**EXHIBIT
10.25**
 
 INCENTIVE
STOCK OPTION NO.  ________
 
 
 FLAG
FINANCIAL CORPORATION
 1994
EMPLOYEES STOCK INCENTIVE PLAN
 
 INCENTIVE
STOCK OPTION AGREEMENT
 
 
 This
Incentive Stock Option Agreement (the “Agreement”) is entered into as of the
_________ day of __________________, ________, by and between FLAG Financial
Corporation (the “Company”) and ________________________________
(“Optionee”).
 
 *WITNESSETH:*
 
 WHEREAS,
the Company (which term as used herein shall include any parent or subsidiary of
the Company) has adopted the FLAG Financial Corporation 1994 Employees Stock
Incentive Plan (the “Plan”) which is administered by a committee appointed by
the Company’s Board of Directors (the “Committee”); and
 
 WHEREAS,
effective as of __________________, ________, the Committee granted to Optionee
an incentive stock option under, and in accordance with, the terms of the Plan
to reward Optionee for his efforts on behalf of the Company and to encourage his
continued loyalty and diligence; and
 
 WHEREAS,
to comply with the terms of the Plan and to further the interests of the Company
and Optionee, the parties hereto have set forth the terms of such option in
writing in this Incentive Stock Option Agreement;
 
 NOW,
THEREFORE, for and in consideration of the premises and mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as
follows:
 
 1. Grant
of Option .
 
 Effective
as of __________________, ________, the Committee granted Optionee an incentive
stock option. Under that option and subject to the terms and conditions set
forth herein, Optionee shall have the right to purchase _________ shares of the
$1.00 par value common stock of the Company (the “Common Stock”); such
__________ shares hereinafter are referred to as the “Optioned Shares,” and this
option hereinafter is referred to as the “Option”. The Option is intended to be
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).
 
 2. Option
Price .
 
 The price
per share for each of the Optioned Shares shall be $_______________ (the “Option
Price”), which is the Fair Market Value of the Optioned Shares on
_______________, ________________, the date of grant.
 
 3. Exercise
of Option .
 
 (a) General . The
Option may be exercised by Optionee’s delivery to the Secretary of the Company
of a written notice of exercise executed by Optionee (the “Notice of Exercise”).
The Notice of Exercise shall be substantially in the form set forth as Exhibit
A, attached hereto and made a part hereof, and shall identify the Option and the
number of Optioned Shares that are being exercised.
 
 (b) Beginning
of Exercise Period . The
Option first shall become exercisable according to the following schedule;
provided, if Optionee ceases to be an employee of the Company, his rights with
regard to all non-vested Options under this schedule shall cease
immediately:
 
 
 Individually
determined vesting schedule to be set forth here.
 
 Notwithstanding
the foregoing, the Option shall become 100% vested immediately upon the death or
Disability of Optionee or upon a Change of Control.
 
 (c) Partial
Exercise .
Optionee may exercise the Option for less than the full number of exercisable
Optioned Shares, but such exercise may not be made for less than 100 shares or
the total remaining shares subject to the Option, if less than 100
shares.
 
 4. Termination
of Option .
 
 Notwithstanding
any provisions to the contrary herein, the Option shall not be exercisable
either in whole or in part after the earliest of:
 
 (a) Ten years
from the date of grant;
 
 (b) The date
that is immediately prior to the first anniversary of the date on which Optionee
dies (i) while employed by the Company, (ii) within the three-month period that
begins on the date on which Optionee ceases to be an employee of the Company for
any reason other than death or Disability or (iii) within the one-year period
that begins on the date on which Optionee ceases to be an employee of the
Company due to Disability;
 
 (c) The date
of expiration of the one-year period that begins on the date on which Optionee
ceases to be an employee of the Company due to Disability or retirement;
provided, if Optionee dies during such one-year period, the terms of subsection
(b) shall control;
 
 (d) The date
of expiration of the three-month period that begins on the date on which
Optionee ceases to be an employee of the Company for any reason other than death
or disability;
 
 (e) The date
on which the Company gives notice (or is deemed to have given notice) to
Optionee of his termination of employment for cause, all as described in Section
2.5 of the Plan; or
 
 (f) Such
other earlier date as may be required under the terms of the Plan.
 
 5 *.* Option
Non-Transferable .
 
 The
Option shall not be transferable by Optionee other than by will or by the laws
of descent and distribution. During the lifetime of Optionee, the Option shall
be exercisable only by Optionee (or, if he becomes disabled or otherwise
incapacitated, by the guardian of his property or his duly appointed attorney
in-fact) and shall not be assignable or transferable by the Optionee and,
subject to Section 6 hereof, no other person shall acquire any rights in the
Option.
 
 6. Death
Optionee and Transfer of Option .
 
 In the
event of the death of Optionee while in the employ of the Company, within a
period of one year after the termination of his employment with the Company due
to Disability, or within a three-month period after the employee ceases to be an
employee of the Company for any reason other than for cause, all or any of the
unexercised portion of the Option owned by the deceased Optionee may be
exercised by Optionee’s personal representatives, heirs or legatees at any time
prior to the first anniversary of the date of the death of Optionee, but in no
event later than the date as of which such Option expires pursuant to Section 4
hereof. Such exercise shall be effected in accordance with the terms hereof as
if such representative, heir or legatee was Optionee herein.
 
 7. Medium
and Time of Payment of Option Price .
 
 (a) General . The
Option Price shall be payable by Optionee (or his successors in accordance with
Section 6 hereof) upon exercise of the Option and shall be paid in cash, in
shares of the Common Stock, or any combination thereof.
 
 (b) Payment
in Shares of the Common Stock. If
Optionee pays all or part of the Option Price with shares of the Common Stock,
the following conditions shall apply:
 
 (i) Optionee
shall deliver to the Secretary of the Company a certificate or certificates for
shares of the Common Stock duly endorsed for transfer to the Company with
signature guaranteed by a member firm of a national stock exchange or by a
national or state bank (or guaranteed or notarized in such other manner as the
Committee may require);
 
 (ii) Optionee
must have held any shares of the Common Stock used to pay the Option Price for
at least six months prior to the date such payment is made;
 
 (iii) Such
shares shall be valued on the basis of the Fair Market Value of the Common Stock
on the date of exercise pursuant to the terms of the Plan; and
 
 (iv) The value
of such Common Stock shall be less than or equal to the Option Price. If
Optionee delivers Common Stock with a value that is less than the Option Price,
then Optionee shall pay the balance of the Option Price in a form allowed under
subsection (a) above.
 
 In
addition to the payment of the Option Price, Optionee also shall pay in cash (or
have withheld from his normal pay) an amount equal to the amount, if any, which
the Company at the time of exercise is required to withhold under the income tax
and FICA withholding provisions of the Internal Revenue Code of 1986, as
amended, and the income tax laws of the state of the Optionee’s
residence.
 
 8. Agreement
of Optionee .
 
 Optionee
acknowledges that he has read Section 9 of the Plan and understands that certain
restrictions may apply with respect to shares of the Common Stock acquired by
him pursuant to his exercise of the Option (including restrictions on resale
applicable to “affiliates” under Rule 144 of the Securities Act of 1933, as
amended, and restrictions on resale applicable to shares of the Common Stock
that have not been registered under the Securities Act of 1933, as amended, and
applicable state securities laws). Optionee hereby agrees to execute such
documents and take such actions as the Company may require with respect to state
and federal securities laws and restrictions on the resale of such shares which
may pertain.
 
 9. Delivery
of Stock Certificates .
 
 As
promptly as practical after the date of exercise of the Option and the receipt
by the Company of full payment therefor, the Company shall deliver to Optionee a
stock certificate representing the shares of the Common Stock acquired by
Optionee pursuant to his exercise of the Option.
 
 10. Notices .
 
 All
notices or other communications hereunder shall be in writing and shall be
effective (i) when personally delivered by courier (including overnight
carriers) or otherwise to the party to be given such notice or other
communication or (ii) on the third business day following the date deposited in
the United States mail if such notice or other communication is sent by
certified or registered mail with return receipt requested and postage thereon
fully prepaid. The addresses for such notices shall be as follows:
 
 If to the
Company:
 
 FLAG
Financial Corporation
 Attention:
Corporate Secretary
 101
North Greenwood Street
 LaGrange,
Georgia 30240
 
 If to
Optionee:
 
 
 
 
 
 
 
 
 
 Any party
hereto, by notice of the other party hereunder, may change its address for
receipt of notices hereunder.
 
 11. Other
Terms and Conditions .
 
 In
addition to the terms and conditions set forth herein, the Option is subject to
and governed by the other terms and conditions set forth in the Plan and in any
Schedule I attached hereto, each of which is hereby incorporated by reference.
In the event of any conflict between the provisions of this Agreement and the
Plan, the Plan shall control.
 
 12. Miscellaneous .
 
 (a) The
granting of the Option and the execution of this Agreement shall not give
Optionee any rights to similar grants in the future years or any right to be
retained in the employ of the Company or to interfere in any way with the right
of the Company to terminate Optionee’s employment at any time.
 
 (b) Unless
and except as otherwise specifically provided in this Agreement, Optionee shall
have no right of a shareholder with respect to any shares covered by the Option
until the date of issuance of a stock certificate to him for such
shares.
 
 (c) If any
term, provision, covenant or restriction contained in this Agreement is held by
a court or a federal regulatory agency of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected **,** impaired
or invalidated. If for any reason such court or regulatory agency determines
that this Agreement will not permit Optionee to acquire the fall number of
Optioned Shares, it is the express intention of the Company to allow Optionee to
acquire such lesser number of shares as may be permissible without any amendment
for modification hereof.
 
 (d) This
Agreement shall be construed and enforced in accordance with the laws of
Delaware.
 
 (e) This
Agreement, together with the Plan, contains the entire understanding among the
parties and supercedes any prior understanding and agreements between them
representing the subject matter hereof. There are no representations,
agreements, arrangements or understandings, oral or written, between and among
the parties hereto relating to the subject matter hereof which are not fully
expressed herein and in the Plan.
 
 (f) Section
and other headings contained in this Agreement are for reference purposes only
and are in no way intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
 
 (g) This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which shall constitute one agreement, and the
signatures of any party or any counterpart shall be deemed to be a signature to,
and may be appended to, any other counterpart.
 
 IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the first
date written above.
 
 
 FLAG
Financial Corporation
 
 By: 
___________________________
 
 Title: 
__________________________
 
 
 OPTIONEE:
 
 _______________________________
 Signature
 
 
 
 _______________________________
 Print or
type name
 
 
 
  *EXHIBIT
A*
 
 FLAG
Financial Corporation
 1994
Employees Stock Incentive Plan
 
 **NOTICE
OF EXERCISE FOR INCENTIVE STOCK OPTION AGREEMIENT**
 
 This
Notice of Exercise is given pursuant to the terms of the Incentive Stock Option
Agreement, dated ____________________, _______________, between FLAG Financial
Corporation (the “Company”) and the undersigned Optionee (the “Agreement”) which
Agreement represents Incentive Stock Option No._________ and which is made a
part hereof and incorporated herein by reference.
 
 EXERCISE
OF OPTION .
Optionee hereby exercises his option to purchase ________ of his Optioned
Shares. Optionee hereby delivers, together with this written statement of
exercise, the full Option Price with respect to the exercised Optioned Shares,
which consist of: [COMPLETE ONLY ONE]
 
 š Cash in
the total amount of $
 
 š ________ Shares of
the Company’s Common Stock.
 
 š Cash in
the total amount of $_______________
 And __________ Shares of the Company’s Common Stock.
 
 š Other
(specify):
 
 Acknowledgement .
Optionee hereby acknowledges that, to the extent he is an “affiliate” of the
Company (as that term is defined in Rule 144 promulgated under the Securities
Act of 1933, as amended), or to the extent that the Optioned Shares have not
been registered under the Securities Act of 1933, as amended, or applicable
state securities laws, any shares of the Company’s Common Stock, acquired by him
as a result of his exercise of the Option pursuant to this Notice are subject
to, and the certificates representing such shares shall be legended to reflect,
certain trading restrictions under applicable securities laws (including
particularly the Securities and Exchange Commission’s Rule 144), all as
described in Section 9 of the Plan, and Optionee hereby agrees to comply with
all such restrictions and to execute such documents or take such other actions
as the Company may require in connection with such restrictions.
 
 Executed
this _________ day of ___________________ ,
________.
 
 
 OPTIONEE:
 
 _________________________
 Signature
 
 
 __________________________
 Print or type name
 
 FLAG
Financial Corporation hereby acknowledges receipt of this Notice of Exercise and
receipt of payment in the form and amount indicated above, all on this ________
day of ___________, _________.
 
 
 FLAG
Financial Corporation
 
 By: 
_____________________________
 
 Title: 
____________________________