Document:

EXHIBIT 10.1

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

     THIS  AGREEMENT  is  made  as  of February 21, 2002 (the "Effective Date"),
between FLAG Financial Corporation, a Georgia corporation ("FLAG"); FLAG Bank, a
bank  subsidiary  of FLAG (the "Bank") (collectively, the "Employer"); and PATTI
S.  DAVIS,  a  resident  of  the  State  of  Georgia  (the  "Employee").

                                    RECITALS:

     The  Employer employs the Employee as Senior Vice President of FLAG and the
Bank  under the terms of that certain Employment Agreement dated January 1, 2001
(the  "Employment  Agreement").

     The  Employer  and  Employee  desire  to  amend  and restate the Employment
Agreement  on  the  terms  and  conditions  set  forth  herein.

     In  consideration  of  the  above  premises  and  the  mutual  agreements
hereinafter  set  forth,  the  parties  hereby  agree  as  follows:

1.  DEFINITIONS.  Whenever used in this Agreement, the following terms and their
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variant  forms  shall  have  the  meaning  set  forth  below:

     1.1  "Affiliate"  shall  mean  any  business  entity which controls FLAG or
           ---------
is  controlled  by  or  is  under  common  control  with  FLAG.

     1.2  "Agreement"  shall  mean  this Agreement and any exhibits incorporated
           ---------
herein  together with any amendments hereto made in the manner described in this
Agreement.

     1.3  "Area"  shall  mean  the  geographic  area  within  the  boundaries of
           ----
Dooly,  Troup  and  Upson  Counties,  Georgia.  It  is the express intent of the
parties  that  the  Area  as  defined  herein is in the area where the Executive
performs  services  on  behalf  of  the  Employer under this Agreement as of the
Effective  Date.

     1.4  "Average  Monthly  Compensation"  shall  mean  the quotient determined
           ------------------------------
(a)  by  dividing the sum of the Employee's then current Base Salary (as defined
in  Section  4.1  hereof)  and  the  greater of the most recently paid Incentive
Compensation  (as  defined in Section 4.2(a) hereof) or the average of Incentive
Compensation  paid  over  the  three  previous  years  (b)  by  twelve.

     1.5  "Bank"  shall  mean  FLAG  Bank  or  its  successor(s).
           ----

     1.6  "Business  of  the  Employer" shall mean the business conducted by the
           ---------------------------
Employer,  which  is the business of banking, including the solicitation of time
and  demand  deposits  and  the  making of residential, consumer, commercial and
corporate  loans.

     1.7  "Cause"  shall  mean:
           -----

          1.7.1     With  respect  to  termination  by  the  Employer:

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          (a)  A material breach of the terms of this Agreement by the Employee,
     including,  without  limitation,  failure  by  the  Employee to perform the
     Employees'  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  Employee  by  the  Employer;

          (b)  Conduct  by  the Employee that (i) constitutes fraud, dishonesty,
     gross  malfeasance  of  duty  or  conduct  grossly  inappropriate  to  the
     Employee's  office  and  (ii)  is  demonstrably  likely to lead to material
     injury  to  the Employer or resulted or was intended to result in direct or
     indirect gain to or personal enrichment of the Employee; provided, however,
     that such conduct shall not constitute "Cause" unless there shall have been
     delivered  to  the Employee a written notice setting forth with specificity
     the  reasons  that  the  Employer believes the Employee's conduct meets the
     standard  set  forth in this Section 1.7.1(b), the Employee 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 Employer is confirmed by a
     vote  of  the  membership  of the Board of Directors of FLAG as provided in
     Section  3.2.1;

          (c)  Conduct  resulting in the conviction of the Employee of a felony;
     or

          (d)  Conduct  by the Employee that results in the permanent removal of
     the  Employee  from  her  position as an officer or employee 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.

     1.7.2     With  respect  to  termination  by  the  Employee:

          (a)  a  material diminution in the powers, responsibilities, duties or
     total  compensation  of  the  Employee  hereunder  by  the  Employer, which
     condition  remains  uncured  after  the  expiration  of  thirty  (30)  days
     following  the delivery of written notice of such condition to the Employer
     by  the  Employee;

          (b)  the  failure  of  the  Board of Directors of FLAG to maintain the
     Employee's  appointment to the office of Senior Vice President, the failure
     of  the  Board  of  Directors  of  the  Bank  to  maintain  the  Employee's
     appointment  to  the  office  of  Senior Vice President; the failure of the
     shareholders of FLAG to elect J. Daniel Speight, Jr. as a director of FLAG;
     or  the failure of the Board of Directors of the Bank to elect the Employee
     as  a  director  of  the  Bank;  or

          (c)  a material breach of the terms of this Agreement by the Employer,
     which  breach  remains  uncured  after  the  expiration of thirty (30) days
     following  the delivery of written notice of such breach to the Employer by
     the  Employee.

     1.8  "Change  in  Control"  means  any  one  of  the  following events
           -------------------
     occurring after  the  Effective  Date:

               (a)  the  acquisition  by  any  person  or  persons  acting  in
     concert  of  the  then outstanding voting securities of FLAG, if, after the
     transaction, the acquiring person (or persons) owns, controls or holds with
     power  to  vote  twenty-five  percent  (25%) or more of any class of voting
     securities  of  FLAG or such other transaction as may be described under 12
     C.F.R.  Section  225.41(c)  or  any  successor  thereto;

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          (b)  within  any  twelve-month  period  (beginning  on  or  after  the
     Effective  Date)  the persons who were directors of FLAG immediately before
     the beginning of such twelve-month period (the "Incumbent Directors") shall
     cease  to  constitute  at  least  a  majority  of  such board of directors;
     provided  that any director who was not a director as of the Effective Date
     shall be deemed to be an Incumbent Director if that director was elected to
     such  board  of  directors  by,  or  on  the  recommendation of or with the
     approval  of, at least two-thirds (2/3) of the directors who then qualified
     as Incumbent Directors; and provided further that no director whose initial
     assumption of office is in connection with an actual or threatened election
     contest  relating  to  the  election  of directors shall be deemed to be an
     Incumbent  Director;

          (c)  the  approval  by  the  stockholders of FLAG of a reorganization,
     merger  or  consolidation,  with  respect  to  which  persons  who were the
     stockholders  of  FLAG  immediately prior to such reorganization, merger or
     consolidation  do  not, immediately thereafter, own more than fifty percent
     (50%)  of  the  combined  voting  power entitled to vote in the election of
     directors  of  the  reorganized,  merged  or  consolidated  company's  then
     outstanding  voting  securities;  or

          (d)  the  sale,  transfer or assignment of all or substantially all of
     the  assets  of  FLAG  and  its  subsidiaries  to  any  third  party.

     1.9  "Confidential  Information" means data and information relating to the
           -------------------------
          Business of the Employer (which does not rise to the status of a Trade
          Secret) which is or has been disclosed to the Employee or of which the
          Employee  became  aware  as a consequence of or through the Employee's
          relationship  to  the Employer and which has value to the Employer and
          is  not  generally  known  to  its  competitors.  Without limiting the
          foregoing,  Confidential  Information  shall  include:

          (a)  all  items  of  information  that  could be classified as a trade
     secret  pursuant  to  Georgia  law;

          (b)  the names, addresses and banking requirements of the customers of
     the  Bank  and  the nature and amount of business done with such customers;

          (c)  the  names and addresses of employees and other business contacts
     of  the  Bank;

          (d)  the particular names, methods and procedures utilized by FLAG and
     the  Bank  in  the  conduct  and  advertising  of  their  business;

          (e)  application,  operating  system, communication and other computer
     software  and  derivatives  thereof, including, without limitation, sources
     and  object  codes,  flow  charts,  coding sheets, routines, subrouting and
     related  documentation  and  manuals  of  FLAG  and  the  Bank;  and

          (f)  marketing  techniques,  purchasing information, pricing policies,
     loan policies, quoting procedures, financial information, customer data and
     other  materials  or  information  relating  to  the Bank's manner of doing
     business.

Confidential Information shall not include any data or information that has been
voluntarily  disclosed  to  the public by the Employer (except where such public
disclosure has been made by the Employee without authorization) or that has been
independently  developed  and  disclosed by others, or that otherwise enters the
public  domain  through  lawful  means.

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     1.10  "Employer  Information"  means  Confidential  Information  and  Trade
            ---------------------
Secrets.

     1.11  "Permanent  Disability"  shall  mean  a  condition for which benefits
            ---------------------
would  be payable under any long-term disability coverage (without regard to the
application of any elimination period requirement) then provided to the Employee
by the Bank or, if no such coverage is then being provided, the inability of the
Employee  to  perform  the  material aspects of the Employee's duties under this
Agreement  for  a  period  of  at  least  180 consecutive days as certified by a
physician  chosen  by  the  Employee  and reasonably acceptable to the Employer.

     1.12.  "Term"  shall  mean  that period of time commencing on the Effective
             ----
Date  and  running  until  (a)  the  close  of business on the last business day
immediately  preceding  the  third (3rd) anniversary of the thirtieth (30th) day
following  the date non-renewal of this Agreement is received or (b) any earlier
termination  of  employment of the Employee under this Agreement as provided for
in  Section  3.

     1.13  "Trade  Secrets"  means,  without  regard  to  form,  information
            --------------
including,  but  not  limited  to,  technical  or  nontechnical  data, formulas,
patterns,  compilations,  programs,  devices,  methods,  techniques,  drawings,
processes,  financial data, financial plans, product plans or lists of actual or
potential  customers  or  suppliers  which (a) derives economic value, actual or
potential,  from  not  being  generally  known  to,  and  not  being  readily
ascertainable  by  proper  means by, other persons who can obtain economic value
from  its  disclosure  or  use;  and  (b)  is  the  subject  of efforts that are
reasonable  under  the  circumstances  to  maintain  its  secrecy.

2.  DUTIES.
    ------

     2.1  The  Employee is employed as the Senior Vice President of FLAG and the
Bank,  subject  to the direction of the Chief Executive Officer and the Board of
Directors of FLAG and the Bank, respectively, or their designee(s). The Employee
shall  perform  and  discharge  well  and  faithfully  the authority, duties and
responsibilities  which may be assigned to the Employee from time to time by the
Chief  Executive  Officer  of the Employer in connection with the conduct of the
Business  of  the  Employer; provided, however, that, in making its assignments,
the  Chief  Executive  Officer of the Employer shall assign only such authority,
duties  and  responsibilities assigned to the Employee from time to time as are,
in  the  aggregate,  consistent with the duties and responsibilities as would be
customarily  assigned to a person occupying a the positions held by the Employee
pursuant  to  the  terms of this Agreement, including, but not limited to, those
set  forth  on  Exhibit  A  attached  hereto.

     2.2 In addition to the duties and responsibilities specifically assigned to
the  Employee  pursuant  to  Section  2.1  hereof,  the  Employee  shall:

          (a)  devote substantially all of the Employee's time, energy and skill
     during  regular  business  hours  to  the  performance of the duties of the
     Employee's  employment (reasonable vacations and reasonable absences due to
     illness  excepted)  and  faithfully  and industriously perform such duties;

          (b)  diligently  follow  and  implement  all  management  policies and
     decisions  communicated  to  the Employee by the Chief Executive Officer of
     the  Employer  which  are  consistent  with  this  Agreement;  and

          (c)  timely  prepare and forward to the Chief Executive Officer of the
     Employer  all  reports  and accounting as may be requested of the Employee.

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     2.3     The  Employee  shall  devote  the  Employee's entire business time,
attention  and energies to the Business of the Employer and shall not during the
term  of this Agreement be engaged (whether or not during normal business hours)
in  any other business or professional activity, whether or not such activity is
pursued  for  gain,  profit  or other pecuniary advantage; but this shall not be
construed  as  preventing  the  Employee  from

          (a)  investing  the  Employee's  personal  assets  in businesses which
     (subject  to  clause (b) below) are not in competition with the Business of
     the  Employer  and  which  will not require any services on the part of the
     Employee  in  their  operation  or  affairs  and  in  which  the Employee's
     participation  is  solely  that  of  an  investor,

          (b)  purchasing  securities  or other interests in any entity provided
     that  such  purchase shall not result in the Employee's collectively owning
     beneficially at any time five percent (5%) or more of the equity securities
     of  any  business  in  competition  with  the Business of the Employer; and

          (c)  participating in civic and professional affairs and organizations
     and  conferences,  preparing  or  publishing papers or books or teaching so
     long as the Board of Directors of FLAG approves of such activities prior to
     the  Employee's  engaging  in  them.

3.  TERM  AND  TERMINATION.
    ----------------------

     3.1  Term.  This  Agreement  shall  remain  in  effect  for  the  Term.
          ----
While  this  Agreement  remains in effect, it shall automatically renew each day
after  the  Effective  Date  such  that  the Term remains a three-year term from
day-to-day thereafter unless any party gives written notice to the others of its
or her intent that the automatic renewals shall cease.  In the event such notice
of non-renewal is properly given, the Agreement and the Term shall expire on the
third  (3rd)  anniversary  of  the  thirtieth (30th) day following the date such
written  notice  is  received.

     3.2  Termination.  During  the  Term,  the employment of the Employee under
          -----------
this  Agreement  may  be  terminated  only  as  follows:

          3.2.1  By  the  Employer:

               (a)  For  Cause,  following  approval  of such action by at least
          seventy-five percent (75%) of the membership of the Board of Directors
          of  FLAG  and  only after providing Employee with at least thirty (30)
          days'  written  notice,  in  which  event  the  Employer shall have no
          further  obligation  to  the  Employee  except  for the payment of any
          amounts  earned and unpaid as of the effective date of termination; or

               (b)  Without  Cause at any time, provided that the Employer shall
          give  the Employee sixty (60) days' prior written notice of its intent
          to  terminate,  in  which event the Employer shall be required to meet
          its  obligations  to  the  Employee  under  Section  3.3  below.

          3.2.2  By  the  Employee:

               (a) For Cause, with no prior notice except as provided in Section
          1.7.2,  in  which  event  the  Employer  shall be required to meet its
          obligations  to  the  Employee  under  Section  3.3  below;  or

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               (b)  Without  Cause,  provided  that  the Employee shall give the
          Employer  sixty  (60)  days'  prior  written  notice of the Employee's
          intent to terminate, in which event the Employer shall have no further
          obligation  to  the  Employee except for payment of any amounts earned
          and  unpaid  as  of  the  effective  date  of  the  termination.

          3.2.3  By  the  Employee within the period commencing three (3) months
     prior  to  and  ending  twelve (12) months after a Change in Control of the
     Employer  (the  "Election  Period"),  provided that the Employee shall give
     thirty (30) days' written notice prior to the end of the Election Period to
     the  Employer  of  the Employee's intention to terminate this Agreement, in
     which  event  the Employer shall be required to meet its obligations to the
     Employee  under  Section  3.3  below.

          3.2.4  At  any  time upon mutual, written agreement of the parties, in
     which  event  the Employer shall have no further obligation to the Employee
     except for the payment of any amounts earned and unpaid as of the effective
     date  of  the  termination.

          3.2.5  Notwithstanding anything in this Agreement to the contrary, the
     Term  shall  expire  automatically  upon  the Employee's death or Permanent
     Disability, in which event the Employer shall have no further obligation to
     the  Employee except for the payment of any amounts earned and unpaid as of
     the effective date of termination and, if the reason for termination is the
     Employee's  Permanent Disability, the Employer shall pay to the Employee as
     liquidated damages an amount equal to Average Monthly Compensation for each
     full  month following such termination until the earlier of the month prior
     to  the month for which the Employee's long-term disability benefits become
     payable  or  six  (6)  full  months commencing with the month following the
     month  in  which  the  date  of  termination  occurs.

     3.3  Termination  Payments.  In  the  event  the  Employee's  employment is
          ---------------------
terminated  under  this  Agreement  prior to the expiration of the Term pursuant
Section  3.2.1(b),  Section 3.2.2(a) or Section 3.2.3, the Employer shall pay to
the  Employee as severance pay and liquidated damages a lump sum amount equal to
the  product of (a) Average Monthly Compensation multiplied by (b) the number of
months  (including  partial  months)  from the effective date of the termination
through  the  then  unexpired  portion  of  the Term or, if greater, twelve.  In
addition,  from the effective date of the termination through the then unexpired
portion of the Term (or, if greater, for a period of twelve months following the
effective  date  of the termination (the "Severance Period"), the Employer shall
pay  an  amount  equal  to  what  would  be  the Employee's cost of COBRA health
continuation  coverage  for the Employee and eligible dependents for the greater
of  the  Severance  Period  or  the  period  during which the Employee and those
eligible  dependents are entitled to COBRA health continuation coverage from the
Employer.

     Notwithstanding  any  other provision of this Agreement to the contrary, if
the  aggregate  of  the  payments  provided  for in this Agreement and the other
payments  and  benefits  which  the  Employee  has the right to receive from the
Employer  (the  "Total  Payments")  would  constitute  a "parachute payment," as
defined  in  Section  280G(b)(2)  of  the Internal Revenue Code, as amended (the
"Code"),  the Employee shall receive the Total Payments unless the (a) after-tax
amount  that  would  be  retained by the Employee (after taking into account all
federal,  state and local income taxes payable by the Employee and the amount of
any  excise  taxes  payable  by the Employee under Section 4999 of the Code that
would  be  payable by the Employee (the "Excise Taxes")) if the Employee were to
receive  the  Total Payments has a lesser aggregate value than (b) the after-tax
amount  that  would  be  retained by the Employee (after taking into account all
federal,  state  and local income taxes payable by the Employee) if the Employee
were to receive the Total Payments reduced to the largest amount as would result
in  no portion of the Total Payments being subject to Excise Taxes (the "Reduced
Payments"),  in  which  case  the Employee shall be entitled only to the Reduced
Payments.  If  the

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Employee  is  to receive the Reduced Payments, the Employee shall be entitled to
determine which of the Total Payments, and the relative portions of each, are to
be  reduced.

4.  COMPENSATION.  The  Employee shall receive the following salary and benefits
    ------------
during  the  Term:

     4.1  Base  Salary.  The  Employee  shall  be  compensated at a base rate of
          ------------
One  Hundred  Thirty-Five  Thousand  Dollars  ($135,000)  per year, which may be
increased  from  time  to  time  in  accordance  with the immediately succeeding
sentence  ("Base  Salary").  The Employee's Base Salary shall be reviewed by the
Board  of Directors of the Employer annually, and the Employee shall be entitled
to  receive annually an increase in such amount, if any, as may be determined by
the  Board  of  Directors  of  the  Employer  based  upon the performance of the
Employer  and  its  compliance  with regulatory standards.  Such salary shall be
payable  in  accordance  with  the  Employer's  normal  payroll  practices.

          4.2  Incentive  Compensation.
               -----------------------

               (a)  The Employee shall be entitled to participate in such bonus,
          incentive  and  other  executive  compensation  programs  as  are made
          available  to senior management of FLAG and the Bank from time to time
          (the  "Incentive  Compensation").

               (b)  The  Employee  shall be entitled to receive a one-time bonus
          payment  equal  to  Fifty  Thousand  Dollars  ($50,000) which shall be
          payable to the Employee in a lump-sum cash payment as of the Effective
          Date  or  as  soon  as  practicable  thereafter.

     4.3  Stock  Options.  FLAG  may  grant  to  the Employee stock options from
          --------------
time  to time commensurate with the Employee's position.  Any such options shall
be  reflected  by  a  separate  written  award.

     4.4  Benefits.  The  Employee  shall  be  entitled  to such benefits as may
          --------
be  available  from  time  to  time  for  senior executives of FLAG and the Bank
similarly  situated  to  the  Employee.  All  such benefits shall be awarded and
administered  in  accordance  with  FLAG  and  the  Bank's standard policies and
practices.  Such  benefits  may  include, by way of example only, profit sharing
plans,  retirement  or  investment  funds,  dental,  health  and  life insurance
benefits  and  such  other  benefits  as  the  Employer  deems  appropriate.

     4.5  Automobile.  The  Employer  shall  transfer  to  the Employee title to
          ----------
the  automobile  currently  made  available  to  the Employee for her use.   The
Employee  acknowledges  that  the  value  of  the  automobile at the time of the
transfer  will  constitute  imputed  income  to  the  Employee.

     4.6  Business  Expenses.  The  Employer  shall  reimburse  the Employee for
          ------------------
reasonable  business  (including  travel)  expenses  incurred by the Employee in
performance  of  the  Employee's  duties  hereunder; provided, however, that the
Employee  shall,  as  a  condition  of reimbursement, submit verification of the
nature  and  amount  of  such expenses in accordance with reimbursement policies
from  time  to  time  adopted by the Employer and in sufficient detail to comply
with  rules  and  regulations  promulgated  by  the  Internal  Revenue  Service.

     4.7  Vacation.  On  a  non-cumulative basis  the Employee shall be entitled
          --------
to a minimum of four (4) weeks of vacation annually, during which the Employee's
compensation  shall  be  paid  in  full.

     4.8  Withholding.  The  Employer  may  deduct  from  each  payment  of
          -----------
compensation  hereunder  all  amounts  required  to  be deducted and withheld in
accordance  with  applicable  federal  and  state  income  tax,  FICA  and other
withholding  requirements.

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5.  EMPLOYER  INFORMATION.
    ---------------------

     5.1  Ownership  of  Information.  All  Employer  Information  received  or
          --------------------------
developed  by  the  Employee while employed by the Employer will remain the sole
and  exclusive  property  of  the  Employer.

     5.2  Obligations  of  the  Employee.  The  Employee  agrees  (a)  to  hold
          ------------------------------
Employer  Information  in  strictest  confidence, and (b) not to use, duplicate,
reproduce, distribute, disclose or otherwise disseminate Employer Information or
any  physical embodiments thereof and may in no event take any action causing or
fail  to  take any action necessary in order to prevent any Employer Information
from losing its character or ceasing to qualify as Confidential Information or a
Trade Secret.  In the event that the Employee is required by law to disclose any
Employer  Information,  the  Employee  will not make such disclosure unless (and
then only to the extent that) the Employee has been advised by independent legal
counsel  that  such  disclosure  is  required  by  law and then only after prior
written  notice  is  given  to the Employer when the Employee becomes aware that
such disclosure has been requested and is required by law.  This Section 5 shall
survive  for  a  period  of  twelve  (12)  months  following termination of this
Agreement  with  respect  to  Confidential  Information,  and  shall  survive
termination  of  this  Agreement for so long as is permitted by the then-current
Georgia  Trade  Secrets  Act  of 1990, O.C.G.A. Sec.Sec. 10-1-760-10-1-767, with
respect  to  Trade  Secrets.

     5.3  Delivery  upon  Request  or  Termination.  Upon  request  by  the
          ----------------------------------------
Employer,  and  in  any event upon termination of the Employee's employment with
the  Employer,  the  Employee will promptly deliver to the Employer all property
belonging  to  FLAG  or  the  Bank,  including  without  limitation all Employer
Information  then  in  the  Employee's  possession  or  control.

6.  NON-COMPETITION.  The  Employee  agrees  that  during  his employment by the
    ---------------
Employer  hereunder  and,  in  the  event  of  his termination other than by the
Employer  without  Cause pursuant to Section 3.2.1(b), by the Employee for Cause
pursuant  to Section 3.2.2(a), or by the Employee pursuant to Section 3.2.3, for
a  period  of  twelve  (12)  months thereafter, the Employee will not (except on
behalf  of  or with the prior written consent of the Employer), within the Area,
either  directly or indirectly, on his own behalf or in the service or on behalf
of  others,  as  an  executive  employee or in any other capacity which involves
duties and responsibilities similar to those undertaken for the Employer, engage
in  any business which is the same as or essentially the same as the Business of
the  Employer.

7.  NON-SOLICITATION  OF  CUSTOMERS.  The  Employee  agrees  that  during  the
    -------------------------------
Employee's  employment by the Employer hereunder and, in the event of Employee's
termination  other  than  by  the  Employer  without  Cause  pursuant to Section
3.2.1(b),  by  the  Employee  for  Cause pursuant to Section 3.2.2(a), or by the
Employee  pursuant  to  Section  3.2.3,  for  a  period  of  twelve  (12) months
thereafter, the Employee will not (except on behalf of or with the prior written
consent  of  the Employer), on the Employee's own behalf or in the service or on
behalf  of  others, solicit, divert or appropriate or attempt to solicit, divert
or  appropriate,  directly  or by assisting others, any business from any of the
Bank's customers, including actively sought prospective customers, with whom the
Employee  has  or  had  material  contact  during  the last two (2) years of the
Employee's  employment,  for purposes of providing products or services that are
competitive  with  those  provided  by  the  Bank.

8.  NON-SOLICITATION  OF  EMPLOYEES.  The  Employee  agrees  that  during  the
    -------------------------------
Employee's  employment  by  the  Employer  hereunder  and,  in  the event of the
Employee's  termination  other  than  by  the Employer without Cause pursuant to
Section  3.2.1(b), by the Employee for Cause pursuant to Section 3.2.3(a), or by
the  Employee  pursuant  to  Section  3.2.3,  for a period of twelve (12) months
thereafter,  the  Employee  will  not,  on  the  Employee's own behalf or in the
service  or  on  behalf  of  others, solicit, recruit or hire away or attempt to
solicit,  recruit  or  hire  away,  directly  or  by  assisting  others,  any

                                       22
<PAGE>
employee  of FLAG or its Affiliates, whether or not such employee is a full-time
employee  or  a  temporary employee of FLAG or its Affiliates and whether or not
such  employment  is  pursuant  to  written  agreement  and  whether or not such
employment  is  for  a  determined  period  or  is  at  will.

9.  REMEDIES.  The  Employee  agrees  that the covenants contained in Sections 5
    --------
through  8  hereof  are  of  the  essence  of  this  Agreement; that each of the
covenants  is  reasonable  and  necessary to protect the business, interests and
properties  of  the  Employer;  and  that  irreparable  loss  and damage will be
suffered  by the Employer should he breach any of the covenants.  Therefore, the
Employee  agrees  and consents that, in addition to all the remedies provided by
law  or  in  equity,  the  Employer shall be entitled to a temporary restraining
order  and  temporary  and  permanent  injunctions  to  prevent  a  breach  or
contemplated  breach  of  any  of  the covenants.  The Employer and the Employee
agree  that  all  remedies  available  to  the  Employer  or  the  Employee,  as
applicable,  shall  be cumulative.  In addition, in the event the Employee fails
to  comply  with  any  of  the  covenants contained in Section 5 hereof and such
failure shall not be cured to the reasonable satisfaction of the Employer within
thirty  (30) days after receipt of written notice thereof from the Employer, the
Employer  shall  thereupon  be  relieved  of  liability for all obligations then
remaining  under  Section  3.3  hereof.

10.  SEVERABILITY.  The  parties  agree  that each of the provisions included in
     ------------
this  Agreement is separate, distinct and severable from the other provisions of
this  Agreement  and  that  the  invalidity or unenforceability of any Agreement
provision shall not affect the validity or enforceability of any other provision
of this Agreement.  Further, if any provision of this Agreement is ruled invalid
or  unenforceable  by  a  court  of competent jurisdiction because of a conflict
between  the  provision  and  any applicable law or public policy, the provision
shall be redrawn to make the provision consistent with and valid and enforceable
under  the  law  or  public  policy.

11.  NO  SET-OFF BY THE EMPLOYEE.  The existence of any claim, demand, action or
     ---------------------------
cause  of action by the Employee against FLAG, or any Affiliate of FLAG, whether
predicated  upon  this Agreement or otherwise, shall not constitute a defense to
the  enforcement  by  the  Employer  of  any  of  its  rights  hereunder.

12.  NOTICE.  All  notices  and other communications required or permitted under
     ------
this Agreement shall be in writing and, if mailed by prepaid first-class mail or
certified  mail, return receipt requested, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) business days after
the postmarked date thereof.  In addition, notices hereunder may be delivered by
hand,  facsimile  transmission  or  overnight courier, in which event the notice
shall  be deemed effective when delivered or transmitted.  All notices and other
communications  under this Agreement shall be given to the parties hereto at the
following  addresses:

          (a)  If  to  the  Employer,  to  the  Employer  at:

               FLAG  Financial  Corporation
               Attention:  Joe  Evans
               Suite  550
               3475  Piedmont  Road,  NE
               Atlanta,  GA  30305

          (b)  If  to  the  Employee,  to  the  Employee  at:

               Patti  S.  Davis
               P.O.  Box  628
               Unadilla,  GA  31091

                                       23
<PAGE>
13.  ASSIGNMENT.  Neither  party hereto may assign or delegate this Agreement or
     ----------
any  of  its rights and obligations hereunder without the written consent of the
other  party  hereto; provided, however, that this Agreement shall be assumed by
and  shall  be  binding  upon  any  successor  to  the  Employer.

14.  WAIVER.  A  waiver  by  the Employer of any breach of this Agreement by the
     ------
Employee  shall  not be effective unless in writing, and no waiver shall operate
or  be  construed  as  a  waiver  of  the same or another breach on a subsequent
occasion.

15.  ARBITRATION.  Except  for  any claim for injunctive relief, any controversy
     -----------
or  claim  arising  out  of or relating to this contract, or the breach thereof,
shall  be  settled  by  binding  arbitration  in  accordance with the Commercial
Arbitration Rules of the American Arbitration Association.  The Employer and the
Employee  agree  that  they  will  seek  to enforce any arbitration award in the
Superior  Court of Fulton County. The decision of the arbitration panel shall be
final  and  binding upon the parties and judgment upon the award rendered by the
arbitration panel may be entered by any court having jurisdiction.  The Employer
and  the  Employee  agree to share equally the fees and expenses associated with
the  arbitration  proceedings.

16.  ATTORNEYS' FEES.  With respect to arbitration of disputes and if litigation
     ---------------
ensues  between  the parties concerning the enforcement of an arbitration award,
each  party  shall  pay its own fees, costs and expenses; provided, however, the
Employer  shall  advance  to  the  Employee  reasonable fees, costs and expenses
incurred by the Employee in preparing for and in initiating or defending against
any  proceeding  or  suit  brought to enforce rights or obligations set forth in
this  Agreement.  Such  advances  shall  be  made  within thirty (30) days after
receiving  copies of invoices presented by the Employee for such fees, costs and
expenses.  The  Employee  shall  have  the  obligation to reimburse the Employer
within  sixty (60) days following the final disposition of the matter (including
appeals)  to  the  full  extent  of  the  aggregate advances unless the panel of
arbitrators  or court, as the case may be, has ruled in favor of the Employee on
the  merits  of  the  substantive  issues  in  dispute.

17.  APPLICABLE  LAW.  This  Agreement shall be construed and enforced under and
     ---------------
in accordance with the laws of the State of Georgia.  The parties agree that the
Superior Court of Fulton County, Georgia, shall have jurisdiction of any case or
controversy  arising  under  or in connection with this Agreement and shall be a
proper  forum  in  which  to  adjudicate  such  case or controversy. The parties
consent  to  the  jurisdiction  of  such  courts.

18.  INTERPRETATION.  Words  importing  any  gender includes all genders.  Words
     --------------
importing the singular form shall include the plural, and vice versa.  The terms
"herein," "hereunder," "hereby, "hereto, "hereof" and any similar terms refer to
this  Agreement.  Any  captions,  titles  or  headings preceding the text of any
article,  section  or  subsection herein are solely for convenience of reference
and  shall  not  constitute  part  of  this  Agreement  or  affect  its meaning,
construction  or  effect.

19.  ENTIRE  AGREEMENT.  This  Agreement embodies the entire and final agreement
     -----------------
of  the  parties on the subject matter stated in the Agreement.  No amendment or
modification  of  this  Agreement shall be valid or binding upon the Employer or
the  Employee  unless  made  in  writing  and signed by both parties.  All prior
understandings  and  agreements relating to the subject matter of this Agreement
are  hereby  expressly  terminated; provided, however, that this Agreement shall
not  alter,  limit  or  otherwise  impair  the  Employee's  rights  under  any
tax-qualified  retirement  plan  in  which  the  Employee  is  or  may  become a
participant.

20.  RIGHTS  OF THIRD PARTIES.  Nothing herein expressed is intended to or shall
     ------------------------
be  construed  to confer upon or give to any person, firm or other entity, other
than  the  parties  hereto  and  their permitted assigns, any rights or remedies
under  or  by  reason  of  this  Agreement.

                                       24
<PAGE>
21.  SURVIVAL.  The  obligations  of the Employer pursuant to Sections 3.2.5 and
     --------
3.3  and  the  obligations of the Employee pursuant to Sections 5, 6, 7, 8 and 9
shall  survive  the  termination of the employment of the Employee hereunder for
the  period  designated  under  each  of  those  respective  sections.

     IN  WITNESS  WHEREOF,  the  parties  hereto  have  hereunto  executed  this
Agreement  in  accordance  with  the  provisions  hereof.

                              FLAG  FINANCIAL  CORPORATION

                              By:  /s/  Joseph  W.  Evans
                                   ----------------------

                              Print  Name:  Joseph  W.  Evans
                                            -----------------

                              Date:  2/21/02

ATTEST:

------------------------------------

Date:

                              FLAG  BANK

                              By:  /s/  Joseph  W.  Evans
                                   ----------------------

                              Print  Name:  Joseph  W.  Evans
                                            -----------------

                              Date:  2/21/02

ATTEST:

------------------------------------

Date:
     -----------------------

                              /s/  Patti S. Davis
                              -------------------
                              Patti S. Davis

                                    EXHIBIT A
                                    ---------

                             DUTIES OF THE EMPLOYEE

-    To  be  completed  annually  by  the  Employee  and  approved  by the Chief
     Executive  Officer  based  on  assigned  duties  at  that  time.

                                       25
<PAGE>EXHIBIT 10.2

                             FOURTH AMENDMENT TO THE
                           FLAG FINANCIAL CORPORATION
                       1994 DIRECTORS STOCK INCENTIVE PLAN
               (AS AMENDED AND RESTATED AS OF SEPTEMBER 18, 1997)

THIS  FOURTH  AMENDMENT  is  made  as  of  February  19, 2002, by FLAG Financial
Corporation,  a  Georgia  corporation  (the  "Company").

WHEREAS,  the  Company  maintains  the FLAG Financial Corporation 1994 Directors
Stock  Incentive  Plan  (as  amended and restated as of September 18, 1997) (the
"Plan");  and

WHEREAS,  the Company desires to amend the Plan to modify the provisions related
to  expiration  of  options  upon  a  director's termination of service with the
Company.

NOW, THEREFORE, the Company does hereby amend the Plan, effective as of the date
first  set forth above, by deleting the existing Section 6.9(a) and substituting
therefor  the  following:

     "(a)     Termination  of Service.  In the event the Optionee ceases to be a
Director  for  any  reason  other  than  death  or  Disability,  any  Option  or
unexercised  portion  thereof granted to him shall terminate on and shall not be
exercisable  after  the  earliest  to  occur  of  (i) the expiration date of the
Option;  (ii)  the  date  on  which  the Company gives notice to the Optionee of
termination  of  his service as a Director or a director of any affiliate of the
Company if service is terminated by the Company or by its shareholders for Cause
(an  Optionee's  resignation  in anticipation of a termination of service by the
Company  or  by  its  shareholders  for  Cause  shall  constitute  a  notice  of
termination  by  the Company); or (iii) three months after the date the Optionee
ceases  to  be  either  a  Director  or a member of the board of directors of an
affiliate of the Company for any reason other than that specified in clause (ii)
above;  provided,  that  the  Committee may provide in the Option Agreement that
such  Option  or  any  unexercised  portion  thereof  shall  terminate  sooner.
Notwithstanding  the  foregoing,  in  the  event that an Optionee's service as a
Director or as a director of an affiliate of the Company terminates for a reason
other  than  death or Disability at any time after a Change of Control, the term
of  all  Options  of  that  Optionee  shall  be  extended through the end of the
three-month  period  immediately  following  the  date  of  such  termination of
service.

     Prior  to the earliest of the dates specified in the preceding paragraph of
this subsection (a), the Option shall be exercisable only in accordance with its
terms  and  only for the number of shares exercisable on the date of termination
of  service  as  a Director or as a director of an affiliate of the Company. The
question  of  whether  an authorized leave of absence or absence for military or
government  service  or  for  any other reason shall constitute a termination of
service  as  a  Director  or  as  a  director of an affiliate of the Company for
purposes  of  the Plan shall be determined by the Committee, which determination
shall  be  final  and  conclusive."

                                       26
<PAGE>
     Except as specifically amended hereby, the remaining provisions of the Plan
shall  remain  in  full force and effect as prior to the adoption of this Fourth
Amendment.

     IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to be duly
executed under seal on its behalf, effective as of the date first above written.

ATTEST/WITNESS:                   FLAG  FINANCIAL  CORPORATION

By:                               By:  /s/  Joseph  W.  Evans
   ----------------------            ------------------------
Print  Name:                      Print  Name:  Joseph  W.  Evans
             ------------                       -----------------

                                  Print  Title:  Chairman  and  CEO

                                  Date:  2/19/02

                                       27
<PAGE>

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