 1, 2000, we will pay a dividend of
$0.075 per share. We presently intend to continue paying cash dividends on a
quarterly basis on our common stock.
The amount and frequency of dividends will be determined by our Board
of Directors in light of our earnings, capital requirements, and financial
condition, and no assurance can be given that dividends on our common stock will
be declared in the future. Further, our ability to pay cash dividends on the
common stock will be dependent on cash dividends paid to us by our bank
subsidiaries. The ability of our bank subsidiaries to pay dividends to us is
restricted by applicable regulatory requirements.
9
<PAGE>
Business
General
We were incorporated under the laws of Georgia in 1987 and commenced
operations in 1988 by acquiring 100% of the outstanding shares of Union County
Bank, now known as United Community Bank. We are a bank holding company
registered under the Bank Holding Company Act of 1956. All of our activities are
currently conducted by our wholly-owned subsidiaries:
o United Community Bank, organized as a Georgia banking
corporation in 1950;
o Carolina Community Bank, Murphy, North Carolina, acquired in
1990;
o Peoples Bank of Fannin County, Blue Ridge, Georgia, acquired
in 1992;
o Towns County Bank, Hiawassee, Georgia, acquired in 1992;
o White County Bank, Cleveland, Georgia, acquired in 1995;
o First Clayton Bank and Trust, Clayton, Georgia, acquired in
1997;
o Bank of Adairsville, Adairsville, Georgia, acquired in 1999;
and
o 1st Floyd Bank, Rome, Georgia, acquired in 1999.
Our banks are community-oriented and offer a full range of retail and
corporate banking services, including checking, savings, and time deposit
accounts, secured and unsecured loans, wire transfers, trust services, and
rental of safe deposit boxes. As of December 31, 1999, our banks operated a
total of 34 locations. To emphasize the commitment to community banking, both
United Community Bank and Peoples Bank of Fannin County operate offices under
trade names that are closely identified with the communities in which they are
located. United Community Bank operates two offices in Union County under the
trade name "Union County Bank," two offices in Lumpkin County, Georgia, under
the trade name "United Community Bank of Lumpkin County," two offices in
Habersham County, Georgia, under the trade name "First Bank of Habersham," and
one office in Hall County, Georgia, under the trade name "United Community Bank
of Hall County." Peoples Bank of Fannin County operates one office in Gilmer
County, Georgia, under the trade name of "United Community Bank of Gilmer
County." The operation of bank offices under trade names is permissible under
current state and federal banking regulations and requires certain customer
disclosures, which both United Community Bank and Peoples Bank of Fannin County
provide.
The Mortgage People Company, a division of United Community Bank, is a
full-service retail mortgage lending operation approved as a seller/servicer for
Federal National Mortgage Association and Federal Home Mortgage Corporation. The
Mortgage People Company was organized to provide fixed and adjustable-rate
mortgages. During 1999, it originated $129 million of residential mortgage loans
for the purchase of homes and to refinance existing mortgage debt, substantially
all of which were sold along with the servicing rights into the secondary market
with no recourse.
We operate two consumer finance companies - United Family Finance Co.,
which operates two offices in Georgia, and United Family Finance Co. of North
Carolina, which operates two offices in North Carolina. In addition, we own an
insurance agency, United Agencies, Inc.
Recent Developments
Pending Acquisitions. On March 3, 2000, we entered into an agreement to
-------------------
acquire North Point Bancshares, Inc. of Dawsonville, Georgia, for 958,211 shares
of our common stock in a transaction that will be accounted for as a pooling of
interests. As of December 31, 1999, North Point had total consolidated assets of
$106.5 million, total liabilities of $97.3 million, and total shareholders'
equity of approximately $9.2 million. The assets included $29.1 million of
10
<PAGE>
investment securities and $61.0 million of loans, net of allowance for loan
losses. Total liabilities included $96.6 million of deposits, of which $17.7
million were non-interest bearing demand deposits and $78.9 million were
interest bearing deposits.
On March 3, 2000, we entered into an agreement to acquire Independent
Bancshares, Inc. of Powder Springs, Georgia, for 870,598 shares of our common
stock in a transaction that will be accounted for as a pooling of interests. As
of December 31, 1999, Independent had $145.1 million of total assets, $132.1
million of total liabilities, and $13.1million of total shareholders' equity.
The assets included $26.1 million of investment securities and $100.5 million of
loans, net of allowance for loan losses. Total liabilities included $123.4
million of deposits, of which $16.6 million were non-interest bearing demand
deposits and $106.8 million were interest bearing deposits.
At our shareholders' meeting to be held in the second quarter of 2000, our
shareholders will be asked to approve an increase in our authorized common stock
from 10,000,000 shares to 50,000,000 shares to provide sufficient shares to
issue in the North Point and Independent acquisitions. The closings of those
acquisitions are conditioned upon our shareholders' approval of the increase in
common stock. There are sufficient shares currently available to issue to
subscribers in this offering.
Services
Our banks are community-oriented, with an emphasis on retail banking,
and offer such customary banking services as customer and commercial checking
accounts, NOW accounts, savings accounts, certificates of deposit, lines of
credit, MasterCard and VISA accounts, money transfers, and trust services. Our
banks finance commercial and consumer transactions, make secured and unsecured
loans, including residential mortgage loans, and provide a variety of other
banking services.
The Mortgage People Company, a division of United Community Bank, is a
full-service mortgage lending operation approved as a seller/servicer for the
Federal National Mortgage Association and the Federal Home Mortgage Corporation
and offers fixed and adjustable-rate mortgages.
United Family Finance Company, is a traditional consumer finance
company. United Family Finance, formerly known as Mountain Mortgage and Loan
Company, is based in Hiawassee, Georgia, and also has been granted a license to
conduct business in Blue Ridge, Georgia. United Family Finance Co. of North
Carolina operates two offices in Murphy and Franklin, North Carolina.
Markets
We conduct banking activities primarily through United Community Bank
in Union, Lumpkin, and Habersham Counties; through Peoples Bank in Fannin
County, Georgia and Polk County, Tennessee; through Towns County Bank in Towns
County, Georgia; through Carolina Community Bank in Cherokee, Macon, Haywood,
Graham, and Clay Counties, North Carolina; through White County Bank in White
County, Georgia; through First Clayton Bank and Trust in Clayton County,
Georgia; through Bank of Adairsville in Adairsville, Georgia; and through 1st
Floyd Bank in Floyd County, Georgia. Mortgage People Company makes mortgage
loans inside the banks' market areas. Customers of our subsidiary banks are
primarily consumers and small businesses.
Deposits
Our banks offer a full range of depository accounts and services to
both consumers and businesses. At December 31, 1999, our deposit base, totaling
approximately $1.6 billion, consisted of approximately $192 million in
non-interest-bearing demand deposits (12% of total deposits), approximately $329
million in interest-bearing demand and money market deposits (20% of total
11
<PAGE>
deposits), approximately $74 million in savings deposits (4% of total deposits),
approximately $743 million in time deposits in amounts less than $100,000 (45%
of total deposits), and approximately $312 million in time deposits of $100,000
or more (19% of total deposits). Certificates of deposit in excess of $100,000
may be more volatile than other deposits because those deposits, to the extent
that they exceed $100,000, are not insured by the FDIC. Our management is of the
opinion that its time deposits of $100,000 or more are customer-relationship
oriented and represent a reasonably stable source of funds. Time deposits of
less than $100,000 include approximately $70 million of "brokered" deposits,
which have an average maturity of less than one year.
Loans
Our banks make both secured and unsecured loans to individuals and
businesses. Secured loans include first and second real estate mortgage loans.
The banks also make direct installment loans to consumers on both a secured and
unsecured basis. At December 31, 1999, the break out of loans by collateral type
is:
(dollar amounts in thousands) Percent of
Amount Total Loans
Secured by real estate:
Residential first liens $ 506,729 36.1%
Residential second liens 27,177 1.9%
Home equity lines of credit 53,191 3.8%
Construction and land development 161,774 11.6%
Non-farm, non-residential 355,269 25.4%
Farmland 16,173 1.2%
Multi-family residential 10,846 0.8%
---------- -------
Total real estate 1,131,159 80.8%
Other Loans:
Commercial and industrial 105,221 7.5%
Agricultural production 9,923 0.7%
States and municipalities 10,101 0.7%
Consumer installment loans 136,983 9.8%
Credit cards and other revolving credit 6,973 0.5%
---------- -------
Total other loans 269,201 19.2%
---------- -------
Total loans $1,400,360 100.0%
========== =======
Specific risk elements associated with each of the banks' lending
categories are as follows:
Commercial, financial, and Industry concentrations, inability to
agricultural monitor the condition of collateral
(inventory, accounts receivable, and
vehicles), lack of borrower management
expertise, increased competition, and
specialized or obsolete equipment as
collateral
Real estate - construction Inadequate collateral and long-term
financing agreements
Real estate - mortgage Changes in local economy and rate limits
on variable rate loans
Installment loans to individuals Loss of borrower's
employment, changes in local economy,
and the inability to monitor collateral
(vehicles, boats, and mobile homes)
13
<PAGE>
Competition
The market for banking and bank-related services is highly competitive.
Our banks actively compete in their respective market areas, which collectively
cover portions of north Georgia and western North Carolina, with other providers
of deposit and credit services. These competitors include other commercial
banks, savings banks, savings and loan associations, credit unions, mortgage
companies, and brokerage firms. The following table displays each of our banks
and the respective percentage of total deposits in each county where each bank
has operations. The table also indicates the ranking by deposit size in each of
the local markets. All information in the table was obtained from the Federal
Deposit Insurance Corporation Summary of Deposits as of June 30, 1999.
United Community Banks, Inc.
Share of Local Market (County)
Banks and Savings Institutions
Market Rank in
Share Market
United Community
Habersham 15% 4
Lumpkin 24% 2
Union 83% 1
Carolina
Cherokee 45% 1
Clay 64% 1
Graham 40% 1
Haywood 7% 6
Henderson 2% 13
Jackson 13% 3
Macon 7% 6
Swain 21% 2
Transylvania 6% 5
Fannin
Fannin 59% 1
Gilmer 17% 3
White
White 50% 1
Towns
Towns 36% 2
First Clayton
Rabun 29% 3
Adairsville
Bartow 7% 7
Floyd
Floyd 8% 6
14
<PAGE>
Management
Executive Officers
Our executive officers are elected by the Board of Directors annually
in January and hold office until the following January unless they sooner resign
or are removed from office by the Board of Directors.
Our executive officers, and their ages, positions, and terms of office
as of February 1, 2000, are as follows:
<TABLE>
<CAPTION>
Name (age) Position with us Position with our subsidiary banks Officer since
- ---------- ---------------- ---------------------------------- -------------
<S> <S> <S> <C>
Jimmy C. Tallent President, Chief Executive Chairman of the Board of Union County 1988
(47) Officer and Director Bank, Towns County Bank and White
County Bank; Director of Carolina
Community Bank, Peoples Bank, First
Clayton Bank and Trust, Bank of
Adairsville, 1st Floyd Bank and United
Family Finance
Thomas C. Gilliland Executive Vice President and President, Chief Executive Officer and 1992
(51) Director Vice Chairman of the Board of Peoples
Bank; Executive Vice President and
Director of United
Billy M. Decker Senior Vice President, Director Senior Vice President, Director and 1988
(56) and Secretary Secretary of United Community Bank;
Director of Carolina Community Bank
Guy Freeman Senior Vice President President, Chief Executive Officer and 1995
(64) Director of Carolina Community Bank
Christopher J. Bledsoe Senior Vice President and Chief Director of United Family Finance 1993
(36) Financial Officer
Roger L. Bishop Senior Vice President and None 1998
(50) Chief Operations and
Information Officer (prior
to joining us, he served
as Senior Vice President
to Brintech, Inc., a
consulting firm in New Smyrna
Beach, Florida, from
April of 1996 to August of
1998 and was a Senior
Consultant for Alex Sheshunoff
Management Services,
Inc., a consulting firm of Austin,
Texas, from March
of 1994 to April of 1996)
James G. Campbell Senior Vice President (prior to None 1999
(43) joining us in 1999, he served
as Regional Community Bank
President of Firstar Bank, NA
in Bowling Green, Kentucky,
successor by merger in 1998 to
Trans Financial, Inc. Prior to
the merger, he served as
Executive Vice President of
Trans Financial, from 1995 to
1998)
15
<PAGE>
Patrick J. Rusnak Vice President and Controller None 1998
(36) (prior to joining United, he
was Senior Assistant Controller
of Trans Financial, Inc., a
bank holding company in Bowling
Green, Kentucky, from 1994 to
1998)
</TABLE>
None of the above officers is related to another, and there are no
arrangements or understandings between them and any other person pursuant to
which any of them was elected as an officer.
Principal Shareholders
The following table lists information concerning the beneficial
ownership of our common stock at February 1, 2000, by (i) each person known to
us to beneficially own more than 5% of the common stock, (ii) each director and
executive officer, and (iii) all directors and executive officers as a group.
Except as set forth below, the stockholders named below have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Shareholder Number of Shares Owned Percent of Class
Beneficially
<S> <C> <C> <C>
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> *
Robert L. Head, Jr. 672,743<F5> 7.98%
Post Office Box 147, Blairsville, Georgia
30514
Charles E. Hill 169,032<F6> 2.01%
Hoyt O. Holloway 48,085<F7> *
Deral P. Horne 25,000<F8> *
John R. Martin 57,633 *
Clarence W. Mason, Sr. 30,382<F9> *
Zell B. Miller 1,000 *
16
<PAGE>
W.C. Nelson, Jr. 672,622<F10> 7.98%
Post Office Box 127, Blairsville, Georgia
30514
Charles E. Parks 102,259<F11> 1.21%
Tim Wallis 53,829 *
Christopher J. Bledsoe 22,933<F12> *
Guy W. Freeman 40,018<F13> *
All Directors and Executive Officers as a 2,427,235<F14> 28.80%
Group (19 persons)
- -------------------------
* Less than one percent.
<FN>
<F1> Includes 10,000 shares beneficially owned by Mr. Tallent pursuant to
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
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, for 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
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. Mr. Head's address is Post
Office Box 147, Blairsville, Georgia 30514.
<F6> Includes 10,000 shares beneficially owned by Mr. Hill pursuant to
debentures. Does not include 77,455 shares owned by Mr. Hill's wife,
for which he disclaims beneficial ownership.
<F7> Includes 10,000 shares beneficially owned pursuant to debentures and
35,565 beneficially owned by Holloway Motors, Inc., a company 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
debentures. Does not include 1,920 shares owned by Mr. Horne's wife,
for which he disclaims beneficial interest.
<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, for which he disclaims beneficial ownership.
<F10> Includes 11,250 shares beneficially owned by a trust over which Mr.
Nelson has voting power and 10,000 shares owned pursuant to debentures.
Does not include 15,005 shares owned by Mr. Nelson's wife, for which he
disclaims beneficial ownership. Mr. Nelson's address is Post Office Box
127, Blairsville, Georgia 30514.
<F11> Includes 10,000 shares beneficially owned by Mr. Parks pursuant to
debentures.
<F12> Includes 6,000 shares beneficially owned by Mr. Bledsoe pursuant to
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
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 debentures.
</FN>
</TABLE>
17
<PAGE>
Description of Securities
The following is a summary of certain provisions of the common stock,
preferred stock, debentures, and trust preferred securities.
General
Our authorized capital stock consists of 10,000,000 shares of common
stock, $1.00 par value per share, and 10,000,000 shares of preferred stock,
$1.00 par value per share. As of March 1, 2000, 8,429,090 shares of our common
stock, including 140,000 shares deemed outstanding pursuant to outstanding
debentures and presently exercisable options to acquire 254,822 shares of our
common stock, were issued and outstanding and no shares of preferred stock were
issued and outstanding.
Preferred Stock
We are authorized to issue 10,000,000 shares of preferred stock,
issuable in such series and bearing such voting, dividend, conversion,
liquidation, and other rights and preferences as the Board of Directors may
determine. The preferred stock can be issued for any lawful corporate purpose
without further action by the shareholders. The issuance of any preferred stock
having conversion rights might have the effect of diluting the interests of the
other shareholders. Shares of preferred stock could be issued with such rights,
privileges, and preferences as would deter a further tender or exchange offer or
to discourage the acquisition of control of us. The Board of Directors presently
has no plans to issue any preferred stock.
Common Stock
All voting rights are vested in the holders of the common stock. Each
holder of common stock is entitled to one vote per share on any issue requiring
a vote at any meeting. The shares do not have cumulative voting rights in the
election of directors. All shares of common stock are entitled to share equally
in such dividends as our Board of Directors may declare on our common stock from
sources legally available therefor. The determination and declaration of
dividends is within the discretion of our Board of Directors. Our common stock
will be entitled to receive on a pro rata basis, after payment or provision for
payment of all our debts and liabilities, all of our assets available for
distribution, in cash or in kind. The shares of common stock do not have
preemptive rights to subscribe to additional shares of common stock.
The outstanding shares of common stock are, and the shares of common
stock to be issued by us in connection with the offering will be, duly
authorized, validly issued, fully paid, and nonassessable.
Debentures
Debentures in the principal amount of $3,500,000 which are due on
December 31, 2006, are outstanding as of the date hereof. The debentures bear
interest at the rate of one quarter of one percentage point over the prime rate
per annum as quoted in The Wall Street Journal, payable on April 1, July 1,
October 1, and January 1 of each year commencing on April 1, 1997, to holders of
record at the close of business on the 15th day of the month immediately
preceding the interest payment date. Interest is computed on the basis of the
actual number of days elapsed in a year of 365 or 366 days, as applicable.
Interest on the debentures is payable, at the option of our Board of Directors,
in cash or in an additional debenture with the same terms as the debentures.
18
<PAGE>
The debentures may be redeemed, in whole or in part from time to time
on or after January 1, 1998, at our option upon at least 20 days and not more
than 60 days notice, at a redemption price equal to 100% of the principal amount
of the debentures to be redeemed plus interest accrued and unpaid as of the date
of redemption.
The holder of any debentures not called for redemption will have the
right, exercisable at any time up to December 31, 2006, to convert such
debenture at the principal amount thereof into shares of our common stock at the
conversion price of $25 per share, subject to adjustment for stock splits and
stock dividends.
The debentures are unsecured obligations and are subordinate in right
of payment to all of our obligations to our other creditors, except obligations
ranking on a parity with or junior to such debentures. The debentures were not
issued pursuant to an indenture nor is there a trustee to act on behalf of
debenture holders.
Trust Preferred Securities.
In July 1998, we created a Delaware statutory business trust, which
issued $21 million of guaranteed preferred beneficial interests to institutional
investors. These securities represent guaranteed preferred beneficial interests
in $21.7 million principal amount of junior subordinated deferrable interest
debentures issued by us to the business trust. Holders of the securities are
entitled to receive preferential cumulative cash distributions accumulating from
the date of their original issuance and payable semi-annually. The distribution
rate, distribution payment dates, and other payment dates for the securities
correspond to the interest rate, interest payment dates, and other payment dates
for the debentures. For regulatory purposes, the securities are treated as Tier
I capital. The debentures are the sole assets of the business trust and bear
interest at 8.125% with a maturity date of July 15, 2028. We may redeem the
debentures, and the business trust may redeem the securities, in whole or in
part, on or after July 15, 2008. If the debentures and the securities are
redeemed in part or in whole prior to January 1, 2008, the redemption price will
include a premium ranging from 4.06% in 2008 to 0.41% in 2017.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock and debentures is
SunTrust Bank, Atlanta, 58 Edgewood Avenue, Room 200, Atlanta, Georgia 30303.
Shares Eligible For Future Sale
Upon completion of the offering, there will be between 8,779,090 and
8,879,090 shares of common stock outstanding (including 254,822 shares issuable
pursuant to presently exercisable options and 140,000 shares issuable upon
conversion of outstanding debentures). All of the shares offered hereby will be
freely transferable, without restriction, under the Securities Act of 1933,
unless acquired by one of our affiliates (as that term is defined under the
Securities Act). Sales of substantial amounts of shares in the limited trading
market following the offering could adversely affect the market price of the
common stock. Since such stock is not listed on a stock exchange or quoted in
the over-the-counter market, no shares can be sold under Rule 144 promulgated
under the Securities Act.
19
<PAGE>
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated financial statements
have been prepared from the historical results of operations of United and to
give effect to the pending acquisition of North Point Bancshares, Inc. and
Independent Bancshares, Inc. using the pooling of interests method of
accounting. These statements should be read in conjunction with our historical
consolidated financial statements, including the notes thereto. The pro forma
combined results are not necessarily indicative of the combined results of
future operations.
20
<PAGE>
United Community Banks, Inc. Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 1999
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Pending Mergers
--------------------------
Historical Historical Pro Forma
As Reported North Point Independent Adjustments Consolidated
-------------- ------------ ------------- ------------ ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and due from banks $ 89,231 7,250 4,639 101,120
Federal funds sold 23,380 4,180 5,000 32,560
----------- -------- -------- ---------- ----------
Cash and cash equivalents 112,611 11,430 9,639 -- 133,680
Securities held to maturity (estimated fair -- 3,762 7,226 10,988
values of $3,784 and $6,169)
Securities available for sale 534,503 25,372 18,834 578,709
Mortgage loans held for sale 6,326 -- -- 6,326
Loans, net of unearned income 1,400,360 62,212 101,576 1,564,148
Less: Allowance for loan losses (17,722) (1,196) (1,125) (20,043)
----------- -------- -------- ---------- ----------
Loans, net 1,382,638 61,016 100,451 -- 1,544,105
Premises and equipment, net 47,365 2,746 5,543 -- 55,654
Other assets 47,997 2,152 3,409 53,558
----------- -------- -------- ---------- ----------
Total assets $ 2,131,440 106,478 145,102 2,383,020
=========== ======== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Deposits:
Demand $ 192,006 17,738 16,614 226,358
Interest bearing demand 328,815 26,991 38,333 394,139
Savings 73,953 5,350 5,169 84,472
Time 1,054,618 46,486 63,306 1,164,410
----------- -------- -------- ---------- ----------
Total deposits 1,649,392 96,565 123,422 -- 1,869,379
Accrued expenses and other liabilities 24,378 344 1,351 26,073
Federal funds purchased and repurchase 31,812 389 -- 32,201
agreements
Federal Home Loan Bank advances 287,572 -- 6,707 294,279
Long-term debt and other borrowings 17,516 -- -- 17,516
Convertible subordinated debentures 3,500 -- -- 3,500
Guaranteed preferred beneficial interests in
company's junior subordinated debentures
(Trust Preferred Securities) 21,000 -- -- 21,000
----------- -------- -------- ---------- ----------
Total liabilities 2,035,170 97,298 131,480 -- 2,263,948
Commitments and contingent liabilities:
Redeemable common stock held by KSOP -- -- 577 -- 577
(44,432 shares outstanding)
Stockholders' Equity:
Preferred stock -- -- -- -- --
Common stock 8,034 2,142 1,948 (4,090) 9,812
1,778
Capital surplus 30,310 1,985 8,614 (10,599) 43,221
12,911
Retained earnings 66,606 5,629 2,822 75,057
Accumulated other comprehensive income (loss) (8,680) (576) (339) -- (9,595)
----------- -------- -------- ---------- ----------
Total stockholders' equity 96,270 9,180 13,045 -- 118,495
----------- -------- -------- ---------- ----------
Total liabilities and stockholders' equity $ 2,131,440 106,478 145,102 -- 2,383,020
=========== ======== ======== ========== ==========
Outstanding common shares 8,034 9,812
Book value per common share $ 11.98 12.08
</TABLE>
United Community Banks, Inc. And Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 1999
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Pending Mergers
United ------------------------
As Historical Historical Pro Forma
Reported North Point Independent Adjustments Consolidated
-------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest income $149,740 8,156 11,096 168,992
Interest expense 81,766 3,629 4,805 90,200
-------- ------ ------ ------- ------
Net interest income 67,974 4,527 6,291 -- 78,792
Provision for loan losses 5,104 620 242 5,966
-------- ------ ------ ------- ------
Net interest income after 62,870 3,907 6,049 -- 72,826
provision
for loan losses
Non-interest income 10,836 625 1,103 12,564
Non-interest expense 54,165 3,070 4,746 61,981
-------- ------ ------ ------- ------
Income before income taxes 19,541 1,462 2,406 -- 23,409
-------- ------ ------ ------- ------
Income taxes 5,893 453 785 7,131
-------- ------ ------ ------- ------
Net income $ 13,648 1,009 1,621 -- 16,278
======== ====== ====== ======= ======
Basic earnings per share $ 1.70 1.66
Diluted earnings per share $ 1.66 1.63
Basic average shares outstanding 8,020 9,796
Diluted average shares outstanding 8,316 10,110
</TABLE>
22
<PAGE>
United Community Banks, Inc. And Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 1998
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Pending Mergers
United ------------------------
As Historical Historical Pro Forma
Reported North Point Independent Adjustments Consolidated
-------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income $116,214 7,693 9,978 133,885
Interest expense 60,004 3,003 4,623 67,630
-------- ------ ----- ------- ------
Net interest income 56,210 4,690 5,355 -- 66,255
Provision for loan losses 2,612 200 202 3,014
-------- ------ ----- ------- ------
Net interest income after 53,598 4,490 5,153 -- 63,241
provision
for loan losses
Non-interest income 9,129 653 938 10,720
Non-interest expense 43,964 2,692 4,442 51,098
-------- ------ ----- ------- ------
Income before income taxes 18,763 2,451 1,649 -- 22,863
-------- ------ ----- ------- ------
Income taxes 5,990 814 549 7,353
-------- ------ ----- ------- ------
Net income $ 12,773 1,637 1,100 -- 15,510
======== ====== ===== ======= ======
Basic earnings per share $ 1.60 1.59
Diluted earnings per share $ 1.57 1.56
Basic average shares outstanding 7,973 9,751
Diluted average shares outstanding 8,246 10,043
</TABLE>
23
<PAGE>
United Community Banks, Inc. And Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 1997
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Pending Mergers
United ------------------------
As Historical Historical Pro Forma
Reported North Point Independent Adjustments Consolidated
-------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income $94,188 6,843 8,332 109,363
Interest expense 48,470 2,802 4,049 55,321
------- ----- ----- ------- ------
Net interest income 45,718 4,041 4,283 -- 54,042
Provision for loan losses 2,814 175 262 3,251
------- ----- ----- ------- ------
Net interest income after 42,904 3,866 4,021 -- 50,791
provision
for loan losses
Non-interest income 7,200 626 671 8,497
Non-interest expense 34,063 2,490 3,542 40,095
------- ----- ----- ------- ------
Income before income taxes 16,041 2,002 1,150 -- 19,193
------- ----- ----- ------- ------
Income taxes 4,987 662 346 5,995
------- ----- ----- ------- ------
Net income $11,054 1,340 804 -- 13,198
======= ===== ===== ======= ======
Basic earnings per share $ 1.42 1.41
Diluted earnings per share $ 1.40 1.40
Basic average shares outstanding 7,810 9,335
Diluted average shares outstanding 8,031 9,564
</TABLE>
24
<PAGE>
Legal Matters
The legality of the shares of common stock offered by this prospectus
will be passed upon for us by Kilpatrick Stockton LLP, Atlanta, Georgia.
Experts
Our consolidated audited financial statements, incorporated into the
registration statement of which this prospectus forms a part, have been
incorporated in reliance upon the reports of Porter Keadle Moore, LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
Where You Can Find More Information
This prospectus is part of a registration statement on Form S-3 that we
have filed with the SEC covering the shares of common stock that we are
offering. This prospectus does not contain all of the information presented in
the registration statement, and you should refer to that registration statement
with its exhibits for further information. Statements in this prospectus
describing or summarizing any contract or other document are not complete, and
you should review the copies of those documents filed as exhibits to the
registration statement for more detail. You may read and copy the registration
statement at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. For information on the operation of the Public Reference
Room, call the SEC at 1-800-SEC-0330. You can also inspect our registration
statement on the Internet at the SEC's web site, http://www.sec.gov.
We are subject to certain informational reporting requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports, proxy
statements, and other information with the SEC. Such periodic reports, proxy
statements and other information filed by us with the SEC can be inspected and
copied at the public reference facilities maintained by the SEC's regional
offices in New York (7 World Trade Center, Suite 1300, New York, New York 10048)
and Chicago (Citicorp Center, 500 W. Madison, Suite 1400, Chicago, Illinois
60661), and copies of such material can be obtained from the public reference
section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, or at the
SEC's web site at http://www.sec.gov.
25
<PAGE>
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No dealer, sales person, or other person has been authorized to
give any information or to make any representations other than
those contained in this prospectus, and, if given or made, such
information or representations must not be relied upon as having
been authorized by us. This prospectus does not
constitute an offer to sell or the solicitation of any offer to A MINIMUM OF 350,000 AND A MAXIMUM OF
buy any security other than the securities to which it relates 450,000 SHARES OF COMMON STOCK
or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no
change in the affairs of United since the date hereof or that
the information contained herein is correct as of any time
subsequent to its date.
UNITED COMMUNITY BANKS, INC.
---------------
--------------
PROSPECTUS
--------------
TABLE OF CONTENTS
Page
Prospectus Summary ................................... 1
Risk Factors.......................................... 4
Forward-Looking Statements............................ 5
The Offering.......................................... 7
Determination of Offering Price....................... 7
Market For and Price Range of Common Stock............ 7
Use of Proceeds....................................... 8
Capitalization........................................ 8
Dividends............................................. 9 ______ ___, 2000
Business.............................................. 10
Management............................................ 15
Principal Shareholders................................ 16
Description of Securities............................. 18
Shares Eligible for Future Sale....................... 19
Pro Forma Consolidated Financial Statements........... 21
Legal Matters......................................... 29
Experts............................................... 29
Where You Can Find More Information................... 29
Index to Financial Statements......................... F-1
================================================================= ============================================================
</TABLE>
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the various expenses and costs expected to be
incurred in connection with the sale and distribution of the securities being
registered. All of the amounts shown are estimated except for the registration
fees of the Securities and Exchange Commission:
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<S> <C>
Securities and Exchange Commission Registration Fee.................................$ 4,514.40
Broker/Dealer Fee .................................................................. 40,000.00
Blue Sky Fees* ..................................................................... 8,000.00
Printing, Engraving, and Mailing Expenses*.......................................... 9,250.00
Legal Fees and Expenses*............................................................ 35,000.00
Accounting and Consulting Fees and Expenses*........................................ 18,500.00
Escrow Fees......................................................................... 6,000.00
--------------
Total.........................................................................$ 121,264.40
</TABLE>
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* Estimate
Item 15. Indemnification of Directors and Officers
Our Bylaws require us to indemnify and hold harmless our directors,
officers, and agents against judgments, fines, penalties, amounts paid in
settlement, and expenses, including attorney's fees, resulting from various
types of legal actions or proceedings if the actions of the party being
indemnified meet the standards of conduct specified therein. Determination
concerning whether or not the applicable standard of conduct has been met can be
made by (a) a disinterested majority of the Board of Directors, (b) independent
legal counsel, (c) an affirmative vote of a majority of shares held by the
shareholders. No indemnification may be made to or on behalf of a corporate
director, officer, employee or agent (I) in connection with a proceeding by or
in the right of the corporation in which such person was adjudged liable on the
basis that personal benefit was improperly received by him. As provided under
Georgia law, the liability of a director may not be eliminated or limited (a)
for any appropriation, in violation of his duties, of any business opportunity
of United, (b) for acts or omissions which involve intentional misconduct or a
knowing violation of law, (c) for unlawful corporate distributions or (d) for
any transaction from which the director received an improper benefit.
Our directors and officers are insured against losses arising from any
claim against them as such for wrongful acts or omissions, subject to certain
limitations.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
Exhibit No. Exhibit
1.1 Broker-Dealer Agreement between Wachovia Securities,
Inc. and United Community Bank, Inc. dated March 31,
2000.
1.2 Escrow Agreement between United Community Banks, Inc.
and SunTrust Bank, N.A., dated March 31, 2000.
2.1 Agreement and Plan of Reorganization dated March 3,
2000, between United Community Banks, Inc. and
Independent Bancshares, Inc.
2.2 Agreement and Plan of Reorganization dated March 3,
2000, between United Community Banks, Inc. and North
Point Bancshares, Inc.
4.1(a) Junior Subordinated Indenture of United with The
Chase Manhattan Bank, as Trustee, relating to the
Junior Subordinated Debentures (included as Exhibit
4.1 to our Registration Statement on Form S-4, File
No. 333-64911, filed with the Commission on September
30, 1998 (the "1998 S-4") and incorporated herein by
reference).
4.1(b) Form of Certificate of Junior Subordinated Debenture
(included as Exhibit 4.2 to the 1998 S-4 previously
filed with the Commission and incorporated herein by
reference).
4.1(c) Certificate of Trust of United Community Capital
Trust (included as Exhibit 4.3 to the 1998 S-4
previously filed with the Commission and incorporated
herein by reference).
4.1(d) Amended and Restated Trust Agreement for United
Community Capital Trust (included as Exhibit 4.4 to
the 1998 S-4 previously filed with the Commission and
incorporated herein by reference).
4.1(e)
Form of New Capital Security Certificate for United
Community Capital Trust (included as Exhibit 4.5 to
the 1998 S-4 previously filed with the Commission and
incorporated herein by reference).
4.1(f) Guarantee of United relating to the Capital
Securities (included as Exhibit 4.6 to the 1998 S-4
previously filed with the Commission and incorporated
herein by reference).
4.1(g) Registration Rights Agreement (included as Exhibit
4.7 to the 1998 S-4 previously filed with the
Commission and incorporated herein by reference).
4.1(h) Form of Floating Rate Convertible Subordinated
Payable In Kind Debenture due December 31, 2006
(included as Exhibit 4.2 to our Registration
Statement on Form S-1, File No. 33-93278, filed with
the Commission on June 8, 1995, and incorporated
herein by reference).
4.1(i) Form of Subscription Agreement (included as Exhibit A
to our Form S-1, File No. 333-20887, filed with the
Commission on January 31, 1997, and incorporated by
reference).
4.2(a) See Exhibits 3.1 and 3.2 for provisions of Articles
of Incorporation and By-Laws, as amended, which
define the rights of Shareholders.
II-2
<PAGE>
5 Opinion of Kilpatrick Stockton LLP.
12.1 Computation of ratio of earnings to fixed charges
(included as Exhibit 12.1 to the 1998 S-4 previously
filed with the Commission and incorporated herein by
reference).
23.1 Consent of Porter Keadle Moore, LLP
24.1 Power of Attorney of certain officers and directors
of United (included on Signature Page)
27.1 Financial Data Schedule
* To be filed by amendment.
II-3
<PAGE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, United has
duly caused this Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Blairsville, State
of Georgia, on the 31st day of March, 2000.
UNITED COMMUNITY BANKS, INC.
By: /s/ Jimmy C. Tallent
Jimmy C. Tallent
Title: President and Chief Executive Officer
Power of Attorney and Signatures
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Jimmy C. Tallent and Robert L. Head, or
either of them, as attorney-in-fact, with each having the power of substitution,
for him in any and all capacities, to sign any amendments to this Registration
Statement on Form S-3 and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of United in the capacities set forth and on the 31st day of March, 2000.
/s/ Jimmy C. Tallent President, Chief Executive Officer,
Jimmy C. Tallent and Director
(Principal Executive Officer)
/s/ Christopher J. Bledsoe Senior Vice President and Chief
Christopher J. Bledsoe Financial Officer
(Principal Financial Officer)
Vice President and Controller
/s/ Patrick J. Rusnak
Patrick J. Rusnak (Principal Accounting Officer)
Chairman of the Board
/s/ Robert L. Head, Jr.
Robert L. Head, Jr.
/s/ Billy M. Decker Director
Billy M. Decker
/s/ Thomas C. Gilliland Director
Thomas C. Gilliland
<PAGE>
/s/ Charles Hill Director
Charles Hill
/s/ Hoyt O. Holloway Director
Hoyt O. Holloway
/s/ P. Deral Horne Director
P. Deral Horne
/s/ John R. Martin Director
John R. Martin
Director
/c/ Clarence William Mason, Sr.
Clarence William Mason, Sr.
/s/ Zell B. Miller Director
Zell B. Miller
Director
/s/ W. C. Nelson, Jr.
W. C. Nelson, Jr.
/s/ Charles E. Parks Director
Charles E. Parks
/s/ Tim Wallis Director
Tim Wallis
<PAGE>
- - EXHIBIT INDEX
Exhibit
No. Description of Exhibit
1.1 Broker-Dealer Agreement between Wachovia Securities,
Inc. and United Community Bank, Inc. dated March 31,
2000.
1.2 Escrow Agreement between United Community Banks, Inc.
and SunTrust Bank, N.A., dated March 31, 2000.
5 and 23.2 -- Opinion and Consent of Kilpatrick Stockton LLP
23.2 -- Consent of Porter Keadle Moore, LLP
<PAGE>
EXHIBIT A
UNITED COMMUNITY BANKS, INC.
59 Highway 515
P.O. Box 398
Blairsville, Georgia 30512
SUBSCRIPTION FOR COMMON STOCK
Gentlemen:
United Community Banks, Inc. (the "Company") is offering to sell shares
of common stock (the "Shares") at a price of $38.00 per share.
The undersigned hereby tenders this subscription for the purchase of
the number of Shares set forth below, to United Community Banks, Inc., P.O. Box
398, Blairsville, Georgia 30514, Attention: Lois Rich. The undersigned has also
enclosed a check, bank draft or money order which represents the full
subscription price, payable to "SunTrust Bank as escrow agent for United
Community Banks, Inc."
The Shares purchased by the undersigned shall be registered as
specified below. If Shares are to be issued in more than one name, please
specify whether ownership is to be as individual owner, tenants in common, joint
tenants with right of survivorship, community property, etc. If Shares are to be
held in joint ownership, all joint owners should sign this subscription. If
Shares are to be issued in the name of one person for the benefit of another,
please indicate whether registration should be as trustee or custodian for such
other person.
The undersigned certifies, acknowledges, and agrees that:
1. The undersigned has received a copy of the Company's Prospectus and
has read and considered the Prospectus, and by executing this subscription
agreement, the undersigned acknowledges and agrees to all the terms and
conditions of the offering as described in the Prospectus and all the terms and
conditions of this subscription. The subscriber by executing this subscription
is not waiving any rights available under applicable federal or state securities
laws.
2. A subscription is not binding until accepted by the Company. The
Company reserves the right to accept or reject a subscription, in whole or in
part, in its sole discretion.
3. The undersigned acknowledges that there is no public market for the
Shares, nor is a public market expected to develop after this offering.
4. The undersigned represents that he/she is (i) a resident of the
State of Georgia, (ii) a resident of the State of North Carolina, or (iii) a
resident of the State of Tennessee.
IN WITNESS WHEREOF, the undersigned has executed this subscription on
the date set forth below and has returned the subscription, with the full
subscription price for the Shares, to the Company.
Date:_______________________________, 2000 ______________________________
Signature of Subscriber
Number of Shares Subscribed ______________________________
for (at $_____ per Share) ______________ Signature of Subscriber
Total Subscription Price $______________ ______________________________
Print Name(s) in which
Shares are to be Registered
Home Address and Personal Information about Person in whose Name the Shares are
to be Registered:
_______________________________
Street Address
_______________________________ _______________________________
City/State/Zip Code Telephone Number
(continued on next page)
<PAGE>
YOU MUST COMPLETE, SIGN AND DATE THIS FORM AND SIGN AND DATE THE FORM W-9 BELOW.
The Form W-9 is used by the Internal Revenue Service to certify social security
and tax identification numbers. Please note that the Company may be required to
withhold 31% of any dividend or cash payment made to an individual who has not
certified his social security number through a Form W-9.
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<C> <S> <S>
SUBSTITUTE
FORM W-9 Part 1 - PLEASE PROVIDE YOUR TIN IN THE
Department of the Treasury BOX AT RIGHT AND CERTIFY BY SIGNING AND Social security number
Internal Revenue Service DATING BELOW
OR
--------------------------------
Employer identification number
- ------------------------------------- ------------------------------------------ ------------------------------------
Part 2 - Check the box if you are NOT
subject to backup withholding under the
provisions of section 3406(a)(1)(C) of the
Internal Revenue Code because (1) you have
not been notified that you are subject to
backup withholding as a result of failure
to report all interest or dividends or (2)
the Internal Revenue Service has notified
you that you are no longer subject to
backup withholding.
-----------------------------------------
Payer's Request for Taxpayer CERTIFICATION -- UNDER THE PENALTIES OF PERJURY I Part 3 -
Identification Number (TIN) CERTIFY THAT THE INFORMATION ON THIS FORM
IS TRUE, CORRECT AND COMPLETE Awaiting TIN
/ /
________________________________________________________
SIGNATURE DATE
- ------------------------------------- ---------------------------------------------------------------- ---------------
</TABLE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into the ____ day of ________, 2000,
by and among United Community Banks, Inc., a Georgia corporation, ("United"),
Wachovia Securities, Inc., a North Carolina corporation ("WSI") and SunTrust
Bank, a Georgia state chartered bank, as Escrow Agent ("Escrow Agent").
WHEREAS, United contemplates a public offering of a minimum of 350,000
shares (the "Minimum Purchase") up to a maximum of 450,000 shares of its common
stock, par value $1.00 per share (the "Common Stock") at a public offering price
of $38.00 per share (the "Offering"); and
WHEREAS, in connection with the Offering, United has filed a
Registration Statement on Form S-3 (File No. 333-_____) with the Securities &
Exchange Commission (the "Registration Statement"); and
WHEREAS, pursuant to a Broker Dealer Agreement dated March 31, 2000, by
and between United and WSI (the "Broker Dealer Agreement"), WSI agreed to act as
a sponsoring Dealer in connection with the sale of Common Stock to investors in
the State of North Carolina (the "NC Investors"); and
WHEREAS, under the terms of the Registration Statement, each investor
in the Offering (each an "Investor" and cumulatively the "Investors") will be
required to submit a subscription agreement for shares of Common Stock
(cumulatively, the "Subscription Agreements"), along with the aggregate purchase
price for shares of Common Stock subscribed for ("Subscription Proceeds" or
"Fund"); and
WHEREAS, the parties intend that Escrow Agent receive the Subscription
Agreements and the Subscription Proceeds from the Investors, and hold and
distribute such Subscription Agreements and Subscription Proceeds in accordance
with the terms and conditions set forth herein; and
WHEREAS, if subscriptions for the Minimum Purchase are not received and
accepted by United by the specific date described in, or that date as extended
pursuant to, the Registration Statement (the "Offering Termination Date"), all
Subscription Proceeds are to be returned to each Investor;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Appointment of Escrow Agent. (a) United hereby appoints Escrow Agent
--------------------------
for the purpose of holding the Subscription Agreements and Subscription Proceeds
in accordance with the terms and conditions contained herein. Escrow Agent
hereby accepts such appointment.
<PAGE>
(b) Investors will be instructed to remit their Subscription Agreements
and Subscription Proceeds (in the form of check, bank draft or money order
payable to SunTrust Bank, as escrow agent for United Community Banks, Inc.)
directly to United Community Banks, Inc. and United will promptly send
Subscription Proceeds to SunTrust Bank.
2. Disposition. (a) Within one business day after receipt by United or
-----------
WSI of any Subscription Proceeds, it will forward those proceeds to Escrow
Agent.
(b) Within one (1) business day of United's receipt of any Subscription
Agreements for any NC Investor, it will forward that Subscription Agreement to
WSI.
(c) Upon receipt of a Subscription Agreement, United shall determine
whether to accept or reject such Subscription Agreement, and shall notify Escrow
Agent and WSI (if it is a NC Investor) in writing of same. Within two (2)
business days of United's notice of rejection, United shall promptly return to
the Investor who executed the rejected Subscription Agreement such Subscription
Agreement and will direct the Escrow Agent to refund the amount tendered
therewith.
(d) Upon receipt by Escrow Agent prior to the Offering Termination Date
of Subscription Agreements and Subscription Proceeds for a Minimum Purchase
which have been accepted in writing by United, the escrow will terminate and
Escrow Agent shall (i) within two (2) business days of such receipt forward all
Subscription Proceeds then held by it to United; and (ii) after WSI or United
notifies Escrow Agent that the Minimum Purchase has been met, thereafter any
additional proceeds shall be disbursed to United upon the written direction of
United.
(e) In the event that on the Offering Termination Date, Escrow Agent is
not in receipt of Subscription Proceeds for the Minimum Purchase which have been
accepted in writing by United, Escrow Agent shall, after notification by United
or WSI in writing of same, terminate the escrow and Escrow Agent shall promptly
return all Subscription Proceeds delivered to it to each Investor and United
will supply SunTrust with Subscription Agreements containing the addresses of
the Investors.
(f) Escrow Agent shall invest any Subscription Proceeds received from
Investors in short-term obligations of the United States government,
certificates of deposit issued by SunTrust Bank or the SunTrust Bank STI Classic
Government Money Market Fund as may be directed by United in writing, until
termination of the escrow. In the absence of written directions, SunTrust will
invest the Subscription Proceeds in the SunTrust Bank STI Classic Government
Money Market Fund. United will be entitled to all interest earned on the escrow.
3. Fees. United agrees to compensate Escrow Agent in accordance with
----
its schedule for fees attached hereto as Exhibit A.
4. Termination of Escrow Funds; Payment of Interest. The Escrow
-----------------------------------------------------
Agreement will terminate on the Offering Termination Date. United hereby agrees
to provide Escrow Agent advance confirmation of the Offering Termination Date.
Within two (2) business days of Escrow Agent's receipt of such notice, Escrow
Agent shall forward to United all interest actually earned on Subscription
Proceeds then held by Escrow Agent.
-2-
<PAGE>
5. Legal Action. Escrow Agent shall be under no duty to take any legal
------------
action in connection with this Agreement or towards its enforcement, or to
appear, prosecute or defend any action or legal proceeding that would result in
or might require it to incur any cost, expense, loss or liability, unless it
shall have been indemnified with respect thereto in accordance with Paragraph 6
of this Agreement.
6. Indemnification. (a) Escrow Agent undertakes to perform only such
---------------
duties as are expressly set forth herein, and no additional duties or
obligations shall be implied hereunder. In performing its duties under this
Agreement, or upon the claimed failure to perform any of its duties hereunder,
Escrow Agent shall not be liable to anyone for any damages, losses or expenses
which may be incurred as a result of Escrow Agent so acting or failing to so
act; provided, however, Escrow Agent shall not be relieved from liability for
damages arising out of its proven gross negligence or willful misconduct under
this Agreement. Escrow Agent shall in no event incur any liability with respect
to (i) any action taken or omitted to be taken in good faith upon advice of
legal counsel, which may be counsel to any party hereto, given with respect to
any question relating to the duties and responsibilities of Escrow Agent
hereunder or (ii) any action taken or omitted to be taken in reliance upon any
instrument delivered to Escrow Agent and believed by it to be genuine and to
have been signed or presented by the proper party or parties.
(b) United warrants to and agrees with Escrow Agent that, unless
otherwise expressly set forth in this Agreement, there is no security interest
in the Fund or any part of the Fund; no financing statement under the Uniform
Commercial Code of any jurisdiction is on file in any jurisdiction claiming a
security interest in or describing, whether specifically or generally, the Fund
or any part of the Fund; and the Escrow Agent shall have no responsibility at
any time to ascertain whether or not any security interest exists in the Fund or
any part of the Fund or to file any financing statement under the Uniform
Commercial Code of any jurisdiction with respect to the Fund or any part
thereof.
(c) As an additional consideration for and as an inducement for Escrow
Agent to act hereunder, it is understood and agreed that, in the event of any
disagreement between the parties to this Agreement or among them or any other
person(s) resulting in adverse claims and demands being made in connection with
or for any money or other property involved in or affected by this Agreement,
Escrow Agent shall be entitled, at the option of Escrow Agent, to refuse to
comply with the demands of such parties, or any of such parties, so long as such
disagreement shall continue. In such event, Escrow Agent shall make no delivery
or other disposition of the Fund or any part of such Fund. Anything herein to
the contrary notwithstanding, Escrow Agent shall not be or become liable to such
parties or any of them for the failure of Escrow Agent to comply with the
conflicting or adverse demands of such parties or any of such parties.
-3-
<PAGE>
Escrow Agent shall be entitled to continue to refrain and refuse to
deliver or otherwise dispose of the Fund or any part thereof or to otherwise act
hereunder, as stated above, unless and until:
(1) the rights of such parties have been finally settled by binding
arbitration or duly adjudicated in a court having jurisdiction of the parties
and the Fund; or
(2) the parties have reached an agreement resolving their differences
and have notified Escrow Agent in writing of such agreement and have provided
Escrow Agent with indemnity satisfactory to Escrow Agent against any liability,
claims or damages resulting from compliance by Escrow Agent with such agreement.
In the event of a disagreement between such parties as described above,
Escrow Agent shall have the right, in addition to the rights described above and
at the option of Escrow Agent, to tender into the registry or custody of any
court having jurisdiction, all money and property comprising the Fund and may
take such other legal action as may be appropriate or necessary, in the opinion
of Escrow Agent. Upon such tender, the parties hereto agree that Escrow Agent
shall be discharged from all further duties under this Agreement; provided,
however, that the filing of any such legal proceedings shall not deprive Escrow
Agent of its compensation hereunder earned prior to such filing and discharge of
Escrow Agent of its duties hereunder.
(d) United agrees to pay Escrow Agent for its ordinary services
hereunder the fees determined in accordance with and payable as specified in the
Schedule of Fees set forth in Exhibit A attached hereto and made a part hereof.
In addition, United agrees to pay to Escrow Agent its expenses incurred in
connection with this Agreement, including but not limited to the actual cost of
legal services in the event Escrow Agent deems it necessary to retain counsel.
Such expenses shall be paid to Escrow Agent within 10 days following receipt by
United of a written statement setting forth such expenses.
United agrees that, in the event any controversy arises under or in
connection with this Agreement or the Fund or Escrow Agent is made a party to or
intervenes in any litigation pertaining to this Agreement or the Fund, to pay to
Escrow Agent reasonable compensation for its extraordinary services and to
reimburse Escrow Agent for all costs and expenses associated with such
controversy or litigation.
As security for all fees and expense to Escrow Agent hereunder and any
and all losses, claims, damages, liabilities and expenses incurred by Escrow
Agent in connection with its acceptance of appointment hereunder or with the
performance of its obligations under this Agreement and to secure the obligation
of United to indemnify Escrow Agent as provided herein, Escrow Agent is hereby
granted a security interest in and a lien upon the Fund, which security interest
and lien shall be prior to all other security interests, liens or claims against
the Fund or any part thereof.
-4-
<PAGE>
(e) Escrow Agent may resign at any time from its obligations
under this Agreement by providing written notice to the parties hereto. Such
resignation shall be effective on the date set forth in such written notice
which shall be no earlier than 10 days after such written notice has been given.
In the event no successor escrow agent has been appointed on or prior to the
date such resignation is to become effective, Escrow Agent shall be entitled to
tender into the custody of a court of competent jurisdiction all assets then
held by it hereunder and shall thereupon be relieved of all further duties and
obligations under this Agreement. Escrow Agent shall have no responsibility for
the appointment of a successor escrow agent hereunder.
(f) Escrow Agent shall have no obligation to take any legal
action in connection with this Agreement or towards it enforcement, or to appear
in, prosecute or defend any action or legal proceeding which would or might
involve it in any cost, expense, loss or liability unless security and
indemnity, as provided in this paragraph, shall be furnished.
United agrees to indemnify Escrow Agent and it officers,
directors, employees and agents and save Escrow Agent and its officers,
directors, employees and agents harmless from and against any and all Claims (as
hereinafter defined) and Losses (as hereinafter defined) which may be incurred
by Escrow Agent or any of such officers, directors, employees or agents as a
result of Claims asserted against Escrow Agent or any of such officers,
directors, employees or agents as a result of or in connection with Escrow
Agent's capacity as such under this Agreement by any person or entity. For the
purposes hereof, the term "Claims" shall mean all claims, lawsuits, causes of
action or other legal actions and proceedings of whatever nature brought against
(whether by way of direct action, counterclaim, cross action or impleader)
Escrow Agent or any such officer, director, employee or agent, even if
groundless, false or fraudulent, so long as the claim, lawsuit, cause of action
or other legal action or proceeding is alleged or determined, directly or
indirectly, to arise out of, result from, relate to or be based upon, in whole
or in part: (a) the acts or omissions of United, (b) the appointment of Escrow
Agent as escrow agent under this Agreement, or (c) the performance by Escrow
Agent of its powers and duties under this Agreement; and the term "Losses" shall
mean losses, costs, damages, expenses, judgments and liabilities of whatever
nature (including but not limited to attorneys', accountants' and other
professionals' fees, litigation and court costs and expenses and amounts paid in
settlement), directly or indirectly resulting from, arising out of or relating
to one or more Claims. Upon the written request of Escrow Agent or any such
officer, director, employee or agent (each referred to hereinafter as an
"Indemnified Party"), United agrees to assume the investigation and defense of
any Claim, including the employment of counsel acceptable to the applicable
Indemnified Party and the payment of all expenses related thereto and,
notwithstanding any such assumption, the Indemnified Party shall have the right,
and United agrees to pay the cost and expense thereof, to employ separate
counsel with respect to any such Claim and participate in the investigation and
defense thereof in the event that such Indemnified Party shall have been advised
by counsel that there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those available to
United. United hereby agrees that the indemnifications and protections afforded
Escrow Agent in this section shall survive the termination of the Agreement.
-5-
<PAGE>
In order to induce and as partial consideration for Escrow Agent's
acceptance of this Agreement, United or WSI acknowledge that Escrow Agent is
serving as escrow agent for the limited purposes set forth herein and each
represent, covenant and warrant to Escrow Agent that no statement or
representation, whether oral or in writing, has been or will be made to any
prospective subscribers for any of the Common Stock to the effect that Escrow
Agent has investigated the desirability or advisability of investment in the
Common Stock or approved, endorsed or passed upon the merits of such investment
or is otherwise involved in any manner with the transactions or events
contemplated in the Parties' disclosure statements or subscription agreements,
other than as Escrow Agent under this Agreement. It is further agreed that no
party shall in any way use the name "SunTrust Bank" or "SunTrust Banks, Inc." in
any sales presentation or literature except in the context of the duties of the
Escrow Agent as escrow agent of the offering of the Common Stock in the
strictest sense. Any breach or violation of the paragraph shall be grounds for
immediate termination of the Agreement by Escrow Agent in accordance with the
terms and provisions set forth herein.
Without limitation to any release, indemnification or hold harmless
provision in favor of Escrow Agent as elsewhere provided in this Agreement,
United covenants and agrees to indemnify Escrow Agent and its officers,
directors, employees and agents and to hold Escrow Agent and such officers,
directors, employees and agents harmless from and against all liability, cost,
losses and expenses, including but not limited to attorneys' fees and expenses
which are suffered or incurred by Escrow Agent or any such officer, director,
employee or agent as a direct or indirect result of the threat or the
commencement of any claim or proceeding against Escrow Agent or any such
officer, director, employee or agent based in whole or in part upon the
allegation of a misrepresentation or an omission of a material or significant
fact in connection with the sale or subscription of any one or more of the
Common Stock. Escrow Agent shall have no responsibility for approving or
accepting on behalf of United any proceeds delivered to it hereunder, nor shall
Escrow Agent be responsible for authorizing issuance of the Common Stock or for
determining the qualification of any purchaser or the accuracy of the
information contained in the Parties' disclosure statements or subscription
agreements.
7. Interpleader. If the parties at any time are in disagreement about
------------
the interpretation of this Agreement, or the rights and obligations hereunder,
or the propriety of any action contemplated by the Escrow Agent hereunder, the
Escrow Agent may, at its sole discretion, file an action in interpleader to
resolve said disagreement. The Escrow Agent shall be indemnified by United for
all costs, including reasonable attorney's fees, in connection with the
aforesaid interpleader action, and shall be fully protected by United in
suspending all or a part of its activities under this Agreement until a final
judgment in the interpleader action is received.
8. Notices. All notices and other communications shall be in writing
-------
and shall be deemed to have been given immediately if delivered personally, on
receipt of facsimile transmission with original mailed via First Class Mail
(provided such receipt is confirmed by the recipient), or five days after
mailing by registered or certified mail (return receipt requested), postage
prepaid to the parties to this Agreement at the following addresses or at such
other address for a party as shall be specified by like notice:
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<PAGE>
(a) To United:
United Community Banks, Inc.
P.O. Box 398
Blairsville, Georgia 30512
Attn.: Christopher Bledsoe, Chief Financial Officer
Telephone: (706) 745-2151
Telecopy: (706) 745-4865
EIN: 58-1807304
(b) To WSI:
Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street
Charlotte, North Carolina 28202
Attn.: James H. Glen, Jr.
Telephone: (704) 379-9217
Telecopy: (704) 379-9025
(c) To Escrow Agent:
SunTrust Bank
Corporate Trust Department
424 Church Street, 6th Floor
Nashville, Tennessee 37219
Attn.: Donna Williams
Telephone: (615) 748-4745
Telecopy: (615) 748-5331
9. Execution and Counterparts. This Agreement may be executed in any
---------------------------
number of counterparts, each of which shall be deemed an original, and all of
which shall constitute a single instrument.
10. Entire Agreement. This Agreement supersedes all prior discussions
---------------
and agreements between the parties with respect to the subject matter hereof,
and this Agreement contains the sole and entire agreement between the parties
with respect to the matters covered hereby and thereby. This Agreement shall not
be altered or amended, except by an instrument in writing, signed by or on
behalf of the parties hereto.
11. Governing Law. The validity and effect of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Tennessee.
-7-
<PAGE>
12. Successors and Assigns. Except for resignations permitted under the
---------------------
terms hereof, this Agreement may not be assigned to any party hereto without the
prior written consent of the other parties hereto. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, legal representatives, successors and permitted assigns.
13. Partial Invalidity and Severability. All rights and restrictions
-------------------------------------
contained herein may be exercised and may be applicable and binding only to the
extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement shall be held to be illegal, invalid
or unenforceable by a court of competent jurisdiction or by a duly constituted
arbitral tribunal, it is the intent of the parties that the remaining terms
hereof shall constitute their Agreement with respect to the subject matter
hereof and all such remaining terms shall remain in full force and effect.
14. Headings. The headings as to contents of particular paragraphs in
--------
this Agreement are inserted only for convenience and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
and caused this Agreement to be executed under seal by their duly authorized
officers as of the day and year first above written.
(CORPORATE SEAL) UNITED COMMUNITY BANKS, INC.
Attest:/s/ Billy M. Decker By: /s/ Christopher J. Bledsoe
Secretary Christopher J. Bledsoe
Chief Financial Officer
(CORPORATE SEAL) WACHOVIA SECURITIES, INC.
Attest:______________________ By: /s/ Joe H. Glen, Jr.
Secretary
(Signatures continued on following page)
<PAGE>
(Signatures continued from previous page)
ESCROW AGENT:
SUNTRUST BANK
(BANK SEAL) By:_____________________________
Name:_______________________
Title:______________________
<PAGE>
EXHIBIT A
FEES
UNITED COMMUNITY BANKS, INC.
Common Stock
BROKER-DEALER AGREEMENT
March 31, 2000
Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street, Suite 2300
Charlotte, North Carolina 28202
Dear Sirs:
SECTION 1. Broker-Dealer Agreement. United Community Banks, Inc., a
Georgia corporation (the "Company") proposes to issue, offer and sell a minimum
of 350,000 shares and a maximum of 450,000 shares of its authorized but unissued
Common Stock, par value $1.00 per share (the "Common Shares") and intends to
offer a portion of those securities in the State of North Carolina. In order
that its offering meets the requirements of Chapter 78A of the North Carolina
General Statutes ("Chapter 78A"), the Company must obtain the sponsorship of its
offering by a North Carolina registered dealer.
Accordingly, the Company hereby appoints Wachovia Securities, Inc.
("WSI") as a sponsoring dealer and WSI accepts appointment under the provisions
of Section 18 NCAC 6.1305 of the North Carolina Administrative Code. In that
capacity, WSI will act as a sponsoring dealer for the account of the Company in
connection with a public offering of the Common Shares in the State of North
Carolina after the effective date of the registration statement hereinafter
referred to. WSI will act as dealer on behalf of the Company in connection with
effecting the offer and sale of the Common Shares in North Carolina to residents
of North Carolina. In North Carolina, the sales of the Common Shares are to be
made for the account of the Company at a price of $38.00 per share, unless and
until the Company establishes another price. WSI has not and will not be
involved with determining the price of the shares to be sold in the public
offering and shall have no financial commitment to purchase any of the Common
Shares.
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to WSI that:
(a) A registration statement on Form S-3 (the "Registration
Statement") has been or will be filed with the Securities and Exchange
Commission (the "Commission") with respect to the Common Shares and has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the Commission's
rules and regulations (the "Rules and Regulations"). The Company has
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prepared and has filed or proposes to file prior to the effective date
of such registration statement an amendment or amendments to such
registration statement, which amendment or amendments have been or will
be similarly prepared. There have been delivered to WSI a copy of such
registration statement and amendments, as to which the prospectus (the
"Prospectus") is a part, together with a copy of each exhibit filed
therewith. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final Prospectus, or
(ii) a final Prospectus in accordance with Rule 424(b) of the Rules and
Regulations.
(b) The Commission has not issued any order preventing or
suspending the use of the Prospectus and the Prospectus conforms in all
material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, does not include any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading; and at the time the Registration Statement
becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements
thereto, will contain all material statements and information required
to be included therein by the Act and the Rules and Regulations and
will in all material respects conform to the requirements of the Act
and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, no representation
or warranty contained in this subsection 2(b) shall be applicable to
information contained in or omitted from the Registration Statement,
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by or
on behalf of WSI, specifically for use in the preparation thereof.
(c) The Company is current in all filings of reports,
financial statements and schedule requirements to be made with the
Commission under the Securities Exchange Act of 1934 (the "Exchange
Act").
(d) The Company and each of United Community Bank ("United"),
Carolina Community Bank ("Carolina"), Peoples Bank of Fannin County
("Fannin"), Towns County Bank ("Towns"), White County Bank ("White"),
First Clayton Bank and Trust ("First Clayton"), Bank of Adairsville
("Adairsville"), and 1st Floyd Bank ("Floyd"), (United, Carolina,
Fannin, Towns, White, First Clayton, Adairsville and Floyd are
collectively referred to herein as the "Subsidiaries") have been duly
organized and are validly existing and in good standing under the laws
of their respective jurisdictions of organization, with full power and
authority to own and lease their properties and conduct their
respective businesses as described in the Prospectus; except as
disclosed in the Prospectus and the financial statements of the
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<PAGE>
Company, the Company, directly or indirectly, owns all of the
outstanding capital stock of its Subsidiaries free and clear of all
claims, liens, charges and encumbrances; the Company and each of its
Subsidiaries are in possession of and operating in compliance with all
banking, insurance and other applicable approvals, authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in
full force and effect. The deposits in each of the Company's banking
subsidiaries are insured by the Federal Deposit Insurance Corporation.
(e) The Company has authorized and outstanding capital stock
as set forth under the heading "Capitalization" in the Prospectus; the
issued and outstanding Common Shares have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued
in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform to the description
thereof contained in the Prospectus. All issued and outstanding shares
of capital stock of each Subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are owned directly
or indirectly by the Company. Except as disclosed in or contemplated by
the Prospectus and the financial statements of the Company and the
related notes thereto included in the Prospectus, neither the Company
nor any Subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock, or any such
options, rights, convertible securities or obligations. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights.
(f) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable, and will conform to the description thereof
contained in the Prospectus. No preemptive rights or other rights to
subscribe for or purchase exist with respect to the issuance and sale
of the Common Shares by the Company pursuant to this Agreement. No
shareholder of the Company has any right which has not been waived to
require the Company to register the sale of any share owned by such
shareholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Common Shares to be sold by the Company as contemplated
herein.
(g) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the rights of creditors
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<PAGE>
generally and by principles of equity, whether considered at law or
equity. The making and performance of this Agreement by the Company and
the consummation of the transactions herein contemplated will not
violate any provisions of the articles of incorporation or bylaws, or
other organizational documents, of the Company and will not conflict
with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party
or by which the Company or any of its properties may be bound or
affected, any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of
its properties. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement,
except for compliance with the Act and Blue Sky securities laws
applicable to the public offering of the Common Shares by the Company.
(h) Porter Keadle Moore, LLP, who have expressed their opinion
with respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, or incorporated by
reference therein, and are independent accountants as required by the
Act and the Rules and Regulations.
(i) The combined financial statements and schedules of the
Company and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the financial position of
the Company as of the respective dates of such financial statements and
schedules, and the results of operations and changes in financial
position of the Company for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by Porter Keadle Moore, LLP. No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the
Prospectus under the captions "Capitalization" and "Pro Forma
Confidential Financial Statements" fairly present the information set
forth therein on the basis stated in the Registration Statement. The
pro forma financial information (including the related notes) included
in the Prospectus complies as to form in all material respects to the
applicable accounting requirements of the Act and the Rules and
Regulations, and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable. Such
pro forma adjustments have been properly applied to the historical
amounts in the compilation of the information and such information
fairly represents with respect to the Company the financial position,
results of operations and other information purported to be shown
therein at the respective dates and for the respective periods
specified.
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(j) The Company has disclosed in the Registration Statement
and Prospectus all information it is required to disclose therein, and
such Registration Statement and Prospectus are true and correct in
every material respect and do not fail to disclose any information
which if not disclosed would cause the Registration Statement and/or
Prospectus to be materially misleading in any respect.
(k) The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted
only in accordance with management's general or specific authorization,
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
SECTION 3. Representations and Warranties of WSI. WSI hereby represents
and warrants to the Company that:
(a) The information set forth in the Prospectus that was
furnished to the Company by and on behalf of WSI for use in connection
with the preparation of the Registration Statement and the Prospectus
is correct in all material respects;
(b) WSI is registered as a dealer under the requirements of
Chapter 78A; and
(c) WSI will make all necessary filings with the National
Association of Securities Dealers, Inc. (the "NASD") in connection with
its services provided hereunder.
SECTION 4. Covenants of the Company. The Company covenants and
agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective. WSI will have the opportunity to
review and approve the Registration Statement and any amendment
thereto. The Company will promptly advise WSI in writing (i) of the
receipt of any comments of the Commission, (ii) of any request of the
Commission for amendment of or supplement to the Registration Statement
(either before or after it becomes effective) or the Prospectus or for
additional information, (iii) when the Registration Statement shall
have become effective, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose. If
the Commission shall enter any such stop order at any time, the Company
will use its best efforts to obtain the lifting of such order at the
earliest possible moment. The Company will not file any amendment or
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supplement to the Registration Statement (either before or after it
becomes effective) or the Prospectus of which WSI has not been
furnished with a copy a reasonable time prior to such filing or to
which WSI reasonably objects or which is not in compliance with the Act
and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon WSI's request, any amendment or supplements to the
Registration Statement or the Prospectus which in WSI's judgment may be
necessary or advisable to enable WSI to continue the distribution of
the Common Shares, and will use its best efforts to cause the same to
become effective as promptly as possible. In addition, the Company will
assist WSI in connection with WSI's filings with the NASD. The Company
covenants that it will not commence the offering until such time as WSI
has received any required approvals from the NASD.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event
occurs, as a result of which the Prospectus, including any amendments
or supplements, would include an untrue statement of a material fact,
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments
or supplements, to comply with the Act or the Rules and Regulations,
the Company will promptly advise WSI thereof and will promptly prepare
and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance and will use
its best efforts to cause the same to become effective as soon as
possible; and, in case WSI is required to deliver a prospectus after
such nine-month period, the Company upon request, but at the expense of
WSI, will promptly prepare such amendment or amendments to the
Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section
10(a)(3) of the Act.
(d) The Company will timely file such reports pursuant to the
Exchange Act as are necessary in order to make generally available to
its security holders as soon as practicable an earnings statement for
the purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by WSI, the Company, at its
expense, but only for the nine-month period referred to in Section
10(a)(3) of the Act, will furnish to WSI or mail to the order of WSI
copies of the Registration Statement and the Prospectus and all
amendments and supplements to any such documents, in each case as soon
as available and in such quantities as WSI may request, for the
purposes contemplated by the Act.
(f) The Company shall qualify or register the Common Shares
for sale under (or obtain exemptions from the application of) the Blue
Sky securities law of North Carolina, will comply with such law and
will continue such qualification, registration and exemption in effect
so long as reasonably required for the distribution of the Common
Shares. The Company will advise WSI promptly of the suspension of the
qualification or registration of (or any such exemption relating to)
the Common Shares for offering, sale or trading in any jurisdiction or
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any initiation or threat of any proceeding for any such purpose, and in
the event of the issuance of any order suspending such qualification,
registration or exemption, the Company, with WSI's cooperation, will
use its best efforts to obtain the withdrawal thereof.
(g) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its
statements under the caption "Use of Proceeds" in the Prospectus.
WSI may, in its sole discretion, waive in writing the performance by
the Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 5. Payment of Fees and Expenses.
(a) The Company will pay to WSI at the closing of the offering
a fee of $40,000 for WSI's services performed hereunder; and
(b) Whether or not the transactions contemplated hereunder are
consummated or this Agreement becomes effective or is terminated, the
Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby and all reasonable
fees and expenses of WSI, including reasonable fees and disbursements
of WSI's counsel.
SECTION 6. Effectiveness of Registration Statement. WSI and the Company
will use their best efforts to cause the Registration Statement to become
effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 7. Indemnification.
(a) The Company agrees to indemnify and hold harmless WSI
against any losses, claims, damages or liabilities to which WSI may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged
untrue statement made by the Company in Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement or any amendment
thereto, or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or (iii)
the omission or alleged omission to state in the Registration Statement
or any amendment thereto or any Application, a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse WSI for any legal or other expenses
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reasonably incurred by WSI in connection with investigating, defending
against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment
thereto or any Application in reliance upon and in conformity with
written information furnished to the Company by WSI expressly for
inclusion in the Prospectus beneath the heading "The Offering". The
Company will not, without the prior written consent of WSI, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of
action or portion thereof) in respect of which indemnification may be
sought hereunder (whether or not WSI is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of WSI from all liability arising out
of such claim, action, suit or proceeding or related cause of action or
portion thereof.
(b) WSI agrees to indemnify and hold harmless the Company and
its officers, directors, agents, representatives and affiliates against
any losses, claims, damages or liabilities to which the Company or its
officers, directors, agents, representatives and affiliates may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment thereto or any Application or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by WSI
expressly for inclusion in the Prospectus beneath the heading "The
Offering"; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party under
subsection (a) and (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnifying party); provided, however, that if the defendants in
any such action included the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party and such indemnified party shall have the right to
select separate counsel to defend such action on behalf of such
indemnified party. After such notice from the indemnifying party to
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such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend
such action, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless
(i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction
arising out of the same general allegations or circumstances, which
separate counsel shall be designated by WSI in the case of indemnity
arising under paragraph (a) of this Section 7) or (ii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. Nothing in this Section
7(c) shall preclude an indemnified party from participating at its own
expense in the defense of any such action so assumed by the
indemnifying party.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and WSI on the other from the offering
of the Common Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and WSI on
the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and WSI on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Company bear to the total fees received by WSI. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company on the one hand and WSI on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and WSI agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
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subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this
subsection (d), WSI shall not be required to contribute any amount in
excess of the fees described in Section 1 hereto. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls WSI within the meaning of the Securities Act; and
the obligations of WSI under this Section 7 shall be in addition to any
liability which WSI may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and
to each person, if any, who controls the Company within the meaning of
the Securities Act.
SECTION 8. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to WSI or by WSI by notice to the Company at any time prior to the time
this Agreement shall become effective as to all its provisions, and any
such termination shall be without liability on the part of the Company
to WSI (except for the fees and expenses to be paid or reimbursed by
the Company, pursuant to Sections 5 and 7 hereof and except to the
extent provided in Section 9 hereof) or of WSI to the Company (except
for the expenses to be paid or reimbursed by WSI, pursuant to Section 7
hereof and except to the extent provided in Section 9 hereof).
(b) This Agreement may also be terminated by WSI by notice to
the Company (i) if any adverse event shall have occurred or shall exist
which makes untrue or incorrect in any material respect any statement
or information contained in the Registration Statement or Prospectus or
which is not reflected in the Registration Statement or Prospectus but
should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect,
or (ii) if there shall be any action, suit or proceeding pending or
threatened; or there shall have been any development or prospective
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development involving particularly the business or properties or
securities of the Company or any of its Subsidiaries or the
transactions contemplated by this Agreement which, in the reasonable
judgment of WSI, may materially and adversely affect the Company's
business or earnings and makes it impracticable or inadvisable to offer
or sell the Common Shares. Any termination pursuant to this subsection
(b) shall be without liability on the part of WSI to the Company or on
the part of the Company to WSI (except for the fees and expenses to be
paid or reimbursed by the Company pursuant to Sections 5 and 7 hereof
and except to the extent provided in Section 9 hereof).
SECTION 9. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of the Company's officers and of WSI set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of WSI, the Company, or any of its or
their partners, officers or directors or any controlling person, as the case may
be, and will survive delivery of and payment for the Common Shares sold
hereunder and any termination of this Agreement.
SECTION 10. Notices. All communications hereunder shall be in writing
and, if sent to WSI shall be mailed, delivered or telegraphed and confirmed to
Wachovia Securities, Inc., IJL Financial Center, 201 North Tryon Street, Suite
2300, Charlotte, North Carolina, Attention: James H. Glen, Jr., with a copy to
Smith, Helms, Mulliss & Moore, LLP, 201 North Tryon Street, Charlotte, North
Carolina, 28202, Attention: Boyd C. Campbell, Jr.; and if sent to the Company
shall be mailed, delivered or telegraphed and confirmed to the Company at P.O.
Box 398, 63 Highway 515, Blairsville, Georgia 30512, with a copy to Kilpatrick
Stockton LLP, Suite 2800, 1100 Peachtree Street, Atlanta, Georgia 30309,
Attention: F. Sheffield Hale. The Company or WSI may change the address for
receipt of communications hereunder by giving notice to the others.
SECTION 11. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, and to the benefit of the officers and
directors and controlling persons referred to in Section 7, and in each case
their respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. No such assignment shall
relieve any party of its obligations hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from WSI merely by reason of
such purchase.
SECTION 12. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of North Carolina.
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SECTION 16. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company.
If the foregoing is in accordance with WSI's understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company and WSI, all in accordance
with its terms.
Very truly yours,
UNITED COMMUNITY BANKS, INC.
By: /s/ Patrick J. Rusnak
Name: Patrick J. Rusnak
Title: Controller
WACHOVIA SECURITIES, INC.
By: /s/ Joe H. Glen, Jr.
Name: Joe H. Glen, Jr.
Title:
March 31, 2000
United Community Banks, Inc.
Post Office Box 398
59 Highway 515
Blairsville, Georgia 30512
Re: United Community Banks, Inc.
Registration Statement on Form S-3
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-3 filed by United Community Banks, Inc. (the "Company"), a Georgia
corporation, with the Securities and Exchange Commission with respect to the
registration under the Securities Act of 1933, as amended, of a minimum of
350,000 shares and a maximum of 450,000 shares of common stock, par value $1.00
per share, of the Company (the "Common Stock"), to be sold to the public.
As your counsel, and in connection with the preparation of the
Registration Statement, we have examined the originals or copies of such
documents, corporate records, certificates of public officials, officers of the
Company and other instruments related to the authorization and issuance of the
common stock as we deemed relevant or necessary for the opinions expressed
herein. Based upon the foregoing, it is our opinion that the shares of common
stock to be issued and sold by the Company to the public will be, upon issuance,
sale and delivery in the manner and under the terms and conditions described in
the Registration Statement, validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name in the "Legal
Matters" section of the Registration Statement, including the Prospectus
constituting a part thereof, and any amendments thereto.
Very truly yours,
KILPATRICK STOCKTON LLP
By: /s/ Richard R. Cheatham
Richard R. Cheatham,
a Partner
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 25, 2000, except for note 20 as to
which the date is March 3, 2000, accompanying the financial statements of United
Community Banks, Inc. and Subsidiaries incorporated by reference in the
Registration Statement on Form S-3 and Prospectus. We consent to the
incorporation by reference of the aforementioned report in the Registration
Statement on Form S-3 and Prospectus, and to the use of our name as it appears
under the caption "Experts".
/s/ Porter Keadle Moore, LLP
Atlanta, Georgia
March 31, 2000
