**Exhibit
10.28**
 
 **EXECUTIVE
SALARY CONTINUATION AGREEMENT**
 
 
 **THIS
AGREEMENT** , made
and entered into this 11th day of November, 2004, by and between Flag Bank, a
Bank organized and existing under the laws of the State of Georgia (hereinafter
referred to as the “Bank”), Flag Financial Corporation (hereinafter referred to
as the “Holding Company”), and Joseph Daniel Speight, Jr., an Executive of the
Bank (hereinafter referred to as the “Executive”).
 **WHEREAS** , the
Executive has been and continues to be a valued Executive of the Bank, and is
now serving the Bank as its Vice Chairman and the Holding Company as its Vice
Chairman, Chief Financial Officer, and Secretary;
 
 **WHEREAS** , it is
the consensus of the Board of Directors (hereinafter referred to as the “Board”)
that the Executive’s services to the Bank in the past have been of exceptional
merit and have constituted an invaluable contribution to the general welfare of
the Bank in bringing the Bank to its present status of operating efficiency and
present position in its field of activity;
 
 **WHEREAS** , the
Executive’s experience, knowledge of the affairs of the Bank, reputation, and
contacts in the industry are so valuable that assurance of the Executive’s
continued services is essential for the future growth and profits of the Bank
and it is in the best interests of the Bank to arrange terms of continued
employment for the Executive so as to reasonably assure the Executive remains in
the Bank’s employ during the Executive’s lifetime or until the age of
retirement;
 
 **WHEREAS** , it is
the desire of the Bank that the Executive’s services be retained as herein
provided;
 
 **WHEREAS** , the
Executive is willing to continue in the employ of the Bank provided, in
accordance with the Executive’s Employment Contract, the Bank agrees to pay the
Executive or the Executive’s beneficiary(ies), certain benefits in accordance
with the terms and conditions hereinafter set forth;
 
 **ACCORDINGLY** , it is
the desire of the Bank and the Executive to enter into this Agreement under
which the Bank will agree to make certain payments to the Executive at
retirement or the Executive’s beneficiary(ies) in the event of the Executive’s
death pursuant to this Agreement;
 
 **FURTHERMORE** , it is
the intent of the parties hereto that this Executive Plan be considered an
unfunded arrangement maintained primarily to provide supplemental retirement
benefits for the Executive, and be considered a non-qualified benefit plan for
purposes of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). The Executive is fully advised of the Bank’s financial status and has
had substantial input in the design and operation of this benefit plan;
and
 
 **NOW
THEREFORE** , in
consideration of services performed in the past and to be performed in the
future as well as of the mutual promises and covenants herein contained it is
agreed as follows:
 
 **I.** **EMPLOYMENT**
 
 The Bank
agrees to employ the Executive in such capacity as the Bank may from time to
time determine. The Executive will continue in the employ of the Bank in such
capacity and with such duties and responsibilities as may be assigned to him, as
defined in his Employment Contract, and with such compensation as may be
determined from time to time by the Board of Directors of the Bank.
 
 **II.** **FRINGE
BENEFITS**
 
 The
Salary continuation benefits provided by this Agreement are granted by the Bank
as a fringe benefit to the Executive and are not part of any Salary reduction
plan or an arrangement deferring a bonus or a Salary increase. The Executive has
no option to take any current payment or bonus in lieu of these Salary
continuation benefits except as set forth hereinafter.
 
 **III.** **RETIREMENT
DATE AND NORMAL RETIREMENT AGE**
 
 A.  Retirement
Date:
 
 If the
Executive remains in the continuous employ of the Bank, the Executive shall
retire from active employment with the Bank on the Executive’s sixty-fifth
(65 th )
birthday, unless by action of the Board of Directors this period of active
employment shall be shortened or extended.
 
 B.  Normal
Retirement Age:
 
 Normal
Retirement Age shall mean the date on which the Executive attains age sixty-five
(65).
 
 **IV.** **RETIREMENT
BENEFIT AND POST-RETIREMENT DEATH BENEFIT**
 
 Upon said
retirement, the Bank, commencing with the first day of the month following the
date of such retirement, shall pay the Executive an annual benefit equal to One
Hundred Thirty-Six Thousand and 00/100 th Dollars  ($136,000.00). Said benefit shall be paid in one hundred eighty (180) equal
monthly installments (1/12 th of the
annual benefit). If, however, less than ** one
hundred eighty (180) such monthly payments have been made prior to the death of
the Executive, then the Bank shall either, at the discretion of the Bank,
continue such monthly payments to the individual or individuals the Executive
may have designated in writing and filed with the Bank until the full number of
one hundred eighty (180) monthly payments have been made, or make the total
amount of said payment due in one (1) lump sum to said beneficiary(ies). In the
absence of any effective beneficiary designation, any such amount becoming due
and payable upon the death of the Executive shall be payable to the duly
qualified executor or administrator of the Executive’s estate. Said payment due
hereunder shall begin the first day of the second month following the decease of
the Executive.
 
 **V.** **DEATH
BENEFIT PRIOR TO RETIREMENT**
 
 In the
event the Executive should die while actively employed by the Bank at any time
after the date of this Agreement but prior to the Executive attaining the age of
sixty-five (65) years (or such later date as may be agreed upon), the Bank will
pay an annual benefit equal to the accrued balance, on the date of death, of the
Executive’s accrued liability retirement account paid in either, at the
discretion of the Bank, one (1) lump sum or in equal monthly installments
(1/12 th of the
annual benefit) for a period of one hundred eighty (180) months to such
individual or individuals as the Executive may have designated in writing and
filed with the Bank. In the absence of any effective beneficiary designation,
any such amount becoming due and payable upon the death of the Executive shall
be payable to the duly qualified executor or administrator of the Executive’s
estate. Said payment due hereunder shall begin the first day of the second month
following the decease of the Executive.
 
 **VI.** **BENEFIT
ACCOUNTING/**
 **ACCRUED
LIABILITY RETIREMENT ACCOUNT**
 
 The Bank
shall account for this benefit using the regulatory accounting principles of the
Bank’s primary federal regulator. The Bank shall establish an accrued liability
retirement account for the Executive into which appropriate reserves shall be
accrued.
 
 **VII.** **VESTING**
 
 The
Executive shall be twenty five percent (25%) vested in the retirement benefit
that is the subject of this Agreement and shall be subject to an annual vesting
percentage of four percent (4%) for each full year of employment with the Bank
from the date of this Agreement, to a maximum of one hundred percent
(100%).
 
 **VIII.       
TE** **RMINATION
OF EMPLOYMENT**
 
 Subject
to Subparagraph VIII (c) hereinbelow, in the event that the employment of the
Executive shall terminate prior to Normal Retirement Age, as provided in
Paragraph III, by the Executive’s voluntary action, then this Agreement shall
terminate upon the date of such termination of employment and the Bank shall pay
to the Executive an amount of money equal to the retirement benefit set forth in
Paragraph IV multiplied by the Executive’s cumulative vested percentage
(Paragraph VII). This compensation shall be paid for one hundred eighty (180)
equal monthly installments commencing at Normal Retirement Age.
 
 Subject
to Subparagraph VIII (c) hereinbelow, in the event that the employment of the
Executive shall terminate prior to Normal Retirement Age, as provided in
Paragraph III, by the Executive’s discharge by the Bank without cause or by the
Executive’s voluntary action, as defined below, then this Agreement shall
terminate upon the date of such termination of employment and the Bank shall pay
to the Executive the full retirement benefit as provided in Paragraph IV. This
compensation shall be payable at Normal Retirement Age in one hundred eighty
(180) equal monthly installments.
 
 Termination
of Employment by the Executive’s voluntary action, as it pertains to this
paragraph, shall mean:
 
 (a)
    A
      material diminution in the powers, responsibilities, duties or total
      compensation of the Executive hereunder by the Bank, which condition
      remains uncured after the expiration of thirty (30) days following the
      delivery of written notice of such condition to the Bank by the
      Executive;
 
 (b)
    The
      failure of the Board of Directors of FLAG to maintain the Executive’s
      appointment to the office of its Vice Chairman; the failure of the Board
      of Directors of the Bank to maintain the Executive’s appointment to the
      office of its Vice Chairman ; or the failure of the shareholders of FLAG
      to elect Executive as a director of FLAG or the Bank to elect Executive as
      a director of the Bank.
 
 In the
event the Executive’s death should occur after such termination but prior to the
completion of the monthly payments provided for in this Paragraph VIII, the
remaining installments, or one (1) lump sum, at the discretion of the Bank,
shall be paid to such individual or individuals as the Executive may have
designated in writing and filed with the Bank. In the absence of any effective
beneficiary designation, any such amount shall be payable to the duly qualified
executor or administrator of the Executive’s estate. Said payment due hereunder
shall begin the first day of the second month following the decease of the
Executive.
 
 In the
event the Executive shall be Discharged for Cause, at any time, all benefits
provided herein shall be forfeited. Discharge for Cause shall mean:
 
 (c)
    A
      material breach of the terms of the Employment Agreement by the Executive,
      including, without limitation, failure by the Executive to perform the
      Executive’s duties and responsibilities in the manner and to the extent
      required under this Agreement, which breach remains uncured after the
      expiration of thirty (30) days following the delivery of written notice of
      such breach to the Executive by the Bank;
 
 (d)
    Conduct
      by the Executive that (i) constitutes fraud, dishonesty, gross malfeasance
      of duty or conduct grossly inappropriate to the Executive’s office and
      (ii) is demonstrably likely to lead to material injury to the Bank or
      resulted or was intended to result in direct or indirect gain to or
      personal enrichment of the Executive; provided, however, that such conduct
      shall not constitute “Cause” unless there shall have been delivered to the
      Executive a written notice setting forth with specificity the reasons that
      the Bank believes the Executive’s conduct meets the standard set forth in
      this Subparagraph VIII (e) the Executive shall have been provided with an
      opportunity to be heard in person by the Board of Directors of FLAG (with
      the assistance of counsel, if desired) and, in the event of any such
      hearing, the decision of the Bank is confirmed following approval of such
      action by at least seventy-five (75%) of the membership of the Board of
      Directors of FLAG and only after providing Executive with at least thirty
      (30) days’ written notice, in which event the Bank shall have no further
      obligation to the Executive; or
 
 (e)  Conduct
resulting in the conviction of the Executive of a felony; or
 
 (f)
    Conduct
      by the Executive that results in the permanent removal of the Executive
      from his position as an officer or Executive of FLAG or the Bank pursuant
      to a written order by any regulatory agency with authority or jurisdiction
      over FLAG or the Bank, as the case may be.
 
 **IX.** **CHANGE
OF CONTROL**
 
 Change of
Control shall be deemed to be the cumulative transfer of more than fifty percent
(50%) of the voting stock of the Bank from the date of this Agreement. For the
purposes of this Agreement, transfers made on account of deaths or gifts,
transfers between family members or transfers to a qualified retirement plan
maintained by the Bank shall not be considered in determining whether there has
been a change in control.
 
 Upon a
Change of Control, if the Executive subsequently suffers a Termination of
Service (voluntary or involuntary), except for cause, within six (6) months
prior to or anytime subsequent to a Change of Control, then the Executive shall
receive the benefits in Paragraph IV herein upon attaining Normal Retirement Age
(Subparagraph III [B]), as if the Executive had been continuously employed by
the Bank until the Executive’s Normal Retirement Age.
 
 **X.** **RESTRICTIONS
ON FUNDING**
 
 The Bank
shall have no obligation to set aside, earmark or entrust any fund or money with
which to pay its obligations under this Executive Plan. The Executive, their
beneficiary(ies), or any successor in interest shall be and remain simply a
general creditor of the Bank in the same manner as any other creditor having a
general claim for matured and unpaid compensation.
 
 The Bank
reserves the absolute right, at its sole discretion, to either fund the
obligations undertaken by this Executive Plan or to refrain from funding the
same and to determine the extent, nature and method of such funding. Should the
Bank elect to fund this Executive Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability policies or annuities, the
Bank reserves the absolute right, in its sole discretion, to terminate such
funding at any time, in whole or in part. At no time shall any Executive be
deemed to have any lien, right, title or interest in any specific funding
investment or assets of the Bank.
 
 If the
Bank elects to invest in a life insurance, disability or annuity policy on the
life of the Executive, then the Executive shall assist the Bank by freely
submitting to a physical exam and supplying such additional information
necessary to obtain such insurance or annuities.
 
 **XI.** **MISCELLANEOUS**
 
 A. Alienability
and Assignment Prohibition:
 
 Neither
the Executive, nor the Executive’s surviving spouse, nor any other
beneficiary(ies) under this Executive Plan shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify or
otherwise encumber in advance any of the benefits payable hereunder nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance owed by the Executive or the
Executive’s beneficiary(ies), nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event the Executive or any
beneficiary attempts assignment, commutation, hypothecation, transfer or
disposal of the benefits hereunder, the Bank’s liabilities shall forthwith cease
and terminate.
 
 
 B. Binding
Obligation of the Bank and any Successor in Interest:
 
 The Bank
shall not merge or consolidate into or with another bank or sell substantially
all of its assets to another bank, firm or person until such bank, firm or
person expressly agree, in writing, to assume and discharge the duties and
obligations of the Bank under this Executive Plan. This Executive Plan shall be
binding upon the parties hereto, their successors, beneficiaries, heirs and
personal representatives.
 
 C. Amendment
or Revocation:
 
 Subject
to Paragraph XIII, it is agreed by and between the parties hereto that, during
the lifetime of the Executive, this Executive Plan may be amended or revoked at
any time or times, in whole or in part, by the mutual written consent of the
Executive and the Bank.
 
 D. Gender:
 
 Whenever
in this Executive Plan words are used in the masculine or neuter gender, they
shall be read and construed as in the masculine, feminine or neuter gender,
whenever they should so apply.
 
 E. Effect
on Other Bank Benefit Plans:
 
 Nothing
contained in this Executive Plan shall affect the right of the Executive to
participate in or be covered by any qualified or non-qualified pension,
profit-sharing, group, bonus or other supplemental compensation or fringe
benefit plan constituting a part of the Bank’s existing or future compensation
structure.
 
 F. Headings:
 
 Headings
and subheadings in this Executive Plan are inserted for reference and
convenience only and shall not be deemed a part of this Executive
Plan.
 
 G. Applicable
Law:
 
 The
validity and interpretation of this Agreement shall be governed by the laws of
the State of Georgia.
  H. 12
U.S.C. § 1828(k):
 
 Any
payments made to the Executive pursuant to this Executive Plan, or otherwise,
are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) or
any regulations promulgated thereunder.
 
 I. Partial
Invalidity:
 
 If any
term, provision, covenant, or condition of this Executive Plan is determined by
an arbitrator or a court, as the case may be, to be invalid, void, or
unenforceable, such determination shall not render any other term, provision,
covenant, or condition invalid, void, or unenforceable, and the Executive Plan
shall remain in full force and effect notwithstanding such partial
invalidity.
 
 J. Not a
Contract of Employment:
 
 This
Agreement shall not be deemed to constitute a contract of employment between the
parties hereto, nor shall any provision hereof restrict the right of the Bank to
discharge the Executive, or restrict the right of the Executive to terminate
employment.
 
 K. Present
Value:
 
 All
present value calculations under this Agreement shall be based on the following
discount rate:
 
 Discount
Rate:  The
discount rate as used in the FASB 87 calculations for the Executive Plan.
 
 **XII.**  **ERISA
PROVISION**
 
 A. Named
Fiduciary and Plan Administrator:
 
 The
“Named Fiduciary and Plan Administrator” of this Executive Plan shall be Flag
Bank until its resignation or removal by the Board. As Named Fiduciary and Plan
Administrator, the Bank shall be responsible for the management, control and
administration of the Executive Plan. The Named Fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the
Executive Plan including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
 
 
 B. Claims
Procedure and Arbitration:
 
 In the
event a dispute arises over benefits under this Executive Plan and benefits are
not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of
the Executive’s death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date payments are
refused. The Named Fiduciary and Plan Administrator shall review the written
claim and if the claim is denied, in whole or in part, they shall provide in
writing within sixty (60) days of receipt of such claim the specific reasons for
such denial, reference to the provisions of this Executive Plan upon which the
denial is based and any additional material or information necessary to perfect
the claim. Such written notice shall further indicate the additional steps to be
taken by claimants if a further review of the claim denial is desired. A claim
shall be deemed denied if the Named Fiduciary and Plan Administrator fail to
take any action within the aforesaid sixty-day period.
 
 If
claimants desire a second review they shall notify the Named Fiduciary and Plan
Administrator in writing within sixty (60) days of the first claim denial.
Claimants may review this Executive Plan or any documents relating thereto and
submit any written issues and comments they may feel appropriate. In their sole
discretion, the Named Fiduciary and Plan Administrator shall then review the
second claim and provide a written decision within sixty (60) days of receipt of
such claim. This decision shall likewise state the specific reasons for the
decision and shall include reference to specific provisions of the Plan
Agreement upon which the decision is based.
 
 If
claimants continue to dispute the benefit denial based upon completed
performance of this Executive Plan or the meaning and effect of the terms and
conditions thereof, then claimants may submit the dispute to an arbitrator for
final arbitration. The arbitrator shall be selected by mutual agreement of the
Bank and the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree that they and
their heirs, personal representatives, successors and assigns shall be bound by
the decision of such arbitrator with respect to any controversy properly
submitted to it for determination.
 
 Where a
dispute arises as to the Bank’s discharge of the Executive “for cause,” such
dispute shall likewise be submitted to arbitration as above described and the
parties hereto agree to be bound by the decision thereunder.
 
 
 **XIII.**
    **TERMINATION
      OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR
      REGULATIONS**
 
 The Bank
is entering into this Agreement upon the assumption that certain existing tax
laws, rules and regulations will continue in effect in their current form. If
any said assumptions should change and said change has a detrimental effect on
this Executive Plan, then the Bank reserves the right to terminate or modify
this Agreement accordingly. Upon a Change of Control (Paragraph IX), this
paragraph shall become null and void effective immediately upon said Change of
Control.
 
 **XIV.** **EFFECTIVE
DATE**
 
 The
Effective Date of this Executive Plan shall be April 9, 2004.
 
 
 **IN
WITNESS WHEREOF** , the
parties hereto acknowledge that each has carefully read this Agreement and
executed the original thereof on the first day set forth hereinabove, and that,
upon execution, each has received a conforming copy.
 
 **FLAG
BANK**
 Vienna,
Georgia
 
 
 
 /s/Beverly
Peavy      By:  /s/
Patti Davis -
SVP
 
 Witness  (Bank
Officer other than Insured)   Title
 
 
 
 /s/Lisa
S.
Lane  /s/
Joseph Daniel Speight,
Jr.
 
 Witness         Joseph Daniel Speight, Jr.