EXHIBIT 10(e)


                          FORM OF EMPLOYMENT AGREEMENT

     THIS AGREEMENT (the "Agreement"),  made this 24th day of November, 2003, by
and among COASTAL FINANCIAL CORPORATION, a Delaware corporation ("the Company"),
COASTAL FEDERAL BANK, a wholly owned subsidiary of the Company (the "Bank"), and
Jimmy R. Graham (the "Executive").

                                   WITNESSETH

     WHEREAS,  the  Company  and the Bank  desire to retain the  services of the
Executive as Executive Vice  President/Chief  Information Officer of the Company
and the Bank;

     WHEREAS,  the  Company  and  the  Bank  have  previously  entered  into  an
employment agreement with the Executive;

     WHEREAS,  the Executive and the respective  Boards of Directors of the Bank
and the Company  desire to enter into an updated and revised  agreement  setting
forth the terms and conditions of the continuing employment of the Executive and
the related rights and obligations of each of the parties;

     NOW,  THEREFORE,  in  consideration  of the premises  and mutual  covenants
herein contained, it is agreed as follows:

     1. Employment.  The Executive is employed as Executive Vice President/Chief
Information Officer of the Company and the Bank. The Executive shall perform all
duties  which  are  customarily  performed  by  persons  situated  in a  similar
executive  capacity and such other  duties as are  delegated to him by the Chief
Executive Officer from time to time.

     2.  Location and  Facilities.  The  Executive  will be  furnished  with the
working facilities and staff customary for executive officers with the title and
duties  set  forth in  Section 1 and as are  necessary  for him to  perform  his
duties.  The  location of such  facilities  and staff shall be at the  principal
administrative  offices of the  Company  and the Bank,  or at such other site or
sites customary for such offices.

     3. Term.

          a.   The  term of  this  Agreement  shall  be (i)  the  initial  term,
               consisting of the period commencing on the date of this Agreement
               (the "Effective Date") and ending on the first anniversary of the
               Effective  Date,  plus (ii) any and all extensions of the initial
               term made pursuant to this Section 3.

          b.   Commencing on the Effective Date and on each day thereafter,  the
               term under this Agreement shall be renewed  automatically  for an
               additional   one  (1)  day  period  beyond  the  then   effective
               expiration  date  without  action  by any  party,  provided  that
               neither  the  Company,  on the one hand,  nor  Executive,  on the
               other,  shall have given at least sixty (60) days written  notice
               of its or his desire  that the term not be  renewed.  In the case
               such notice is given by one party to the other,  the term of this
               Agreement   shall  become  fixed  and  shall  end  on  the  first
               anniversary of the date of written notice.

     4.   Base Salary.

          a.   The Bank  agrees  to pay the  Executive  during  the term of this
               Agreement  a base  salary at the rate of  $144,000.00  per annum,
               payable  in  accordance   with  the  Bank's   customary   payroll
               practices.

          b.   The  Board  of the Bank  shall  review  annually  the rate of the
               Executive's  base salary based upon  factors they deem  relevant,
               and may  maintain or increase his salary,  provided  that no such
               action  shall  reduce the rate of salary below the rate in effect
               on the Effective Date.

          c.   In the absence of action by the Board of the Bank,  the Executive
               shall  continue to receive salary at the per annum rate specified
               on the  Effective  Date or, if another rate has been  established
               under the  provisions  of this Section 4, the rate last  properly
               established  by  action  of the  Board  of  the  Bank  under  the
               provisions of this Section 4.

     5.  Bonuses.  The  Executive  shall  be  entitled  to  participate  in  any
discretionary bonus or other incentive  compensation  programs that the Board of
the Company or the Bank may  establish  from time to time for the benefit of the
officers or employees of the Company or the Bank.

     6. Benefit  Plans.  The Executive  shall be entitled to participate in such
life insurance,  medical, dental, pension, profit sharing, and retirement plans,
stock  compensation plans and other programs and arrangements as may be approved
from time to time by the Company or the Bank for the benefit of their respective
employees.

     7.  Vacation and Leave.  The  Executive  shall be entitled to vacations and
other leave in accordance with Bank policy for senior executives.

     8. Expense Payments and  Reimbursements.  The Executive shall be reimbursed
for all  reasonable  out-of-pocket  business  expenses  that he  shall  incur in
connection  with his services under this Agreement upon  substantiation  of such
expenses in accordance with applicable policies of the Company or the Bank.

     9.   Loyalty.

          a.   During the term of this Agreement the Executive: (i) shall devote
               all his time,  attention,  skill,  and  efforts  to the  faithful
               performance of his duties hereunder; provided, however, that from
               time to time,  the Executive may serve on the boards of directors
               of, and hold any other  offices or  positions  in,  companies  or

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               organizations  which will not present any  conflicts  of interest
               with the  Company  or the Bank or any of  their  subsidiaries  or
               affiliates,  unfavorably  affect the  performance  of Executive's
               duties  pursuant to this  Agreement,  or violate  any  applicable
               statute or regulation;  and (ii) shall not engage in any business
               or activity  contrary to the business affairs or interests of the
               Company or the Bank.

          b.   Nothing  contained in this  Agreement  shall prevent or limit the
               Executive's  right  to  invest  in the  capital  stock  or  other
               securities  of any business  dissimilar  from that of the Company
               and the Bank, or, solely as a passive,  minority investor, in any
               business.

          c.   The Executive agrees to maintain the  confidentiality  of any and
               all information  concerning the operation or financial  status of
               the Company and the Bank;  the names or  addresses  of any of its
               borrowers,   depositors  and  other  customers;  any  information
               concerning  or  obtained  from  such  customers;  and  any  other
               information  concerning  the Company and the Bank to which he may
               be exposed  during the course of his  employment.  The  Executive
               further  agrees  that,  unless  required  by law or  specifically
               permitted  by the Board in writing,  he will not  disclose to any
               person or entity,  either during or subsequent to his employment,
               any of the  above-mentioned  information  which is not  generally
               known to the public,  nor shall he employ such information in any
               way other than for the benefit of the Company and the Bank.

     10.  Termination  and  Termination  Pay.  Subject  to  Section  11 of  this
Agreement,  the Executive's employment under this Agreement may be terminated in
the following circumstances:

          a.   Death.  The  Executive's  employment  under this Agreement  shall
               terminate  upon his death during the term of this  Agreement,  in
               which event the  Executive's  estate shall be entitled to receive
               the compensation due to the Executive through the last day of the
               calendar month in which his death occurred.

          b.   Retirement.   This  Agreement   shall  be  terminated   upon  the
               retirement of the Executive under the retirement  benefit plan or
               plans in which he  participates  pursuant  to  Section  6 of this
               Agreement or otherwise.  For all other purposes,  the Executive's
               termination  of employment at retirement  shall be treated in the
               same manner as if he voluntarily  terminated  employment pursuant
               to Section 10(f).

          c.   Disability.

               i.   The Company,  the Bank,  or the  Executive may terminate the
                    Executive's   employment   after  having   established   the

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                    Executive's  Disability.  For  purposes  of this  Agreement,
                    "Disability"  means a  physical  or  mental  infirmity  that
                    impairs the Executive's ability to substantially perform his
                    duties  under  this   Agreement  and  that  results  in  the
                    Executive's   becoming  eligible  for  long-term  disability
                    benefits  under  the  Company's  or  the  Bank's   long-term
                    disability  plan (or, if the Company or the Bank has no such
                    plan in effect,  that  impairs  the  Executive's  ability to
                    substantially  perform his duties under this Agreement for a
                    period of one hundred eighty (180)  consecutive  days).  The
                    Boards of the Company and the Bank shall  determine  whether
                    or not the  Executive  is and  continues  to be  permanently
                    disabled for purposes of this Agreement in good faith, based
                    upon  competent  medical  advice and other factors that they
                    reasonably  believe to be  relevant.  As a condition  to any
                    benefits,  such Board may require the Executive to submit to
                    such  physical or mental  evaluations  and tests as it deems
                    reasonably appropriate.

               ii.  In the event of such Disability,  the Executive's obligation
                    to perform services under this Agreement will terminate.  In
                    the event of such termination,  the Executive shall continue
                    to receive  seventy-five  (75)  percent of his monthly  base
                    salary  (at  the  annual  rate  in  effect  on his  date  of
                    termination)   through  the  earlier  of  the  date  of  the
                    Executive's  death,  the date he attains  age 65 or the date
                    which  is one (1) year  after  the  Executive's  termination
                    date.  Such  payments  shall be reduced by the amount of any
                    short-  or  long-term  disability  benefits  payable  to the
                    Executive under any other  disability  program  sponsored by
                    the Company or the Bank.  In addition,  during any period of
                    the Executive's Disability in which he is receiving payments
                    under  this  paragraph,  the  Executive  and his  dependents
                    shall,  to the  greatest  extent  possible,  continue  to be
                    covered   under  all  benefit  plans   (including,   without
                    limitation,  retirement  plans and medical,  dental and life
                    insurance  plans)  of the  Company  and the  Bank  in  which
                    Executive  participated  prior to his Disability on the same
                    terms as if Executive were actively  employed by the Company
                    and the Bank.

          d.   Just Cause.

               i.   The Board of the Company or the Bank may, by written  notice
                    to the  Executive  in the form and manner  specified in this
                    paragraph,  immediately  terminate his  employment  with the
                    Company  or the Bank,  respectively,  at any time,  for Just
                    Cause.   The  Executive  shall  have  no  right  to  receive
                    compensation   or  other   benefits  for  any  period  after
                    termination  for Just  Cause  except  for  vested  benefits.
                    Termination for "Just Cause" shall mean termination  because
                    of, in the good faith  determination of the Company's or the
                    Bank's Board, the Executive's:

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                    (1) Personal dishonesty;

                    (2) Incompetence;

                    (3) Willful misconduct;

                    (4) Breach of fiduciary duty involving personal profit;

                    (5) Intentional   failure  to  perform  duties  under  this
                        Agreement;

                    (6)  Willful violation of any law, rule or regulation (other
                         than  traffic  violations  or  similar  offenses)  that
                         reflects  adversely on the  reputation of the Bank, any
                         felony conviction, any violation of law involving moral
                         turpitude, or any violation of a final cease-and-desist
                         order; or

                    (7)  Material  breach by the  Executive of any  provision of
                         this Agreement.

               ii   Notwithstanding  the foregoing,  the Executive  shall not be
                    deemed to have been terminated for Just Cause by the Company
                    or the Bank unless  there shall have been  delivered  to the
                    Executive  a  copy  of a  resolution  duly  adopted  by  the
                    affirmative vote of not less than three-fourths (3/4) of the
                    entire membership of the Board of the Company or the Bank at
                    a meeting  of such  Board  called  and held for the  purpose
                    (after reasonable notice to the Executive and an opportunity
                    for  the  Executive  to  be  heard  before  the  Board  with
                    counsel),  finding  that,  in the good faith opinion of such
                    Board,  the Executive was guilty of conduct  described above
                    and specifying the particulars thereof.

          e.   Certain Regulatory Events.

               i.   If the Executive is removed  and/or  permanently  prohibited
                    from  participating  in the conduct of the Bank's affairs by
                    an order  issued  under  Sections  8(e)(4) or 8(g)(1) of the
                    Federal  Deposit  Insurance  Act ("FDIA") (12 U.S.C.  ss.ss.
                    1818(e)(4)  and (g)(1)),  all  obligations of the Bank under
                    this Agreement  shall  terminate as of the effective date of
                    the order,  but vested  rights of the  parties  shall not be
                    affected.

               ii.  If the Bank is in default (as defined in Section  3(x)(1) of
                    FDIA),  all  obligations  of the Bank under  this  Agreement
                    shall terminate as of the date of default, but vested rights
                    of the parties shall not be affected.

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               iii. If a notice served under  Sections  8(e)(3) or (g)(1) of the
                    FDIA (12 U.S.C.  Sections  1818(e)(3)  and (g)(1))  suspends
                    and/or    temporarily    prohibits   the   Executive    from
                    participating  in the  conduct  of the Bank's  affairs,  the
                    Bank's  obligations  under this Agreement shall be suspended
                    as of the date of such service, unless stayed by appropriate
                    proceedings. If the charges in the notice are dismissed, the
                    Bank  shall,  (x)  pay  the  Executive  all or  part  of the
                    compensation  withheld while its contract  obligations  were
                    suspended,  and (y)  reinstate  (in whole or in part) any of
                    its obligations which were suspended.

          f.   Voluntary  Termination  by  Executive.  In  addition to his other
               rights to  terminate  under this  Agreement,  the  Executive  may
               voluntarily  terminate  employment  with the Bank and the Company
               during the term of this  Agreement  upon at least sixty (60) days
               prior written  notice,  in which case the Executive shall receive
               only his compensation,  vested rights and employee benefits up to
               the date of his termination.

          g.   Without Just Cause or With Good Reason.

               i.   In  addition  to  termination  pursuant  to  Sections  10(a)
                    through  10(f),  (x) the Boards of the  Company or the Bank,
                    respectively,  may,  by  written  notice  to the  Executive,
                    immediately terminate his employment with the Company or the
                    Bank, respectively, at any time for a reason other than Just
                    Cause  (a  termination  "Without  Just  Cause")  and (y) the
                    Executive  may,  by  written  notice  to the  Boards  of the
                    Company and the Bank,  immediately  terminate this Agreement
                    at any time  within  ninety  (90)  days  following  an event
                    constituting  "Good Reason" as defined below (a  termination
                    "With Good Reason").

               ii.  Subject to Section  11 hereof,  in the event of  termination
                    under this Section 10(g), the Executive shall be entitled to
                    receive his continued base salary (determined at the highest
                    annual rate of base  salary in effect  pursuant to Section 4
                    of  this  Agreement  for  any  of  the  twelve  (12)  months
                    immediately  preceding  the  date of such  termination)  and
                    prorated cash bonus for the remaining  term of the Agreement
                    (determined  by reference  to the highest  annual cash bonus
                    received by the  Executive  in any of the three (3) calendar
                    years preceding the date of termination).  The sum due under
                    this Section  10(g) shall be paid in one lump sum within ten
                    (10) calendar days of such termination. Also, in such event,
                    the  Executive   shall,   for  the  remaining  term  of  the
                    Agreement,  receive  the  benefits  he would  have  received
                    during  the  remaining  term  of  the  Agreement  under  any
                    tax-qualified or  non-tax-qualified  retirement  programs in

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                   which the Executive  participated  prior to his  termination
                    (with the amount of the benefits  determined by reference to
                    the benefits  received by the Executive  under such programs
                    during the twelve (12) months  preceding his termination or,
                    if applicable,  the accruals made on the Executive's  behalf
                    under such  programs)  and  continue to  participate  in any
                    benefit  plans  of the  Company  and the Bank  that  provide
                    health  (including  medical and dental),  life or disability
                    insurance,  or similar coverage upon terms no less favorable
                    than the most favorable terms provided to senior  executives
                    of the  Bank  during  such  period.  In the  event  that the
                    Company or the Bank is unable to provide  such  coverage  by
                    reason of the  Executive no longer  being an  employee,  the
                    Company  and the  Bank  shall  provide  the  Executive  with
                    comparable  coverage on an  individual  policy  basis or, if
                    individual coverage is not available, provide a cash payment
                    equivalent to the value of such coverage.

               iii. "Good Reason" shall exist if,  without  Executive's  express
                    written consent,  the Company or the Bank materially  breach
                    any of their  respective  obligations  under this Agreement.
                    Without  limitation,  such a material breach shall be deemed
                    to occur upon any of the following:

                    (1)  A    material     reduction    in    the    Executive's
                         responsibilities  or authority,  or a requirement  that
                         the Executive  report to any person or group other than
                         the  Boards of the  Company  and the Bank (or any other
                         effective reduction in reporting  responsibilities)  in
                         connection  with his employment with the Company or the
                         Bank;

                    (2)  Assignment   to   the   Executive   of   duties   of  a
                         non-executive  nature  or  duties  for  which he is not
                         reasonably equipped by his skills and experience;

                    (3)  A reduction in salary or benefits contrary to the terms
                         of this Agreement, or, following a Change in Control as
                         defined in Section 11 of this Agreement,  any reduction
                         in salary or material  reduction in benefits  below the
                         amounts to which he was entitled prior to the Change in
                         Control;

                    (4)  Termination of incentive and benefit plans, programs or
                         arrangements,   or   reduction   of   the   Executive's
                         participation to such an extent as to materially reduce
                         their aggregate value below their aggregate value as of
                         the Effective Date; or

                    (5)  A requirement that the Executive relocate his principal
                         business  office or his  principal  place of  residence
                         outside of the area  consisting  of a thirty  five (35)
                         mile radius from the current main office and any branch
                         of the Bank,  or the  assignment  to the  Executive  of
                         duties that would reasonably require such a relocation.

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               iv.  Notwithstanding the foregoing, a reduction or elimination of
                    the Executive's  participation or benefits under one or more
                    benefit plans  maintained by the Company or the Bank as part
                    of a good faith,  overall  reduction or  elimination of such
                    plan or  plans  or  benefits  thereunder  applicable  to all
                    participants in a manner that does not discriminate  against
                    the  Executive  (except  as  such   discrimination   may  be
                    necessary to comply with law) shall not  constitute an event
                    of Good  Reason  or a  material  breach  of this  Agreement,
                    provided that benefits of the type or to the general  extent
                    as those offered under such plans prior to such reduction or
                    elimination  are not  available  to  other  officers  of the
                    Company or the Bank or any company that  controls  either of
                    them under a plan or plans in or under  which the  Executive
                    is not entitled to participate.

               v.   Notwithstanding  anything in this Agreement to the contrary,
                    during the period  beginning  three (3) months  prior to the
                    announcement  by  the  Bank  or  the  Company  of  an  event
                    constituting  a Change in  Control  (as  defined  in Section
                    11(a)) and ending twelve (12) months following the effective
                    date of a Change in Control,  the Executive may  voluntarily
                    terminate his employment under this Agreement for any reason
                    and such termination shall constitute  termination With Good
                    Reason.

               h.   Continuing   Covenant  Not  to  Compete  or  Interfere  with
                    Relationships.   Regardless   of  anything   herein  to  the
                    contrary,  following a termination by the Company,  the Bank
                    or the Executive  pursuant to Section  10(g) and  continuing
                    until the first  anniversary  of the effective  date of such
                    termination,  the  Executive  shall not serve as an officer,
                    director  or  employee of any bank  holding  company,  bank,
                    savings  association,  savings and loan holding company,  or
                    mortgage company which offers products or services competing
                    with  those  offered  by the  Company  or the Bank  from any
                    office in any city,  town or county where Bank  maintains an
                    office  as of the date of the  Executive's  termination  and
                    shall not interfere with the  relationship of the Company or
                    the   Bank   and   any  of   its   employees,   agents,   or
                    representatives.

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          11.  Termination in Connection with a Change in Control.

               a.   For purposes of this Agreement,  a "Change in Control" shall
                    be deemed to occur on the earliest of

                    i.   The  acquisition by any entity,  person or group (other
                         than the acquisition by a tax-qualified retirement plan
                         sponsored  by the  Company  or the Bank) of  beneficial
                         ownership,  as that term is defined in Rule 13d-3 under
                         the  Securities  Exchange Act of 1934, of more than 25%
                         of the outstanding  capital stock of the Company or the
                         Bank  entitled to vote for the  election  of  directors
                         ("Voting Stock");

                    ii.  The commencement by any entity, person, or group (other
                         than the  Company  or the  Bank,  a  subsidiary  of the
                         Company or the Bank, or a tax-qualified retirement plan
                         sponsored by the Company or the Bank) of a tender offer
                         or  an  exchange   offer  for  more  than  25%  of  the
                         outstanding Voting Stock of the Company or the Bank;

                    iii. The effective time of (x) a merger or  consolidation of
                         the  Company  or  the  Bank  with  one  or  more  other
                         corporations  as a result of which the  holders  of the
                         outstanding  Voting  Stock of the  Company  or the Bank
                         immediately   prior  to  such  merger  exercise  voting
                         control  over less than 51 % of the Voting Stock of the
                         surviving or resulting  corporation,  or (y) a transfer
                         of substantially  all of the property of the Company or
                         the Bank other  than to an entity of which the  Company
                         or the Bank owns at least 51% of the Voting Stock; and

                    iv.  At  such  time  that,  during  any  period  of two  (2)
                         consecutive years,  individuals who at the beginning of
                         such period  constitute the Board of the Company or the
                         Bank (the "Continuing  Directors") cease for any reason
                         to constitute  at least  two-thirds  thereof,  provided
                         that any  individual  whose  election or nomination for
                         election  as a member of the Board  was  approved  by a
                         vote of at least  two-thirds  (2/3)  of the  Continuing
                         Directors   then  in  office  shall  be   considered  a
                         Continuing Director.

               b.   If within the period beginning three (3) months prior to the
                    announcement  by  the  Bank  or  the  Company  of  an  event
                    constituting  a Change in  Control  and ending  twelve  (12)
                    months  following the effective date of a Change in Control,
                    (i) the Company or the Bank shall  terminate the Executive's
                    employment  Without Just Cause,  or (ii) the Executive shall
                    voluntarily  terminate his employment With Good Reason,  the
                    Company or the Bank shall,  within ten (10) calendar days of

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                    the  termination  of  the  Executive's  employment,  make  a
                    lump-sum  cash payment to him equal to one (1) times the sum
                    of the  Executive's  (x) current base salary  (determined at
                    the highest annual rate of base salary in effect pursuant to
                    Section  4 of this  Agreement  for the  twelve  (12)  months
                    immediately  preceding the  effective  date of the Change in
                    Control or, if higher, the rate in effect on the Executive's
                    termination date) and (y) the highest cash bonus paid to the
                    Executive or accrued on the Executive's  behalf with respect
                    to any of the three (3) most recently completed fiscal years
                    of the Bank  preceding the  effective  date of the Change in
                    Control.  This  cash  payment  shall  be made in lieu of any
                    payment also required  under Section 10(g) of this Agreement
                    because of a  termination  in such period.  The  Executive's
                    rights under  Section  10(g) are not  otherwise  affected by
                    this Section 11. Also, in such event,  the Executive  shall,
                    for a twelve (12) month period  following his termination of
                    employment, receive the benefits he would have received over
                    such period  under any  tax-qualified  or  non-tax-qualified
                    retirement  programs  in which  the  Executive  participated
                    prior to his  termination  (with the amount of the  benefits
                    determined  by  reference  to the  benefits  received by the
                    Executive  under such programs during the twelve (12) months
                    preceding  the  Change in  Control  or, if  applicable,  the
                    accruals made on the Executive's  behalf during such period)
                    and  continue to  participate  in any  benefit  plans of the
                    Company and the Bank that provide health (including  medical
                    and  dental),  life  or  disability  insurance,  or  similar
                    coverage  upon  terms  no  less   favorable  than  the  most
                    favorable  terms  provided to senior  executives of the Bank
                    during  such  period.  In the event that the  Company or the
                    Bank is unable to  provide  such  coverage  by reason of the
                    Executive no longer  being an employee,  the Company and the
                    Bank shall provide the Executive  with  comparable  coverage
                    through an individual  policy or, if individual  coverage is
                    not  available,  provide a cash  payment  equivalent  to the
                    value of such coverage.

          12.  Indemnification and Liability Insurance.

               a.   Indemnification. The Company and the Bank agree to indemnify
                    the    Executive    (and   his   heirs,    executors,    and
                    administrators), and to advance expenses related thereto, to
                    the  fullest  extent  permitted  under  applicable  law  and
                    regulations  against any and all  expenses  and  liabilities
                    reasonably incurred by him in connection with or arising out
                    of any  action,  suit,  or  proceeding  in  which  he may be
                    involved  by reason of his having been an  Executive  of the
                    Company or the Bank or any of their subsidiaries (whether or
                    not he continues to be an Executive at the time of incurring
                    any  such  expenses  or   liabilities)   such  expenses  and
                    liabilities  to include,  but not be limited to,  judgments,
                    court costs,  and attorney's fees and the cost of reasonable
                    settlements, such settlements to be approved by the Board of
                    the Company or the Bank,  if such action is brought  against
                    the Executive in his capacity as an Executive of the Company

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                    or the  Bank or any of their  subsidiaries.  Indemnification
                    for  expenses  shall  not  extend to  matters  for which the
                    Executive  has  been  terminated  for  Just  Cause.  Nothing
                    contained herein shall be deemed to provide  indemnification
                    prohibited by applicable law or regulation.

               b.   Insurance. During the period in which indemnification of the
                    Executive is required under this Section, the Company or the
                    Bank shall provide the Executive (and his heirs,  executors,
                    and   administrators)   with   coverage   under  a  standard
                    Executives' and directors'  liability  policy at the expense
                    of the  Company  or the Bank,  at least  equivalent  to such
                    coverage provided to senior Executives of the Company or the
                    Bank.

                    13.  Reimbursement  of Executive's  Expenses to Enforce this
               Agreement.  The Company or the Bank shall reimburse the Executive
               for all out-of-pocket  expenses,  including,  without limitation,
               reasonable   attorney's  fees,   incurred  by  the  Executive  in
               connection  with  successful  enforcement by the Executive of the
               obligations  of the  Company or the Bank to the  Executive  under
               this Agreement. Successful enforcement shall mean the grant of an
               award of money or the  requirement  that the  Company or the Bank
               take some action  specified by this  Agreement (i) as a result of
               court  order;  or  (ii)  otherwise  by the  Company  or the  Bank
               following  an initial  failure of the  Company or the Bank to pay
               such money or take such  action  promptly  after  written  demand
               therefore  from the Executive  stating the reason that such money
               or action was due under this Agreement at or prior to the time of
               such demand.

          14.  Adjustment of Certain Payments and Benefits.

               a.   Tax  Indemnification.  Anything  in  this  Agreement  to the
                    contrary notwithstanding,  and except as set forth below, in
                    the event it shall be determined  that any payment,  benefit
                    or distribution  made or provided by the Company or the Bank
                    to or for the  benefit  of the  Executive  (whether  made or
                    provided   pursuant  to  the  terms  of  this  Agreement  or
                    otherwise)  (each referred to herein as a "Payment"),  would
                    be subject to the excise tax imposed by Section  4999 of the
                    Internal  Revenue  Code of 1986,  as amended (the "Code") or
                    any interest or penalties are incurred by the Executive with
                    respect to such excise tax (the excise  tax,  together  with
                    any   such   interest   and   penalties,   are   hereinafter
                    collectively referred to as the "Excise Tax"), the Executive
                    shall be  entitled  to  receive  an  additional  payment  (a
                    "Gross-Up  Payment") in an amount such that after payment by
                    the  Executive  of all  taxes  (including  any  interest  or
                    penalties  imposed with  respect to such taxes),  including,
                    without  limitation,  any income taxes (and any interest and
                    penalties  imposed  with  respect  thereto)  and  Excise Tax
                    imposed upon the Gross-Up Payment,  the Executive retains an
                    amount  of the  Gross-Up  Payment  equal to the  Excise  Tax
                    imposed upon the Payments.

               b.   Determination of Gross-Up Payment. Subject to the provisions
                    of Section  14(c),  all  determinations  required to be made

                                       11
<PAGE>

                    under this Section 14, including whether and when a Gross-Up
                    Payment is required and the amount of such Gross-Up Payments
                    and the  assumptions  to be  utilized  in  arriving  at such
                    determination,   shall  be  made  by  a   certified   public
                    accounting firm reasonably  acceptable to the Company as may
                    be designated by the Executive (the "Accounting Firm") which
                    shall provide detailed  supporting  calculations both to the
                    Company,  the Bank and the  Executive  within  fifteen  (15)
                    business  days of the receipt of notice  from the  Executive
                    that there have been  Payments,  or such  earlier time as is
                    requested by the Company and the Bank. All fees and expenses
                    of the Accounting  Firm shall be borne solely by the Company
                    and the Bank. Any Gross-Up Payment,  as determined  pursuant
                    to this  Section  14,  shall be paid by the  Company  to the
                    Executive  within five days of (i) the later of the due date
                    for the  payments of any Excise Tax, and (ii) the receipt of
                    the Accounting  Firm's  determination.  Any determination by
                    the  Accounting  Firm shall be binding  upon the Company and
                    the  Executive.  As a  result  of  the  uncertainty  in  the
                    application  of Section 4999 of the Code, at the time of the
                    initial  determination by the Accounting Firm hereunder,  it
                    is possible that Gross-Up  Payments which will not have been
                    made by the  Company  and the Bank  should  have  been  made
                    ("Underpayment"),  consistent with the calculations required
                    to be made hereunder.  In the event that the Company and the
                    Bank exhaust  their  remedies  pursuant to Section 14(c) and
                    the  Executive  thereafter  is required to make a payment of
                    any Excise Tax,  the  Accounting  Firm shall  determine  the
                    amount of the  Underpayment  that has  occurred and any such
                    Underpayment shall be promptly paid by the Company to or for
                    the benefit of the Executive.

               c.   Treatment of Claims.  The Executive shall notify the Company
                    and the Bank in writing of any claim by the Internal Revenue
                    Service  that, if  successful,  would require the payment by
                    the  Company  and the  Bank of the  Gross-Up  Payment.  Such
                    notification  shall be given as soon as  practicable  but no
                    later than ten (10)  business  days after the  Executive  is
                    informed  in  writing of such  claim and shall  apprise  the
                    Company  and the Bank of the  nature of such  claims and the
                    date on which  such  claim  is  requested  to be  paid.  The
                    Executive  shall not pay such claim prior to the  expiration
                    of the thirty (30) day period following the date on which it
                    gives  such  notice  to the  Company  and the  Bank (or such
                    shorter  period ending on the date that any payment of taxes
                    with  respect to such claim is due).  If the Company and the
                    Bank notify the Executive in writing prior to the expiration
                    of such  period that it desires to contest  such claim,  the
                    Executive shall:

                    i.   give  the   Company   and  the  Bank  any   information
                         reasonably request by the Company and the Bank relating
                         such claim,

                    ii.  take such action in  connection  with  contesting  such
                         claim  as the  Company  and the Bank  shall  reasonably

                                       12

<PAGE>

                         request  in  writing  from  time  to  time,  including,
                         without limitation, accepting legal representation with
                         respect  to  such  claim  by  an  attorney   reasonably
                         selected by the Company and the Bank,

                    iii. cooperate  with the  Company and the Bank in good faith
                         in order effectively to contest such claim, and

                    iv.  permit the Company and the Bank to  participate  in any
                         proceedings relating to such claim; provided,  however,
                         that  the  Company  and the  Bank  shall  bear  and pay
                         directly all costs and expenses  (including  additional
                         interest and  penalties)  incurred in  connection  with
                         such  contest  and  indemnity  and hold  the  Executive
                         harmless,  on an after-tax basis, for any Excise Tax or
                         income  tax  (including  interest  and  penalties  with
                         respect   thereto)   imposed   as  a  result   of  such
                         representation  and  payment  of  costs  and  expenses.
                         Without limitation on the foregoing  provisions of this
                         Section  14(c),  the Company and the Bank shall control
                         all  proceedings  taken in connection with such contest
                         and, at their sole option,  may pursue or forgo any and
                         all administrative appeals,  proceedings,  hearings and
                         conferences  with the  taxing  authority  in respect of
                         such claim and may, at their sole option, either direct
                         the  Executive  to pay  the tax  claimed  and sue for a
                         refund or contest the claim in any permissible  manner,
                         and the Executive agrees to prosecute such contest to a
                         determination before any administrative  tribunal, in a
                         court  of  initial  jurisdiction  and in  one  or  more
                         appellate  courts,  as the  Company  and the Bank shall
                         determine;  provided,  however, that if the Company and
                         the Bank direct the Executive to pay such claim and sue
                         for a refund,  the Company  and the Bank shall  advance
                         the  amount of such  payment  to the  Executive,  on an
                         interest-free  basis, from any Excise Tax or income tax
                         (including  interest or penalties with respect thereto)
                         imposed with respect to such advance or with respect to
                         any  imputed  income  with  respect  to  such  advance.
                         Furthermore,  the Company's  and the Bank's  control of
                         the contest  shall be limited to issues with respect to
                         which a Gross-Up Payment would be payable hereunder and
                         the  Executive  shall be entitled to settle or contest,
                         as the case may be,  any  other  issues  raised  by the
                         Internal Revenue Service or any other taxing authority.

               d.   Adjustments to the Gross-Up  Payment.  If, after the receipt
                    by the  Executive  of an  amount  advanced  by  the  Company
                    pursuant to Section 14(c), the Executive becomes entitled to
                    receive any refund with respect to such claim, the Executive
                    shall   (subject  to  the  Company's   complying   with  the
                    requirements  of Section 14(c))  promptly pay to the Company
                    the amount of such refund  (together  with any interest paid
                    or credited thereon after applicable  taxes).  If, after the
                    receipt  by  the  Executive  of an  amount  advanced  by the

                                       13

<PAGE>

                    Company  pursuant to Section 14(c), a determination  is made
                    that the Executive  shall not be entitled to any refund with
                    respect to such claim and such denial of refund occurs prior
                    to  the   expiration   of  thirty   (30)  days   after  such
                    determination, then such advance shall be forgiven and shall
                    not be required to be repaid and the amount of such  advance
                    shall  offset,  to the  extent  thereof,  the  amount of the
                    Gross-Up Payment.

               15. Injunctive  Relief. If there is a breach or threatened breach
          of Section 10(h) of his Agreement or the prohibitions  upon disclosure
          contained in Section 9(c) of this  Agreement,  the Company or the Bank
          and the  Executive  agree that there is no adequate  remedy at law for
          such breach,  and that the Company and the Bank each shall be entitled
          to injunctive  relief  restraining  the Executive  from such breach or
          threatened  breach,  but such relief shall not be the exclusive remedy
          hereunder for such breach.  The parties hereto likewise agree that the
          Executive,  without limitation, shall be entitled to injunctive relief
          to enforce the  obligations  of the Company and the Bank under Section
          11 of this Agreement.

          16. Successors and Assigns.

               a.   This Agreement  shall inure to the benefit of and be binding
                    upon any corporate or other  successor of the Company or the
                    Bank which shall acquire, directly or indirectly, by merger,
                    consolidation,  purchase or otherwise,  all or substantially
                    all of the assets or stock of the Company or the Bank.

               b.   Since  the  Bank and the  Company  are  contracting  for the
                    unique and personal  skills of the Executive,  the Executive
                    shall be precluded  from  assigning or delegating his rights
                    or duties  hereunder  without  first  obtaining  the written
                    consent of the Bank and the Company.

               17.  No  Mitigation.  The  Executive  shall  not be  required  to
          mitigate the amount of any payment  provided for in this  Agreement by
          seeking  other  employment  or otherwise  and no such payment shall be
          offset or  reduced  by the  amount  of any  compensation  or  benefits
          provided to the Executive as a result of any subsequent employment.

               18.   Notices.   All   notices,   requests,   demands  and  other
          communications  in  connection  with this  Agreement  shall be made in
          writing and shall be deemed to have been given when  delivered by hand
          or 48 hours after  mailing at any general or branch United States Post
          Office, by registered or certified mail, postage prepaid, addressed as
          follows,  or to such other  address as shall have been  designated  in
          writing by the addressee:

               a.   If to the Company or the Bank: Copy to:

                               Corporate Secretary
                               Coastal Financial Corporation
                               2619 Oak Street
                               Myrtle Beach, S.C. 29577

                                       14

<PAGE>


               b.   If to the  Executive:

                               Jimmy R. Graham
                               4585 Pee Dee
                               Highway Conway, S.C. 29527

          19. Joint and Several Liability; Payments by the Company and the Bank.
     To the extent permitted by law, except as otherwise  provided  herein,  the
     Company and the Bank shall be jointly and severally  liable for the payment
     of all amounts due under this Agreement.  The Company hereby agrees that it
     shall be jointly and severally  liable with the Bank for the payment of all
     amounts due under this Agreement and shall guarantee the performance of the
     Bank's  obligations  thereunder,  provided  that the  Company  shall not be
     required by this  Agreement to pay to the Executive a salary or any bonuses
     or any other  cash  payments,  except  in the event  that the Bank does not
     fulfill the obligations to the Executive hereunder for such payments.

          20. No Plan Created by this Agreement.  The Executive, the Company and
     the Bank  expressly  declare and agree that this  Agreement was  negotiated
     among  them and that no  provision  or  provisions  of this  Agreement  are
     intended  to, or shall be deemed to,  create any plan for  purposes  of the
     Employee Retirement Income Security Act or any other law or regulation, and
     the Company,  the Bank and the Executive each expressly waives any right to
     assert the  contrary.  Any  assertion  in any  judicial  or  administrative
     filing, hearing, or process by or on behalf of the Executive or the Company
     or the Bank  that such a plan was so  created  by this  Agreement  shall be
     deemed a material  breach of this  Agreement  by the party  making  such an
     assertion.

          21. Amendments.  No amendments or additions to this Agreement shall be
     binding unless made in writing and signed by all of the parties,  except as
     herein otherwise specifically provided.

          22. Applicable Law. Except to the extent preempted by Federal law, the
     laws of the State of Delaware  shall govern this Agreement in all respects,
     whether  as  to  its  validity,  construction,   capacity,  performance  or
     otherwise.

          23.  Severability.  The provisions of this  Agreement  shall be deemed
     severable and the invalidity or unenforceability of any provision shall not
     affect the validity or enforceability of the other provisions hereof.

          24.  Headings.  Headings  contained  herein  are  for  convenience  of
     reference only.

          25. Entire Agreement. This Agreement, together with any understandings
     or  modifications  thereof as agreed to in writing  by the  parties,  shall
     constitute  the entire  agreement  among the parties hereto with respect to
     the subject matter hereof,  other than written  agreements  with respect to
     specific  plans,  programs or  arrangements  described in Sections 5 and 6.
     This Agreement  supercedes and replaces in its entirety the Agreement dated
     October   1,  1992,  as  amended,  between  the  Company,  the Bank and the
     Executive.

                                       15



<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
     the date first set forth above.


Attest:                              COASTAL FINANCIAL CORPORATION


/s/ Susan J. Cooke                      By:  /s/  J.T. Clemmons
--------------------------------       -----------------------------------------
Susan J. Cooke                           J.T. Clemmons
                                       Title: Chairman
/s/ Sandra R. Zanfini
--------------------------------
Sandra R. Zanfini

Attest:                              COASTAL FEDERAL BANK

/s/ Susan J. Cooke                      By:/s/  J.T. Clemmons
--------------------------------       -----------------------------------------
Susan J. Cooke                               J.T. Clemmons
                                       Title: Chairman
 /s/ Sandra R. Zanfini
--------------------------------
Sandra R. Zanfini
Witness:

 /s/ Rebecca L. Belcher                /s/ Jimmy R. Graham
--------------------------------     -----------------------------------------
Rebecca L. Belcher                   EXECUTIVE Jimmy R. Graham