Document:

Flag Incentive Option Award

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 Date

	 	 
	 	 
	 	 
	 	 
	
      Individually
      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.Flag Executivfe Salary Continuation Agrmt

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
(65th)
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 00/100th
Dollars 
($136,000.00). Said benefit shall be paid in one hundred eighty (180) equal
monthly installments (1/12th 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
(1/12th 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.       
TERMINATION
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.

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