**EXHIBIT
10.27**
 **2004
Equity Incentive Plan**
 **Number
2004-000**
 
 **INCENTIVE
STOCK OPTION AWARD**
 **PURSUANT
TO THE FLAG FINANCIAL CORPORATION**
 **2004
EQUITY INCENTIVE PLAN**
 
 THIS
AWARD is made as of the Grant Date by FLAG FINANCIAL CORPORATION (the “Company”)
to **_______________** (the
“Optionee”).
 
 Upon and
subject to the Terms and Conditions attached hereto and incorporated herein by
reference, the Company hereby awards as of the Grant Date to Optionee an
incentive stock option (the “Option”), as described below, to purchase the
Option Shares.
 
 A. Grant
Date: **____________** .
 
 B. Type of
Option: Incentive Stock Option.
 
 C.
    Plan
      under which granted: Flag Financial Corporation 2004 Equity Incentive
      Plan.
 
 D.
    Option
      Shares: All or any part of**_______**shares of the Company’s $1.00 par value common stock (the “Common Stock”),
      subject to adjustment as provided in the attached Terms and
      Conditions.
 
 E.
    Exercise
      Price:**$______**per share, subject to adjustment as provided in the attached Terms and
      Conditions. The Exercise Price is, in the judgment of the Committee, not
      less than 100% of the Fair Market Value of a share of Common Stock on the
      Grant Date or, in the case of an Over 10% Owner, not less than 110% of the
      Fair Market Value of a share of Common Stock on the Grant
      Date.
 
 F.
    Option
      Period: The Option may be exercised only during the Option Period which
      commences on the Grant Date and ends, generally, on the earliest of (a)
      the tenth (10th) anniversary of the Grant Date (unless the Optionee is an
      Over 10% Owner, in which case the fifth (5th) anniversary of the Grant
      Date); (b) three (3) months following the date the Optionee ceases to be
      an employee of the Company (including any Parent or Subsidiary) except as
      provided under clause (c) or (d); (c) the effective date of the date the
      Optionee ceases to be an employee of the Company (including any Parent or
      Subsidiary) due to a termination by the Company for Cause (as defined in
      the Plan); or (d) one (1) year following the date the Optionee ceases to
      be an employee of the Company (including any Parent or Subsidiary) due to
      death, Disability (as defined in the Plan) or retirement at or after age
      65 (see Paragraph 18 of the attached Terms and Conditions for possible
      adverse tax consequences of exercising any portion of the Option more than
      three (3) months after retirement); provided that the Option may be
      exercised as to no more than the vested Option Shares, determined pursuant
      to the Vesting Schedule.*Note
      that other limitations to exercising the Option, as described in the
      attached Terms and Conditions, may apply*.
 
 G.
    Vesting
      Schedule: The Option Shares shall become vested in accordance with
      Schedule 1 hereto.
 
 IN
WITNESS WHEREOF, the parties hereto have executed and sealed this Award as of
the Grant Date set forth above.
 
 **OPTIONEE**       **FLAG
FINANCIAL CORPORATION**
 
 _________________________________   By: 
________________________
 Signature
 _________________________________   Title: 
_______________________
 Print or
type name
 
   
   **TERMS
AND CONDITIONS TO THE**
 **INCENTIVE
STOCK OPTION AWARD**
 **PURSUANT
TO THE FLAG FINANCIAL CORPORATION**
 **2004
EQUITY INCENTIVE PLAN**
 
 
 1. Exercise
of Option . Subject
to the provisions provided herein or in the Award made pursuant to the Flag
Financial Corporation 2004 Equity Incentive Plan:
 
 (a) the
Option may be exercised with respect to all or any portion of the vested Option
Shares (so long as the exercise is not made for less than 100 Option Shares or
the total remaining vested Option Shares, if less than 100 shares) at any time
during the Option Period by the delivery to the Company, at its principal place
of business, of a written notice of exercise in substantially the form attached
hereto as Exhibit 1, which shall be actually delivered to the Company no
earlier than thirty (30) days and no later than ten (10) days prior to the date
upon which Optionee desires to exercise all or any portion of the Option;
and
 
 (b) payment
to the Company of the Exercise Price *multiplied
by* the
number of Option Shares being purchased (the “Purchase Price”) as provided
in Section 3.
 
 Upon
acceptance of such notice and receipt of payment in full of the Purchase Price
and any tax withholding liability, if applicable, the Company shall cause to be
issued a certificate representing the Option Shares purchased.
 
 2. Withholding . To the
extent this Award is treated as a Nonqualified Stock Option pursuant to
Paragraph 18 hereof, the Optionee must satisfy his federal, state, and local, if
any, withholding taxes imposed by reason of the exercise of the Option either by
paying to the Company the full amount of the withholding obligation (i) in cash;
(ii) by tendering shares of Common Stock which have been owned by the Optionee
for at least six (6) months prior to the date of exercise having a Fair Market
Value equal to the withholding obligation; (iii) by electing, irrevocably and in
writing (the “Withholding Election”), to have the smallest number of whole
shares of Common Stock withheld by the Company which, when multiplied by the
Fair Market Value of the Common Stock as of the date the Option is exercised, is
sufficient to satisfy the amount of withholding tax; or (iv) by any combination
of the above. Optionee may make a Withholding Election only if the following
conditions are met:
 
 (a) the
Withholding Election is made on or prior to the date on which the amount of tax
required to be withheld is determined (the “Tax Date”) by executing and
delivering to the Company a properly completed Notice of Withholding Election in
substantially the form attached hereto as Exhibit 2; and
 
 (b) any
Withholding Election will be irrevocable; however, the Committee may, in its
sole discretion, disapprove and give no effect to the Withholding Election.
 
 3. Purchase
Price . Payment
of the Purchase Price for all Option Shares purchased pursuant to the exercise
of an Option shall be made in cash or certified check or, as long as the Common
Stock is traded by brokers, whether on a national securities exchange or
otherwise, by receipt of the Purchase Price in cash from a broker, dealer or
other “creditor” as defined by Regulation T issued by the Board of
Governors of the Federal Reserve System following delivery by the Optionee to
the Committee of instructions in a form acceptable to the Committee regarding
delivery to such broker, dealer or other creditor of that number of Option
Shares with respect to which the Option is exercised.
 
 4. Rights
as Shareholder . Until
the stock certificates reflecting the Option Shares accruing to the Optionee
upon exercise of the Option are issued to the Optionee, the Optionee shall have
no rights as a shareholder with respect to such Option Shares. The Company shall
make no adjustment for any dividends or distribu-tions or other rights on or
with respect to Option Shares for which the record date is prior to the issuance
of that stock certificate, except as the Plan or the attached Award otherwise
provides.
 
 5. Restriction
on Transfer of Option and of Option Shares . The
Option evidenced hereby is nontransferable other than by will or the laws of
descent and distribution and shall be exercisable during the lifetime of the
Optionee only by the Optionee (or in the event of his Disability, by his
personal representative) and after his death, only by his legatee or the
executor of his estate.
 
 6. Changes
in Capitalization .
 
 (a) If the
number of shares of Common Stock shall be increased or decreased by reason of a
subdivision or combination of shares of Common Stock, the payment of a stock
dividend in shares of Common Stock or any other increase or decrease in the
number of shares of Common Stock outstanding effected without receipt of
consideration by the Company, an appropriate adjustment shall be made by the
Committee, in a manner determined in its sole discretion, in the number and kind
of Option Shares and in the Exercise Price.
 
 (b) If the
Company shall be the surviving corporation in any merger consolidation,
reorganization, extraordinary dividend, spin-off or other change in the capital
structure of the Company, the Optionee shall be entitled to purchase the number
and class of securities to which a holder of the number of shares of Common
Stock subject to the Option at the time of the transaction would have been
entitled to receive as a result of such transaction, and a corresponding
adjustment, where appropriate, shall be made in the Exercise Price. In the event
of a Change in Control or other corporate transaction pursuant to which the
Company is not the surviving entity, the Committee may provide for the
assumption of the Option by the surviving entity or the substitution of a new
option, adjusted in a manner similar to that contemplated by the immediately
preceding sentence; however, if the surviving entity does not agree to the
assumption or substitution of the Option, the Committee may elect to terminate
the Option Period as of the effective date of the Change in Control in
consideration of the payment to the Optionee of an amount equal to the
difference between the then Fair Market Value of a share of Common Stock and the
Exercise Price multiplied by each vested Option Share which has not been
exercised as of the effective date of the Change in Control. A dissolution or
liquidation of the Company shall cause the Option to terminate as to any portion
thereof not exercised as of the effective date of the dissolution or
liquidation.
 
 (c) The
existence of the Plan and the Option granted pursuant to this Agreement shall
not affect in any way the right or power of the Company to make or authorize any
adjustment, reclassification, reorganization or other change in its capital or
business structure, any merger or consolidation of the Company, any issue of
debt or equity securities having preferences or priorities as to the Common
Stock or the rights thereof, the dissolution or liquidation of the Company, any
sale or transfer of all or any part of its business or assets, or any other
corporate act or proceeding. Any adjustment pursuant to this Section may
provide, in the Committee’s discretion, for the elimination without payment
therefor of any fractional shares that might otherwise become subject to any
Option.
 
 7. Special
Limitation on Exercise . No
purported exercise of the Option shall be effective without the approval of the
Committee, which may be withheld to the extent that the exercise, either
individually or in the aggregate together with the exercise of other previously
exercised stock options and/or offers and sales pursuant to any prior or
contemplated offering of securities, would, in the sole and absolute judgment of
the Committee, require the filing of a registration statement with the United
States Securities and Exchange Commission or with the securities commission of
any state. If a registration statement is not in effect under the Securities Act
of 1933 or any applicable state securities law with respect to shares of Common
Stock purchasable or otherwise deliverable under the Option, the Optionee (a)
shall deliver to the Company, prior to the exercise of the Option or as a
condition to the delivery of Common Stock pursuant to the exercise of an Option
exercise, such information, representations and warranties as the Company may
reasonably request in order for the Company to be able to satisfy itself that
the Option Shares are being acquired in accordance with the terms of an
applicable exemption from the securities registration requirements of applicable
federal and state securities laws and (b) shall agree that the shares of Common
Stock so acquired will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities law.
 
 8. Legend
on Stock Certificates . 
Certificates evidencing the Option Shares, to the extent appropriate at the
time, shall have noted conspicuously on the certificates a legend intended to
give all persons full notice of the existence of the conditions, restrictions,
rights and obligations set forth herein and in the Plan.
 
 9. Governing
Laws . This
Award and the Terms and Conditions shall be construed, administered and enforced
according to the laws of the State of Georgia.
 
 10. Successors . This
Award and the Terms and Conditions shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and permitted assigns of
the Optionee and the Company.
 
 11. Notice . Except
as otherwise specified herein, all notices and other communications under this
Award shall be in writing and shall be deemed to have been given if personally
delivered or if sent by registered or certified United States mail, return
receipt requested, postage prepaid, addressed to the proposed recipient at the
last known address of the recipient. Any party may designate any other address
to which notices shall be sent by giving notice of the address to the other
parties in the same manner as provided herein.
 
 12. Severability . In the
event that any one or more of the provisions or portion thereof contained in the
Award and these Terms and Conditions shall for any reason be held to be invalid,
illegal or unenforceable in any respect, the same shall not invalidate or
otherwise affect any other provisions of the Award and these Terms and
Conditions, and the Award and these Terms and Conditions shall be construed as
if the invalid, illegal or unenforceable provision or portion thereof had never
been contained herein.
 
 13. Entire
Agreement . Subject
to the terms and conditions of the Plan, the Award and the Terms and Conditions
express the entire understanding of the parties with respect to the
Option.
 
 14. Violation . Any
transfer, pledge, sale, assignment, or hypothecation of the Option or any
portion thereof shall be a violation of the terms of the Award or these Terms
and Conditions and shall be void and without effect.
 
 15. Headings
and Capitalized Terms . Section
headings used herein are for convenience of reference only and shall not be
considered in construing the Award or these Terms and Conditions. Capitalized
terms used, but not defined, in either the Award or the Terms and Conditions
shall be given the meaning ascribed to them in the Plan.
 
 16. Specific
Performance . In the
event of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of the Award and these Terms and Conditions, the party
or parties who are thereby aggrieved shall have the right to specific
performance and injunction in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be
cumulative.
 
 17. No
Right to Continued Retention . Neither
the establishment of the Plan nor the award of Option Shares hereunder shall be
construed as giving the Optionee the right to continued employment with the
Company or any affiliate.
 
 18. Qualified
Status of Option .
 
 (a) In
accordance with Section 2.4 of the Plan, the aggregate Fair Market Value
(determined as of the date an Incentive Stock Option is granted) of the Option
Shares which become exercisable for the first time by an individual during any
calendar year shall not exceed $100,000. If the foregoing limitation is exceeded
with respect to any portion of the Option Shares, that portion of the Option
Shares which cause the limitation to be exceeded shall be treated as a
Nonqualified Stock Option.
 
 (b) In the
event of the Optionee’s retirement, any portion of the Option Shares which has
not been exercised within three (3) months following the date of the Optionee’s
retirement shall be treated as a Nonqualified Stock Option.
 
  
  **EXHIBIT
1**
 
 **NOTICE
OF EXERCISE OF**
 **STOCK
OPTION TO PURCHASE**
 **COMMON
STOCK OF**
 **FLAG
FINANCIAL CORPORATION**
 
 
 Name
_________________________
 Address _______________________
 ______________________________
 Date__________________________
 
 
 
 
 
 Flag
Financial Corporation
 3475
Piedmont Road
 Suite
550
 Atlanta,
GA 30305
 Attn:
Corporate Secretary
 
 Re:  Exercise
of Incentive Stock Option
 
 Gentlemen:
 
 Subject
to acceptance hereof by Flag Financial Corporation (the “Company”) and pursuant
to the provisions of the Flag Financial Corporation 2004 Equity Incentive Plan
(the “Plan”), I hereby give notice of my election to exercise options granted to
me to purchase ______________ shares of Common Stock of the Company under the
Incentive Stock Option Award (the “Award”) dated as of ____________. The
purchase shall take place as of __________, 200__ (the “Exercise
Date”).
 
 On or
before the Exercise Date, I will pay the applicable purchase price as
follows:
 
 
 [  ] by
delivery of cash or a certified check for $___________ for the full purchase
price payable to the order of Flag Financial Corporation.
 
 [ ] by
delivery of a certified check for $___________ representing a portion of the
purchase price with the balance to consist of shares of Common Stock that I have
owned for at least six months and that are represented by a stock certificate I
will surrender to the Company with my endorsement. If the number of shares of
Common Stock represented by such stock certificate exceed the number to be
applied against the purchase price, I understand that a new stock certificate
will be issued to me reflecting the excess number of shares.
 
 [ ] by
delivery of a stock certificate representing shares of Common Stock that I have
owned for at least six months which I will surrender to the Company with my
endorsement as payment of the purchase price. If the number of shares of Common
Stock represented by such certificate exceed the number to be applied against
the purchase price, I understand that a new certificate will be issued to me
reflecting the excess number of shares.
 
 [  ] by
delivery of the purchase price by _________________________, a broker, dealer or
other “creditor” as defined by Regulation T issued by the Board of
Governors of the Federal Reserve System. I hereby authorize the Company to issue
a stock certificate for the number of shares indicated above in the name of said
broker, dealer or other creditor or its nominee pursuant to instructions
received by the Company and to deliver said stock certificate directly to that
broker, dealer or other creditor (or to such other party specified in the
instructions received by the Company from the broker, dealer or other creditor)
upon receipt of the purchase price.
 
 The
required federal, state and local income tax withholding obligations, if any, on
the exercise of the Award shall also be paid on or before the Exercise Date in
cash or with previously owned shares of Common Stock, as provided in the Award,
or in the manner provided in the Withholding Election previously tendered or to
be tendered to the Company no later than the Exercise Date.
 
 As soon
as the stock certificate is registered in my name, please deliver it to me at
the above address.
 
 If the
Common Stock being acquired is not registered for issuance to and resale by the
Optionee pursuant to an effective registration statement on Form S-8 (or
successor form) filed under the Securities Act of 1933, as amended (the “1933
Act”), I hereby represent, warrant, covenant, and agree with the Company as
follows:
 
 The
shares of the Common Stock being acquired by me will be acquired for my own
account without the participation of any other person, with the intent of
holding the Common Stock for investment and without the intent of participating,
directly or indirectly, in a distribution of the Common Stock and not with a
view to, or for resale in connection with, any distribution of the Common Stock,
nor am I aware of the existence of any distribution of the Common Stock;
 
 I am not
acquiring the Common Stock based upon any representation, oral or written, by
any person with respect to the future value of, or income from, the Common Stock
but rather upon an independent examination and judgment as to the prospects of
the Company;
 
 The
Common Stock was not offered to me by means of publicly disseminated
advertisements or sales literature, nor am I aware of any offers made to other
persons by such means;
 
 I am able
to bear the economic risks of the investment in the Common Stock, including the
risk of a complete loss of my investment therein;
 
 I
understand and agree that the Common Stock will be issued and sold to me without
registration under any state law relating to the registration of securities for
sale, and will be issued and sold in reliance on the exemptions from
registration under the 1933 Act, provided by Sections 3(b) and/or 4(2) thereof
and the rules and regulations promulgated thereunder;
 
 The
Common Stock cannot be offered for sale, sold or transferred by me other than
pursuant to: (A) an effective registration under the 1933 Act or in a
transaction otherwise in compliance with the 1933 Act; and (B) evidence
satisfactory to the Company of compliance with the applicable securities laws of
other jurisdictions. The Company shall be entitled to rely upon an opinion of
counsel satisfactory to it with respect to compliance with the above
laws;
 
 The
Company will be under no obligation to register the Common Stock or to comply
with any exemption available for sale of the Common Stock without registration
or filing, and the information or conditions necessary to permit routine sales
of securities of the Company under Rule 144 under the 1933 Act are not now
available and no assurance has been given that it or they will become available.
The Company is under no obligation to act in any manner so as to make Rule 144
available with respect to the Common Stock;
 
 I have
and have had complete access to and the opportunity to review and make copies of
all material documents related to the business of the Company, including, but
not limited to, contracts, financial statements, tax returns, leases, deeds and
other books and records. I have examined such of these documents as I wished and
am familiar with the business and affairs of the Company. I realize that the
purchase of the Common Stock is a speculative investment and that any possible
profit therefrom is uncertain;
 
 I have
had the opportunity to ask questions of and receive answers from the Company and
any person acting on its behalf and to obtain all material information
reasonably available with respect to the Company and its affairs. I have
received all information and data with respect to the Company which I have
requested and which I have deemed relevant in connection with the evaluation of
the merits and risks of my investment in the Company;
 
 I have
such knowledge and experience in financial and business matters that I am
capable of evaluating the merits and risks of the purchase of the Common Stock
hereunder and I am able to bear the economic risk of such purchase;
and
 
 The
agreements, representations, warranties and covenants made by me herein extend
to and apply to all of the Common Stock of the Company issued to me pursuant to
this Award. Acceptance by me of the certificate representing such Common Stock
shall constitute a confirmation by me that all such agreements,
representa-tions, warranties and covenants made herein shall be true and correct
at that time.
 
 I
understand that the certificates representing the shares being purchased by me
in accordance with this notice shall bear a legend referring to the foregoing
covenants, representations and warranties and restrictions on transfer, and I
agree that a legend to that effect may be placed on any certificate which may be
issued to me as a substitute for the certificates being acquired by me in
accordance with this notice. I further understand that capitalized terms used in
this Notice of Exercise without definition shall have the meanings given to them
in the Plan.
 
 Very
truly yours,
 
 
 
 
 
 AGREED TO
AND ACCEPTED:
 
 FLAG
FINANCIAL CORPORATION
 
 By: 
________________________
 
 Title: 
_______________________
 
 Number of
Shares
 Exercised: 
___________________
 
 Number of
Shares
 Remaining:___________________    Date: 
______________________
 
 
 
   
   **EXHIBIT
2**
 
 **NOTICE
OF WITHHOLDING ELECTION**
 **FLAG
FINANCIAL CORPORATION**
 
 
 TO:  _____________________________________
 
 FROM: _____________________________________
 
 RE: Withholding
Election
 
 
 This
election relates to the Option identified in Paragraph 3 below. I hereby
certify that:
 
 (1)
    My
      correct name and social security number and my current address are set
      forth at the end of this document.
 
 (2) I am
(check one, whichever is applicable).
 
 [
      ]
    the
      original recipient of the Option.
 
 [
      ]
    the
      legal representative of the estate of the original recipient of the
      Option.
 
 [
      ]
    a
      legatee of the original recipient of the
Option.
 
 [
      ]
    the
      legal guardian of the original recipient of the
Option.
 
 (3)
    The
      Option to which this election relates was issued under the Flag Financial
      Corporation 2004 Equity Incentive Plan (the “Plan”) in the name of
      _________________________ for the purchase of a total of _________ shares
      of Common Stock of the Company. This election relates to _______________
      shares of Common Stock issuable upon exercise of the Option, provided that
      the numbers set forth above shall be deemed changed as appropriate to
      reflect the applicable Plan provisions.
 
 (4)
    
    In
      connection with any exercise of the Option with respect to the Common
      Stock, I hereby elect:
 
 [  ]
    to
      have certain of the shares issuable pursuant to the exercise withheld by
      the Company for the purpose of having the value of the shares applied to
      pay federal, state, and local, if any, taxes arising from the
      exercise.
 
 [  ]
    to
      tender shares held by me for a period of at least six (6) months prior to
      the exercise of the Option for the purpose of having the value of the
      shares applied to pay such taxes.
 
 The
      shares to be withheld or tendered, as applicable, shall have, as of the
      Tax Date applicable to the exercise, a Fair Market Value equal to the
      minimum statutory tax withholding requirement under federal, state, and
      local law in connection with the exercise.
 
 (5)
    This
      Withholding Election is made no later than the Tax Date and is otherwise
      timely made pursuant to the Plan.
 
 (6)
    I
      understand that this Withholding Election may not be revised, amended or
      revoked by me.
 
 (7)
    I
      further understand that, if applicable, the Company shall withhold from
      the shares a whole number of shares having the value specified in
      Paragraph 4 above.
 
 (8)
    The
      Plan has been made available to me by the Company. I have read and
      understand the Plan and I have no reason to believe that any of the
      conditions to the making of this Withholding Election have not been
      met.
 
 (9)
    Capitalized
      terms used in this Notice of Withholding Election without definition shall
      have the meanings given to them in the
Plan.
 
 
 Dated: 
________________________                                      
_______________________________
 Signature
 
 __________________                  ______________________________
 Social
Security Number   Name
(Printed)
 
 _______________________________
 Street Address
 
 _______________________________
 City, State, Zip
Code
   
   
 **SCHEDULE
1**
 
 **VESTING
SCHEDULE**
 **INCENTIVE
STOCK OPTION AWARD**
 **ISSUED
PURSUANT TO THE**
 **FLAG
FINANCIAL CORPORATION**
 **2004
EQUITY INCENTIVE PLAN**
 
 
 A.
    The
      Option Shares shall become vested Option Shares following completion of
      the years of service as an employee of the Company or any Parent or
      Subsidiary as indicated in the schedule
below:
 
 Percentage
      of Option Shares
      Which
      are Vested Option Shares
    Years
      of Service
      after
      the Grant DateIndividually
      determined vesting schedules to be set forth here.
 
 B.
    Notwithstanding
      Part A, in the event of the death or Disability of Optionee or upon a
      Change in Control, the Option will be fully vested as of a date determined
      by the Committee. With respect to a Change in Control, such date shall be
      no less than ten (10) days prior to the effective date of the Change in
      Control.
 C.
    Notwithstanding
      Part A or Part B, the Optionee may exercise the Option for less than the
      full number of vested Option Shares, but such exercise may not be made for
      less than 100 shares or the total remaining vested Option Shares subject
      to the Option, if less than 100 shares.
 
 D.
    For
      purposes of the Vesting Schedule, Optionee shall be granted a year of
      service for each twelve-consecutive-month period following the Grant Date
      and during which Optionee continues, at all times, as an employee of the
      Company or any Parent or Subsidiary.