Exhibit 10.6

                          COASTAL BANKING COMPANY, INC.

                            2000 STOCK INCENTIVE PLAN





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                          COASTAL BANKING COMPANY, INC.
                            2000 STOCK INCENTIVE PLAN

                                TABLE OF CONTENTS
                                -----------------
                                                                          Page
                                                                          ----

ARTICLE 1   DEFINITIONS....................................................1

ARTICLE 2   THE PLAN.......................................................4
     2.1    Name...........................................................4
     2.2    Purpose........................................................4
     2.3    Effective Date.................................................4

ARTICLE 3   PARTICIPANTS...................................................4

ARTICLE 4   ADMINISTRATION
     4.1    Duties and Powers of the Committee.............................5
     4.2    Interpretation; Rules..........................................5
     4.3    No Liability...................................................5
     4.4    Majority Rule..................................................5
     4.5    Company Assistance.............................................5

ARTICLE 5   SHARES OF STOCK SUBJECT TO PLAN................................6
     5.1    Limitations....................................................6
     5.2    Antidulation...................................................6

ARTICLE 6   OPTIONS........................................................7
     6.1    Types of Options Granted.......................................7
     6.2    Option Grant and Agreement.....................................8
     6.3    Optionee Limitations...........................................8
     6.4    $100,000 Limitation............................................8
     6.5    Exercise Price.................................................9
     6.6    Exercise Period................................................9
     6.7    Option Exercise................................................9
     6.8    Reload Options................................................10
     6.9    Nontransferability of Option..................................11
     6.10   Termination of Employment or Service..........................11
     6.11   Employment Rights.............................................11
     6.12   Certain Successor Options.....................................11
     6.13   Effect of a Corporate Transaction.............................11
     6.14   Forfeiture by Order of Regulatory Agency......................12

ARTICLE 7   STOCK CERTIFICATES............................................12

ARTICLE 8   TERMINATION AND AMENDMENT.....................................12
     8.1    Termination and Amendment.....................................12

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     8.2    Effect on Optionee's Rights...................................13

ARTICLE 9   RELATIONSHIP TO OTHER COMPENSATION PLANS......................13

ARTICLE 10  MISCELLANEOUS.................................................13
     10.1   Replacement or Amended Grants.................................13
     10.2   Forfeiture for Competition....................................13
     10.3   Leave of Absence..............................................13
     10.4   Plan Binding on Successors....................................14
     10.5   Headings, etc., No Part of Plan...............................14
     10.6   Section 16 Compliance.........................................14





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                          COASTAL BANKING COMPANY, INC.
                            2000 STOCK INCENTIVE PLAN

                                   ARTICLE I

                                   DEFINITIONS

     As used herein,  the following terms have the following meanings unless the
context clearly indicates to the contrary:

     "Board" shall mean the Board of Directors of the Company.
      -----

     "Cause" (i) with respect to the Company or any subsidiary which employs the
      -----
recipient of an Option (the  "recipient") or for which such recipient  primarily
performs  services,  the  commission  by  the  recipient  of an  act  of  fraud,
embezzlement,  theft or proven dishonesty,  or any other illegal act or practice
(whether or not resulting in criminal prosecution or conviction),  or any act or
practice which the Committee shall, in good faith,  deem to have resulted in the
recipient's becoming unbondable under the Company's or the subsidiary's fidelity
bond; (ii) the willful  engaging by the recipient in misconduct  which is deemed
by the Committee,  in good faith,  to be materially  injurious to the Company or
any subsidiary,  monetarily or otherwise, including, but not limited, improperly
disclosing trade secrets or other confidential or sensitive business information
and data about the Company or any subsidiaries and competing with the Company or
its  subsidiaries,  or  soliciting  employees,  consultants  or customers of the
Company in violation of law or any  employment  or other  agreement to which the
recipient  is a party;  or (iii) the willful and  continued  failure or habitual
neglect by the  recipient  to perform  his or her duties with the Company or the
subsidiary substantially in accordance with the operating and personnel policies
and  procedures  of the Company or the  subsidiary  generally  applicable to all
their  employees.  For  purposes  of this Plan,  no act or failure to act by the
recipient  shall be deemed be  "willful"  unless  done or  omitted to be done by
recipient not in good faith and without  reasonable  belief that the recipient's
action  or  omission  was  in  the  best  interest  of the  Company  and/or  the
subsidiary.  Notwithstanding the foregoing, if the recipient has entered into an
employment  agreement that is binding as of the date of employment  termination,
and if such employment agreement defines "Cause," then the definition of "Cause"
in such  agreement  shall apply to the  recipient  in this Plan.  "Cause"  under
either (i), (ii) or (iii) shall be determined by the Committee.

     "Code"  shall  mean  the  United  States  Internal  Revenue  Code of  1986,
      ----
including  effective  date and transition  rules (whether or not codified).  Any
reference  herein to a specific section of the Code shall be deemed to include a
reference to any corresponding provision of future law.

     "Committee" shall mean a committee of at least two Directors appointed from
      ---------
time to time by the Board,  having the duties and  authority set forth herein in
addition  to  any  other  authority  granted  by the  Board.  In  selecting  the
Committee, the Board shall consider (i) the benefits under Section 162(m) of the
Code of having a  Committee  composed of  "outside  directors"  (as that term is
defined  in the  Code)  for  certain  grants of  Options  to highly  compensated
executives,  and (ii) the  benefits  under  Rule  16b-3  of  having a  Committee
composed of either the entire Board or a Committee of at least two Directors who
are  Non-Employee




<PAGE>

Directors for Options granted to or held by any Section 16 Insider.  At any time
that the Board shall not have  appointed a committee  as  described  above,  any
reference herein to the Committee shall mean the Board.

     "Company"  shall mean  Coastal  Banking  Company,  Inc.,  a South  Carolina
      -------
corporation.

     "Corporate  Transaction"  shall mean the occurrence of any of the following
      ----------------------
events:

     (i)    a merger or consolidation  in which securities  possessing more than
            50% of the total combined voting power of the Company's  outstanding
            securities are transferred to a person or persons different from the
            persons  holding  those   securities   immediately   prior  to  such
            transaction;

     (ii)   the sale,  transfer or other disposition of all or substantially all
            of the Company's  assets in complete  liquidation  or dissolution of
            the Company; or

     (iii)  the  grant  of  any  bank  regulatory  approval  (or  notice  of  no
            disapproval) for permission to acquire control of the Company or any
            of its banking subsidiaries.

     "Director"  shall  mean a member  of the  Board  and any  person  who is an
      --------
advisory or honorary  director  of the  Company if such person is  considered  a
director for the purposes of Section 16 of the Exchange  Act, as  determined  by
reference to such Section 16 and to the rules, regulations,  judicial decisions,
and  interpretative  or  "no-action"  positions  with  respect  thereto  of  the
Securities  and Exchange  Commission,  as the same may be in effect or set forth
from time to time.

     "Employee"  shall mean a person who  constitutes an employee of the Company
      --------
as such  term is  defined  in the  instructions  to the  Form  S-8  Registration
Statement under the Securities Act of 1933, and also includes  non-employees  to
whom an offer of employment has been extended.

     "Exchange  Act"  shall  mean  the  Securities  Exchange  Act of  1934.  Any
      -------------
reference  herein to a specific  section of the  Exchange Act shall be deemed to
include a reference to any corresponding provision of future law.

     "Exercise  Price"  shall mean the price at which an Optionee may purchase a
      ---------------
share of Stock under a Stock Option Agreement.

     "Fair Market  Value" on any date shall mean (i) the closing  sales price of
      ------------------
the Stock,  regular way, on such date on the national securities exchange having
the  greatest  volume of  trading  in the Stock  during  the  thirty-day  period
preceding  the day the value is to be  determined  or, if such  exchange was not
open for  trading on such date,  the next  preceding  date on which it was open;
(ii) if the Stock is not traded on any national securities exchange, the average
of  the   closing   high  bid  and  low  asked   prices  of  the  Stock  on  the
over-the-counter  market on the day such  value is to be  determined,  or in the
absence of closing bids on such day, the closing bids on the next  preceding day
on which  there  were  bids;  or (iii) if the  Stock  also is not  traded on the
over-the-counter  market,  the fair market value as  determined in good faith by
the Board or the Committee  based on such relevant  facts as may be available to
the Board, which may include



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opinions of independent experts, the price at which recent sales have been made,
the book value of the Stock, and the Company's current and future earnings.

     "Incentive  Stock Option" shall mean an option to purchase any stock of the
      -----------------------
Company,  which  complies  with and is  subject to the  terms,  limitations  and
conditions  of  Section  422 of the Code and any  regulations  promulgated  with
respect thereto.

     "Non-Employee  Director"  shall  have the  meaning  set forth in Rule 16b-3
      ----------------------
under the  Exchange  Act, as the same may be in effect from time to time,  or in
any successor  rule thereto,  and shall be determined for all purposes under the
Plan according to interpretative  or "no-action"  positions with respect thereto
issued by the Securities and Exchange Commission.

     "Officer" shall mean a person who constitutes an officer of the Company for
      -------
the purposes of Section 16 of the Exchange  Act, as  determined  by reference to
such  Section  16  and  to  the  rules,  regulations,  judicial  decisions,  and
interpretative  or "no-action"  positions with respect thereto of the Securities
and Exchange Commission,  as the same may be in effect or set forth from time to
time.

     "Option" shall mean an option, whether or not an Incentive Stock Option, to
      ------
purchase Stock granted pursuant to the provisions of Article VI hereof.

     "Optionee"  shall  mean a  person  to  whom  an  Option  has  been  granted
      --------
hereunder.

     "Parent"  shall  mean  any  corporation   (other  than  the  Company  or  a
      ------
Subsidiary) in an unbroken chain of corporations  ending with the Company if, at
the time of the grant (or modification) of the Option,  each of the corporations
other than the Company or a Subsidiary owns stock  possessing 50% or more of the
total  combined  voting  power  of the  classes  of  stock  in one of the  other
corporations in such chain.

     "Permanent  and Total  Disability"  shall have the same meaning as given to
      --------------------------------
that term by Code Section  22(e)(3) and any  regulations or rulings  promulgated
thereunder.

     "Plan" shall mean the Coastal  Banking  Company,  Inc. 2000 Stock Incentive
      ----
Plan, the terms of which are set forth herein.

     "Purchasable"  shall refer to Stock which may be  purchased  by an Optionee
      -----------
under  the  terms  of this  Plan on or after a  certain  date  specified  in the
applicable Stock Option Agreement.

     "Qualified  Domestic  Relations  Order" shall have the meaning set forth in
      -------------------------------------
the Code or in the Employee Retirement Income Security Act of 1974, or the rules
and regulations promulgated under the Code or such Act.

     "Reload Option" shall have the meaning set forth in Section 6.8 hereof.
      -------------

     "Section 16 Insider" shall mean any person who is subject to the provisions
      ------------------
of  Section 16 of the  Exchange  Act,  as  provided  in Rule  16a-2  promulgated
pursuant to the Exchange Act.



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     "Stock"  shall mean the Common  Stock,  par value  $0.01 per share,  of the
      -----
Company  or, in the event  that the  outstanding  shares of Stock are  hereafter
changed into or exchanged  for shares of a different  stock or securities of the
Company or some other entity, such other stock or securities.

     "Stock Option Agreement" shall mean an agreement between the Company and an
      ----------------------
Optionee under which the Optionee may purchase Stock hereunder, a sample form of
which is attached hereto as Exhibit A (which form may be varied by the Committee
in granting an Option).

     "Subsidiary"  shall mean any  corporation  (other  than the  Company) in an
      ----------
unbroken chain of corporations beginning with the Company if, at the time of the
grant (or modification) of the Option,  each of the corporations  other than the
last  corporation in the unbroken chain owns stock possessing 50% or more of the
total  combined  voting  power  of all  classes  of  stock  in one of the  other
corporations in such chain.

                                   ARTICLE II

                                    THE PLAN

     2.1 Name. This Plan shall be known as "Coastal Banking  Company,  Inc. 2000
         ----
 Stock Incentive Plan."

     2.2 Purpose.   The purpose of the Plan is to advance the  interests  of the
         -------
Company,  its  Subsidiaries,  and its  shareholders  by affording  Employees and
Directors  of the  Company and its  Subsidiaries  an  opportunity  to acquire or
increase  their  proprietary  interests  in the  Company.  The  objective of the
issuance  of the  Options is to promote  the  growth  and  profitability  of the
Company and its  Subsidiaries  because the  Optionees  will be provided  with an
additional incentive to achieve the Company's  objectives through  participation
in its success and growth and by encouraging their continued association with or
service to the Company.

     2.3 Effective  Date.  The Plan shall become  effective on February 15, 2000
         ---------------
provided, however, that if the shareholders of the Company have not approved the
Plan on or prior to the  first  anniversary  of such  effective  date,  then all
options granted under the Plan shall be non-Incentive Stock Options.  If, at the
time of any amendment to the Plan,  shareholder approval is required by the Code
for Incentive Stock Options and such shareholder  approval has not been obtained
(or is not obtained  within 12 months  thereof),  any  Incentive  Stock  Options
issued under the Plan shall automatically become options which do not qualify as
Incentive Stock Options.

                                  ARTICLE III

                                  PARTICIPANTS

     The class of persons  eligible to  participate in the Plan shall consist of
all Directors and Employees of the Company or any Subsidiary.



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                                   ARTICLE IV

                                 ADMINISTRATION

     4.1 Duties and Powers of the Committee.  The Plan shall be  administered by
         ----------------------------------
the Committee. The Committee shall select one of its members as its Chairman and
shall  hold its  meetings  at such  times and  places as it may  determine.  The
Committee  shall  keep  minutes  of its  meetings  and shall make such rules and
regulations  for the  conduct  of its  business  as it may deem  necessary.  The
Committee shall have the power to act by unanimous  written consent in lieu of a
meeting, and to meet telephonically.  In administering the Plan, the Committee's
actions  and  determinations  shall be binding on all  interested  parties.  The
Committee  shall  have  the  power  to  grant  Options  in  accordance  with the
provisions  of the Plan and may grant  Options  singly,  in  combination,  or in
tandem.  Subject to the  provisions of the Plan,  the  Committee  shall have the
discretion and authority to determine those  individuals to whom Options will be
granted and whether such Options  shall be  accompanied  by the right to receive
Reload Options, the number of shares of Stock subject to each Option, such other
matters as are specified  herein,  and any other terms and conditions of a Stock
Option Agreement.  The Committee shall also have the discretion and authority to
delegate to any Officer its power to grant  Options under the Plan to Employees,
but  not  to  Employees  who  are  Officers  or  Directors.  To the  extent  not
inconsistent  with the provisions of the Plan, the Committee may give a Optionee
an election to  surrender  an Option in exchange  for the grant of a new Option,
and shall have the  authority  to amend or modify an  outstanding  Stock  Option
Agreement,  or to waive  any  provision  thereof,  provided  that  the  Optionee
consents to such action.

     4.2 Interpretation;  Rules.  Subject to the express provisions of the Plan,
         ----------------------
the  Committee  also shall have  complete  authority to interpret  the Plan,  to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations  necessary  or  advisable  for the  administration  of the  Plan,
including,  without  limitation,  the  amending  or altering of the Plan and any
Options granted hereunder as may be required to comply with or to conform to any
federal,  state,  or local laws or  regulations.  If an option granted under the
Plan is  intended  to be an  Incentive  Stock  Option but does not qualify as an
Incentive  Stock  Option for any reason,  then the option  granted  shall remain
valid but shall be a non-Incentive Stock Option.

     4.3 No  Liability.  Neither  any  member of the Board nor any member of the
         -------------
Committee  shall be liable to any  person for any act or  determination  made in
good faith with respect to the Plan or any Option granted hereunder.

     4.4 Majority  Rule.  A  majority  of the  members of the  Committee  shall
         --------------
constitute a quorum,  and any action taken by a majority at a meeting at which a
quorum is present,  or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.

     4.5 Company   Assistance.   The  Company  shall  supply  full  and  timely
         --------------------
information to the Committee on all matters relating to eligible persons,  their
employment,  death, retirement,  disability, or other termination of employment,
and such other pertinent  facts as the Committee



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may require.  The Company  shall  furnish the  Committee  with such clerical and
other assistance as is necessary in the performance of its duties.

                                   ARTICLE V

                         SHARES OF STOCK SUBJECT TO PLAN

     5.1 Limitations.  Subject to any antidilution  adjustment  pursuant to the
         -----------
provisions of Section 5.2 hereof, the maximum number of shares of Stock that may
be issued  hereunder  shall be 142,242 and  thereafter  shall  automatically  be
increased  each time the Company issues  additional  shares of Stock so that the
total number of shares  issuable  hereunder  shall at all times equal 15% of the
then  outstanding  shares  of Stock,  unless in any case the Board of  Directors
adopts a resolution providing that the number of shares issuable under this Plan
shall not be so increased. Any or all shares of Stock subject to the Plan may be
issued in any  combination  of Incentive  Stock Options or  non-Incentive  Stock
Options,  and the amount of Stock subject to the Plan may be increased from time
to time in accordance  with Article IX, provided that the total number of shares
of Stock  issuable  pursuant to Incentive  Stock Options may not be increased to
more than 142,242  (other than pursuant to  anti-dilution  adjustments)  without
shareholder  approval.  Shares subject to an Option may be either authorized and
unissued  shares or shares issued and later acquired by the Company.  The shares
covered by any  unexercised  portion of an Option  that has  terminated  for any
reason  (except as set forth in the following  paragraph)  may again be optioned
under the Plan,  and such shares shall not be considered as having been optioned
or issued in computing  the number of shares of Stock  remaining  available  for
option hereunder.

     If Options are issued in respect of options to acquire  stock of any entity
acquired,  by merger or  otherwise,  by the  Company (or any  Subsidiary  of the
Company),  to the extent that such issuance shall not be  inconsistent  with the
terms,  limitations  and  conditions of Code section 422 or Rule 16b-3 under the
Exchange Act, the  aggregate  number of shares of Stock for which Options may be
granted  hereunder  shall  automatically  be  increased  by the number of shares
subject to the Options so issued;  provided,  however, that the aggregate number
of  shares  of  Stock  for  which  Options  may  be  granted   hereunder   shall
automatically  be decreased by the number of shares  covered by any  unexercised
portion  of an Option so issued  that has  terminated  for any  reason,  and the
shares subject to any such unexercised  portion may not be optioned to any other
person.

     5.2 Antidilution.

     (a) If  (x)   the  outstanding   shares  of   Stock  are  changed  into  or
exchanged  for a different  number or kind of shares or other  securities of the
Company by reason of merger,  consolidation,  reorganization,  recapitalization,
reclassification,  combination  or exchange  of shares,  or stock split or stock
dividend, (y) any spin-off,  spin-out or other distribution of assets materially
affects the price of the Company's  stock,  or (z) there is any  assumption  and
conversion  to the Plan by the  Company  of an  acquired  company's  outstanding
option grants, then:

         (i)  the aggregate number and kind of shares of Stock for which Options
     may  be  granted  hereunder  shall  be  adjusted   proportionately  by  the
     Committee; and



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<PAGE>

         (ii) the rights of Optionees  (concerning  the number of shares subject
     to Options and the  Exercise  Price)  under  outstanding  Options  shall be
     adjusted proportionately by the Committee.


     (b) If the Company shall be a party to any  reorganization in which it does
not survive,  involving  merger,  consolidation,  or acquisition of the stock or
substantially  all  the  assets  of the  Company,  the  Committee,  in its  sole
discretion, may (but is not required to):

         (i)  notwithstanding other provisions hereof,  declare that all Options
     granted under the Plan shall become exercisable immediately notwithstanding
     the  provisions  of  the  respective  Stock  Option  Agreements   regarding
     exercisability,  that all such  Options  shall  terminate 30 days after the
     Committee  gives written notice of the immediate right to exercise all such
     Options and of the decision to terminate all Options not  exercised  within
     such 30-day period; and/or

         (ii) notify all Optionees that all Options granted under the Plan shall
     be assumed by the  successor  corporation  or  substituted  on an equitable
     basis with options issued by such successor corporation.


     (c) If the Company is to be liquidated  or dissolved in  connection  with a
reorganization described in Section 5.2(b), the provisions of such Section shall
apply.  In all  other  instances,  the  adoption  of a plan  of  dissolution  or
liquidation of the Company shall, notwithstanding other provisions hereof, cause
every Option outstanding under the Plan to terminate to the extent not exercised
prior  to  the  adoption  of the  plan  of  dissolution  or  liquidation  by the
shareholders,  provided  that,  notwithstanding  other  provisions  hereof,  the
Committee may declare all Options  granted under the Plan to be  exercisable  at
any  time  on  or  before  the  fifth   business  day  following  such  adoption
notwithstanding  the  provisions  of  the  respective  Stock  Option  Agreements
regarding exercisability.

     (d) The adjustments described in paragraphs (a) through (c) of this Section
5.2,  and the manner of their  application,  shall be  determined  solely by the
Committee, and any such adjustment may provide for the elimination of fractional
share interests; provided, however, that any adjustment made by the Board or the
Committee  shall be made in a manner  that  will not  cause an  Incentive  Stock
Option to be other than an Incentive Stock Option under applicable statutory and
regulatory provisions. The adjustments required under this Article V shall apply
to any  successors of the Company and shall be made  regardless of the number or
type of successive events requiring such adjustments.


                                   ARTICLE VI

                                     OPTIONS

     6.1 Types of Options  Granted.  The Committee may,  under this Plan,  grant
         -------------------------
either  Incentive  Stock  Options or Options  which do not qualify as  Incentive
Stock  Options.  Within the  limitations  provided  in this Plan,  both types of
Options  may be granted to the same  person at the same  time,  or at  different
times, under different terms and conditions, as long as the terms and conditions
of  each  Option  are  consistent  with  the  provisions  of the  Plan.  Without
limitation



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<PAGE>

of the  foregoing,  Options may be granted  subject to  conditions  based on the
financial  performance  of the Company or any other factor the  Committee  deems
relevant.

     6.2 Option Grant and  Agreement.  Each Option  granted  hereunder  shall be
         ---------------------------
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement  executed by the Company and the Optionee.  The
terms of the Option, including the Option's duration, time or times of exercise,
exercise price,  whether the Option is intended to be an Incentive Stock Option,
and  whether  the Option is to be  accompanied  by the right to receive a Reload
Option, shall be stated in the Stock Option Agreement.  In structuring the terms
of each Option,  the Committee shall follow the guidelines set forth in the FDIC
statement of policy relating to applications  for deposit  insurance,  including
that the terms should  encourage each Optionee to remain involved in the Company
and/or its Subsidiaries, such as by having a vesting period of equal percentages
each year over the initial  three years  following the grant of the Option and a
requirement  that the Option be  exercised or expire  within a  reasonable  time
after  termination as an active  officer,  employee,  or director.  No Incentive
Stock  Option may be granted  more than ten years  after the earlier to occur of
the effective date of the Plan or the date the Plan is approved by the Company's
shareholders.  Separate Stock Option Agreements may be used for Options intended
to be Incentive Stock Options and those not so intended,  but any failure to use
such separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby.

     6.3 Optionee Limitations.  The Committee shall not grant an Incentive Stock
         --------------------
Option to any person who, at the time the Incentive Stock Option is granted:

     (a) is not an employee of the  Company or any of its  Subsidiaries  (as the
term 44 employee" is defined by the Code); or

     (b) owns or is considered to own stock possessing at least 10% of the total
combined  voting  power of all  classes  of stock of the  Company  or any of its
Parent or Subsidiary corporations; provided, however, that this limitation shall
not apply if at the time an Incentive Stock Option is granted the Exercise Price
is at least I 10 % of the Fair Market Value of the Stock  subject to such Option
and such Option by its terms would not be exercisable  after five years from the
date on which the Option is granted.  For the purpose of this  subsection (b), a
person shall be considered to own: (i) the stock owned,  directly or indirectly,
by or for his or her  brothers  and sisters  (whether  by whole or half  blood),
spouse,  ancestors  and lineal  descendants;  (ii) the stock owned,  directly or
indirectly, by or for a corporation, partnership, estate, or trust in proportion
to such person's stock  interest,  partnership  interest or beneficial  interest
therein;  and  (iii)  the  stock  which  such  person  may  purchase  under  any
outstanding options of the Company or of any Parent or Subsidiary.

     6.4 $100,000 Limitation.  Except as provided below, the Committee shall not
         -------------------
grant an  Incentive  Stock  Option  to, or modify  the  exercise  provisions  of
outstanding  Incentive  Stock  Options  held by, any person who, at the time the
Incentive  Stock Option is granted (or modified),  would thereby receive or hold
any Incentive  Stock Options of the Company and any Parent or  Subsidiary,  such
that the aggregate Fair Market Value  (determined as of the respective  dates of
grant or  modification  of each  option) of the stock with respect to which such
Incentive  Stock Options are  exercisable for the first time during any calendar
year is in excess of $100,000 (or such other limit as may be  prescribed  by the
Code from time to time); provided that the
                         --------



                                       8
<PAGE>

foregoing  restriction on  modification  of outstanding  Incentive Stock Options
shall not preclude the Committee from modifying an outstanding  Incentive  Stock
Option  if,  as a  result  of such  modification  and with  the  consent  of the
Optionee,  such Option no longer  constitutes  an Incentive  Stock  Option;  and
provided that, if the $100,000  limitation (or such other limitation  prescribed
by the Code)  described  in this Section 6.4 is exceeded,  the  Incentive  Stock
Option,  the granting or modification of which resulted in the exceeding of such
limit,  shall be treated as an Incentive  Stock Option up to the  limitation and
the excess shall be treated as an Option not  qualifying  as an Incentive  Stock
Option.


     6.5 Exercise Price.  The Exercise Price of the Stock subject to each Option
         --------------
shall be  determined  by the  Committee.  Subject to the  provisions  of Section
6.3(b)  hereof,  the Exercise Price of an Option shall not be less than the Fair
Market  Value of the Stock as of the date the Option is granted  (or in the case
of an Incentive Stock Option that is subsequently  modified, on the date of such
modification).

     6.6 Exercise  Period.  The period for the  exercise of each Option  granted
         ----------------
hereunder shall be determined by the Committee,  but the Stock Option  Agreement
with  respect  to each  Option  shall  provide  that  such  Option  shall not be
exercisable  after ten years  from the date of grant  (or  modification)  of the
Option.

     6.7 Option Exercise.
         ---------------

     (a) Unless otherwise  provided in the Stock Option Agreement or Section 6.6
hereof,  an Option may be  exercised at any time or from time to time during the
term of the Option as to any or all full shares  which have  become  Purchasable
under  the  provisions  of the  Option,  but not at any time as to less than 100
shares unless the remaining shares that have become so Purchasable are less than
100 shares.  The  Committee  shall have the  authority to prescribe in any Stock
Option  Agreement  that the Option may be exercised  only in  accordance  with a
vesting schedule during the term of the Option.

     (b) An Option  shall be  exercised  by (i)  delivery  to the Company at its
principal office a written notice of exercise with respect to a specified number
of shares of Stock and (ii)  payment to the  Company at that  office of the full
amount of the  Exercise  Price for such  number  of  shares in  accordance  with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with the
involvement  of a stockbroker  in accordance  with the federal  margin rules set
forth  in  Regulation  T  (in  which  case  the  certificates  representing  the
underlying shares will be delivered by the Company directly to the stockbroker).

     (c) The  Exercise  Price is to be paid in full in cash upon the exercise of
the Option and the Company shall not be required to deliver certificates for the
shares purchased until such payment has been made;  provided,  however,  that in
lieu of cash,  in the  Company's  discretion  all or any portion of the Exercise
Price may be paid by tendering to the Company  shares of Stock duly endorsed for
transfer  and owned by the  Optionee,  or by  authorization  to the  Company  to
withhold shares of Stock otherwise issuable upon exercise of the Option, in each
case to be credited  against the Exercise Price at the Fair Market Value of such
shares  on the  date  of  exercise  (however,  no  fractional  shares  may be so
transferred, and the Company shall not be obligated to make any cash payments in
consideration  of any  excess  of the  aggregate  Fair  Market



                                       9
<PAGE>

Value  of  shares  transferred  over the  aggregate  Exercise  Price);  provided
further,  that  the  Board  may  provide  in a Stock  Option  Agreement  (or may
otherwise  determine in its sole  discretion  at the time of exercise)  that, in
lieu of cash or shares,  all or a portion of the  Exercise  Price may be paid by
the  Optionee's  execution  of a recourse  note equal to the  Exercise  Price or
relevant  portion  thereof,  subject to  compliance  with  applicable  state and
federal laws,  rules and  regulations.  Notwithstanding  the above,  the Company
shall not be  obligated  to accept  tender of shares of Stock as  payment of the
Exercise  Price if doing so would result in a charge to the  Company's  earnings
for financial reporting purposes.

     (d) In addition to and at the time of payment of the  Exercise  Price,  the
Optionee shall pay to the Company in cash the full amount of any federal, state,
and local  income,  employment,  or other  withholding  taxes  applicable to the
taxable income of such Optionee resulting from such exercise; provided, however,
that in the  discretion of the Committee any Stock Option  Agreement may provide
that all or any portion of such tax obligations,  together with additional taxes
not exceeding the actual additional taxes to be owed by the Optionee as a result
of such exercise, may, upon the irrevocable election of the Optionee, be paid by
tendering to the Company  whole  shares of Stock duly  endorsed for transfer and
owned by the Optionee,  or by authorization to the Company to withhold shares of
Stock  otherwise  issuable upon  exercise of the Option,  in either case in that
number of shares having a Fair Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject to such  restrictions as to
the approval and timing of any such  election as the  Committee may from time to
time  determine to be necessary or  appropriate to satisfy the conditions of the
exemption  set forth in Rule  16b-3  under  the  Exchange  Act,  if such rule is
applicable.

     (e)  The  holder  of an  Option  shall  not  have  any of the  rights  of a
shareholder with respect to the shares of Stock subject to the Option until such
shares have been issued and transferred to the Optionee upon the exercise of the
Option.


     6.8 Reload Options.
         --------------

     (a) The Committee may specify in a Stock Option Agreement (or may otherwise
determine in its sole discretion) that a Reload Option shall be granted, without
further  action of the  Committee,  (i) to an Optionee  who  exercises an Option
(including  a Reload  Option)  by  surrendering  shares of Stock in  payment  of
amounts specified in Sections 6.7(c) or 6.7(d) hereof,  (ii) for the same number
of shares as are  surrendered to pay such amounts,  (iii) as of the date of such
payment and at an Exercise  Price equal to the Fair Market Value of the Stock on
such date,  and (iv)  otherwise on the same terms and  conditions  as the Option
whose exercise has occasioned such payment, except as provided below and subject
to such other contingencies,  conditions,  or other terms as the Committee shall
specify  at the time  such  exercised  Option  is  granted;  provided,  that the
Committee may require that the shares  surrendered  in payment as provided above
must have  been  held by the  Optionee  for at least  six  months  prior to such
surrender.

     (b) Unless  provided  otherwise  in the Stock  Option  Agreement,  a Reload
Option may not be  exercised  by an Optionee  (i) prior to the end of a one-year
period  from the date that the Reload  Option is  granted,  and (ii)  unless the
Optionee  retains  beneficial  ownership  of the shares of Stock  issued to such
Optionee upon exercise of the Option referred to above in Section  6.8(a)(i) for
a period of one year from the date of such exercise.




                                       10
<PAGE>

     6.9 Nontransferability  of Option. Other than as provided below, no Option
         -----------------------------
shall be  transferable  by an Optionee other than by will or the laws of descent
and distribution or, in the case of non-Incentive  Stock Options,  pursuant to a
Qualified  Domestic  Relations  Order,  and, during the lifetime of an Optionee,
Options  shall  be  exercisable  only by such  Optionee  (or by such  Optionee's
guardian  or  legal  representative,   should  one  be  appointed).  However,  a
Non-Incentive  Stock Option may, in connection with the Optionee's  estate plan,
be  assigned  in  whole or in part  during  Optionee's  lifetime  to one or more
members of the Optionee's  immediate  family or to a trust  established  for the
exclusive benefit of one or more such family members. The assigned portion shall
be exercisable only by the person or persons who acquire a proprietary  interest
in the Option pursuant to such assignment.  The terms applicable to the assigned
portion shall be the same as those in effect for this Option  immediately  prior
to such  assignment  and  shall be set  forth in such  documents  issued  to the
assignee as the Committee may deem appropriate.

     6.10 Termination  of  Employment or Service.  The Committee  shall have the
          --------------------------------------
power to specify the effect upon an Optionee's  right to exercise an Option upon
termination   of  such   Optionee's   employment   or  service   under   various
circumstances,  which effect may include  immediate or deferred  termination  of
such Optionee's  rights under an Option, or acceleration of the date at which an
Option may be exercised in full.  Unless a Stock Option  Agreement  specifically
provides  otherwise,  in the event the recipient of an Option is terminated from
his or her  employment or other service to the Company or its  subsidiaries  for
Cause,  Options,  whether  vested or  unvested,  granted  to such  person  shall
terminate immediately and shall not thereafter be exercisable.


     6.11 Employment  Rights.  Nothing   in  the  Plan  or in any  Stock  Option
          ------------------
Agreement  shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's  employment
at any time.


     6.12 Certain  Successor  Options.  To the extent not inconsistent  with the
          ---------------------------
terms,  limitations  and  conditions  of Code  section  422 and any  regulations
promulgated with respect thereto,  an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired,  by merger or otherwise,
by the Company (or any  Subsidiary of the Company) may contain terms that differ
from those  stated in this  Article  VI, but solely to the extent  necessary  to
preserve  for any such  employee  the  rights  and  benefits  contained  in such
predecessor option, or to satisfy the requirements of Code section 424(a).


     6.13 Effect  of a  Corporate  Transaction.  All  Options,  to  the  extent
          ------------------------------------
outstanding  at the time of a  Corporate  Transaction  but not  otherwise  fully
exercisable,   shall  automatically   accelerate  so  that  the  Options  shall,
immediately  prior to the effective  date of the Corporate  Transaction,  become
exercisable  for all  shares  at the time  subject  to such  Options  and may be
exercised for any or all of those shares as fully vested shares of Stock.


                                       11
<PAGE>

     6.14 Forfeiture by Order of Regulatory  Agency.  If the Company's or any of
          -----------------------------------------
its  financial  institution   Subsidiaries'  capital  falls  below  the  minimum
requirements  contained in 12 CFR 3 or below a higher  requirement as determined
by the Company's or such  Subsidiary's  primary bank regulatory  agencies,  such
agencies may direct the Company to require Optionees to exercise or forfeit some
or all of their Options.  All options granted under this Plan are subject to the
terms of any such directive.


                                  ARTICLE VII

                               STOCK CERTIFICATES

     The Company shall not be required to issue or deliver any  certificate  for
shares of Stock  purchased upon the exercise of any Option granted  hereunder or
any portion thereof prior to fulfillment of all of the following conditions:

     (a) The admission of such shares to listing on all stock exchanges on which
the Stock is then listed;

     (b) The  completion  of any  registration  or other  qualification  of such
shares which the Committee  shall deem necessary or advisable  under any federal
or state law or under the rulings or  regulations of the Securities and Exchange
Commission or any other governmental regulatory body;

     (c) The  obtaining of any approval or other  clearance  from any federal or
state  governmental  agency or body which the  Committee  shall  determine to be
necessary or advisable; and

     (d) The lapse of such  reasonable  period of time following the exercise of
the  Option  as the  Board  from  time to time  may  establish  for  reasons  of
administrative convenience.

     Stock  certificates  issued  and  delivered  to  Optionees  shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable  federal and state  securities  laws. The inability of the Company to
obtain approval from any regulatory body having  authority deemed by the Company
to be necessary to the lawful issuance and sale of any Stock pursuant to Options
shall relieve the Company of any liability with respect to the  non-issuance  or
sale of the  Stock as to which  such  approval  shall  not have  been  obtained.
However, the Company shall use its best efforts to obtain all such approvals.

                                  ARTICLE VIII

                            TERMINATION AND AMENDMENT

     8.1 Termination  and  Amendment.  The Board may at any time  terminate the
         ---------------------------
Plan;  provided,  however,  that the Board  (unless its actions are  approved or
ratified by the  shareholders  of the Company  within  twelve months of the date
that the Board amends the Plan) may not amend the Plan to:



                                       12
<PAGE>

     (a)  Increase  the total  number of shares of Stock  issuable  pursuant  to
Incentive  Stock Options under the Plan,  except as  contemplated in Section 5.2
hereof; or

     (b) Change the class of  employees  eligible  to  receive  Incentive  Stock
Options that may participate in the Plan.

     8.2 Effect on Optionee's Rights. No termination, amendment, or modification
         ---------------------------
of the Plan shall  affect  adversely a  Optionee's  rights  under a Stock Option
Agreement without the consent of the Optionee or his legal representative.

                                   ARTICLE IX

                    RELATIONSHIP TO OTHER COMPENSATION PLANS

     The  adoption  of the  Plan  shall  not  affect  any  other  stock  option,
incentive,  or other  compensation plans in effect for the Company or any of its
Subsidiaries;  nor shall the adoption of the Plan preclude the Company or any of
its  Subsidiaries  from  establishing  any  other  form of  incentive  or  other
compensation  plan for  employees  or  Directors  of the  Company  or any of its
Subsidiaries.

                                    ARTICLE X

                                  MISCELLANEOUS

     10.1 Replacement  or   Amended  Grants.  At  the  sole  discretion  of  the
          --------------------------------
Committee,  and  subject  to the terms of the Plan,  the  Committee  may  modify
outstanding Options or accept the surrender of outstanding Options and grant new
Options in  substitution  for them.  However no  modification of an Option shall
adversely affect a Optionee's  rights under a Stock Option Agreement without the
consent of the Optionee or his legal representative.

     10.2 Forfeiture  for  Competition.  If a  Optionee  provides  services to a
          ----------------------------
competitor  of the Company or any of its  Subsidiaries,  whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience  used or developed by the Optionee  while an Employee,  then that
Optionee's rights under any Options outstanding hereunder shall be forfeited and
terminated  subject  in each  case to a  determination  to the  contrary  by the
Committee.

     10.3 Leave of Absence.  Unless  provided  otherwise in a  particular  Stock
          ----------------
Option  Agreement,  the  following  provisions  shall  apply upon an  Optionee's
commencement of an authorized leave of absence:

     (a) The  exercise  schedule in effect for such Option shall be frozen as of
the  first  day of the  authorized  leave,  and  the  Option  shall  not  become
exercisable for any additional installments of shares of Stock during the period
Optionee remains on such leave.

     (b) Should the Optionee  resume active Employee status within 60 days after
the start date of the  authorized  leave,  Optionee  shall,  for purposes of the
applicable  exercise  schedule,



                                       13
<PAGE>

receive service credit for the entire period of such leave. If the Optionee does
not resume active  Employee  status within such 60-day  period,  then no service
credit shall be given for the entire period of such leave.

     (c) If the  Option  is an  Incentive  Stock  Option,  then  the  following
additional provision shall apply:

               If the leave of absence  continues  for more than  three  months,
          then the Option shall  automatically  convert to a Non-Incentive Stock
          Option  under  the  Federal  tax  laws  upon  the  expiration  of such
          three-month  period,  unless the  Optionee's  reemployment  rights are
          guaranteed  by  statute  or  written  agreement.  Following  any  such
          conversion  of the Option,  all  subsequent  exercises  of the Option,
          whether effected before or after Optionee's  return to active Employee
          status,  shall result in an immediate  taxable event,  and the Company
          shall be required to collect  from  Optionee  the  Federal,  state and
          local  income and  employment  withholding  taxes  applicable  to such
          exercise.

     (d) In no event  shall the Option  become  exercisable  for any  additional
shares or otherwise  remain  outstanding  if Optionee  does not resume  Employee
status prior to the Expiration Date of the option term.

     10.4 Plan  Binding  on  Successors.  The Plan  shall be  binding  upon the
          -----------------------------
successors and assigns of the Company.

     10.5 Headings,  etc.,  No Part of Plan.  Headings of Articles and Sections
          ---------------------------------
hereof are inserted for convenience  and reference;  they do not constitute part
of the Plan.

     10.6 Section  16   Compliance.   With  respect  to  Section  16  Insiders,
          ------------------------
transactions  under  this  Plan are  intended  to  comply  with  all  applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any  provision  of the Plan or action by the  Committee  fails to so comply,  it
shall be deemed void to the extent  permitted by law and deemed advisable by the
Committee.  In addition,  if necessary to comply with Rule 16b-3 with respect to
any grant of an Option  hereunder,  and in  addition  to any  other  vesting  or
holding period specified  hereunder or in an applicable Stock Option  Agreement,
any Section 16 Insider  acquiring an Option shall be required to hold either the
Option or the  underlying  shares of Stock  obtained upon exercise of the Option
for a minimum of six months.




                                       14
<PAGE>




                                    EXHIBIT A
                                       to
                          COASTAL BANKING COMPANY, INC.
                           2000 STOCK INCENTIVE PLAN -
                   Form of Employee of Stock Option Agreement

                          COASTAL BANKING COMPANY, INC.
                             STOCK OPTION AGREEMENT

     THIS STOCK OPTION  AGREEMENT (this  "Agreement") is entered into as of this
    day of  February,  2000,  between  COASTAL  BANKING  COMPANY,  INC., a South
---
Carolina corporation (the "Company"), and                      (the "Optionee").
                                          --------------------

     WHEREAS, on  February    , 2000,  the  Board  of  Directors  of the Company
                         ----
adopted a Stock Incentive Plan known as the "COASTAL BANKING COMPANY,  INC. 2000
STOCK INCENTIVE PLAN" (the "Stock  Incentive  Plan"),  and recommended  that the
Plan be approved by the Company's shareholders; and

     WHEREAS,  the Committee has granted the Optionee a stock option to purchase
the number of shares of the  Company's  common stock as set forth below,  and in
consideration  of the  granting  of that stock  option the  Optionee  intends to
remain in the employ of the Company; and

     WHEREAS,  the Company  considers it desirable and in its best interest that
the Optionee be provided an inducement  to acquire an ownership  interest in the
Company  and an  additional  incentive  to advance  the  interest of the Company
through the grant of an option to purchase shares of common stock of the Company
pursuant to the Stock Incentive Plan; and

     WHEREAS,  the  Company  and the  Optionee  desire  to enter  into a written
agreement  with respect to such option in  accordance  with the Stock  Incentive
Plan.

     NOW,  THEREFORE,   as  an  employment  incentive  and  to  encourage  stock
ownership,  and also in consideration of the mutual covenants  contained herein,
the Company and the Optionee agree as follows.

     1.  Incorporation  of Stock Incentive Plan. This option is granted pursuant
         --------------------------------------
to the provisions of the Stock  Incentive Plan and the terms and  definitions of
the Stock  Incentive Plan are  incorporated  herein by reference and made a part
hereof. A copy of the Stock Incentive Plan has been delivered to, and receipt is
hereby acknowledged by, the Optionee.

     2.  Grant of Option.  Subject to  the  provisions stated in this Agreement,
         ---------------
the Company hereby evidences its grant to the Optionee, not in lieu of salary or
other  compensation,  of the right and option (the  "Option")  to  purchase  the
number of shares of the Company's  Common Stock,  par value $0.01 per share (the
"Stock"), set forth below,  exercisable in the amounts and at the time specified
below.  This Option is intended to be an Incentive  Stock Option,  as defined in
the Internal Revenue Code.


<PAGE>

         Number of Shares:                  *****

         Exercise Price:                    $ *** per share

         Option                             Vesting Schedule: Options are
                                            exercisable with respect the shares
                                            of Stock as follows, subject in each
                                            case to continued employment by the
                                            Company or a subsidiary of the
                                            Company through such date, and
                                            subject to the provisions of Section
                                            7 of this Agreement:

         No. of Shares                                            Vesting Date

         *****                                                          ,2001
                                                   ------------------ --

         *****                                                          ,2002
                                                   ------------------ --

         *****                                                          ,2003
                                                   ------------------ --

         *****                                                          ,2004
                                                   ------------------ --

         *****                                                          ,2005
                                                   ------------------ --

Option Exercise Period:  All options expire and are void unless exercised on or
                         before                   , 2010.
                                -------------- ---

     3.  Exercise  Terms. The Optionee must exercise the Option for at least the
         ---------------
lesser of 100  shares or the number of shares of  Purchasable  Stock as to which
the Option remains unexercised.  If this Option is not exercised with respect to
all or any part of the shares  subject to this Option  prior to its  expiration,
the shares with respect to which this Option was not  exercised  shall no longer
be subject to this Option.

     4.  Restrictions on Transferability.  No Option shall be transferable by an
         -------------------------------
Optionee other than by will or the laws of descent and  distribution or pursuant
to a Qualified  Domestic  Relations  Order.  During the lifetime of an Optionee,
Options  shall  be  exercisable  only by such  Optionee  (or by such  Optionee's
guardian or legal representative, should one be appointed). The shares purchased
pursuant to the exercise of an Incentive  Stock Option shall not be  transferred
by the Optionee except  pursuant to the Optionee's  will, or the laws of descent
and  distribution,  until  such date  which is the later of two years  after the
grant of such  Incentive  Stock  Option or one year  after the  transfer  of the
shares to the Optionee pursuant to the exercise of such Incentive Stock Option.

     5.  Notice of  Exercise  of Option.  This  Option may be  exercised  by the
         ------------------------------
Optionee,   or  by  the   Optionee's   administrators,   executors  or  personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise  attached  hereto as  Schedule  A) signed by the  Optionee,  or by such
administrators,  executors or personal representatives,  and delivered or mailed
to the Company as specified in this  Agreement to the attention of the President
or such


<PAGE>

other  officer as the Company may  designate.  Any such notice shall (a) specify
the  number  of  shares  of  Stock  which  the   Optionee   or  the   Optionee's
administrators,  executors or personal representatives, as the case may be, then
elects to purchase hereunder,  (b) contain such information as may be reasonably
required by the Company  pursuant to this  Agreement,  and (c) be accompanied by
(i) a  certified  or  cashier's  check  payable to the Company in payment of the
total Exercise Price applicable to such shares as provided  herein,  (ii) shares
of stock  owned  by the  Optionee  and duly  endorsed  or  accompanied  by stock
transfer  powers  having a Fair Market Value equal to the total  Exercise  Price
applicable to such Shares purchased hereunder, or (iii) a certified or cashier's
check  accompanied by the number of shares of stock where Fair Market Value when
added to the amount of the check equal the total  Exercise  Price  applicable to
such  shares  purchased   hereunder.   Upon  receipt  of  any  such  notice  and
accompanying  payment,  and subject to the terms hereof,  the Company  agrees to
issue to the Optionee or the  Optionee's  administrators,  executors or personal
representatives, as the case may be, stock certificates for the number of shares
specified in such notice  registered in the name of the person  exercising  this
Option.

     6.  Adjustment in Option.  The number of Shares subject to this Option, the
         --------------------
Exercise Price,  and other matters are subject to adjustment  during the term of
this Option in accordance with Section 5.2 of the Stock Incentive Plan.

     7.  Termination of Employment.
         -------------------------

     (a) In the event of the  termination of the Optionee's  employment with the
Company or any of its Subsidiaries,  other than a termination that is either (i)
for Cause,  (ii)  voluntary  on the part of the  Optionee  and  without  written
consent  of the  Company,  or  (iii)  for  reasons  of death  or  disability  or
retirement,  the Optionee  may  exercise  this Option at any time within 30 days
after  such  termination  to the  extent  of the  number of  shares  which  were
Purchasable hereunder at the date of such termination.

     (b) In the event of a  termination  of the  Optionee's  employment  that is
either (i) for Cause or (ii)  voluntary  on the part of the Optionee and without
the written  consent of the Company,  this Option,  to the extent not previously
exercised,  shall  terminate  immediately  and shall not thereafter be or become
exercisable.

     (c) In the event of the retirement of the Optionee at the normal retirement
date as  prescribed  from time to time by the  Company  or any  Subsidiary,  the
Optionee  shall  continue to have the right to  exercise  any Options for shares
which were Purchasable at the date of the Optionee's  retirement  provided that,
on the date which is three months after the date of retirement, the Options will
become void and  unexercisable  unless on the date of  retirement  the  Optionee
enters into a noncompete agreement with the Company and continues to comply with
such  noncompete  agreement.  This Option does not confer upon the  Optionee any
right with respect to  continuance of employment by the Company or by any of its
Subsidiaries.  This Option shall not be affected by any change of  employment so
long as the  Optionee  continues  to be an employee of the Company or one of its
Subsidiaries.


<PAGE>

     (d) In the event of  termination  of employment  because of the  Optionee's
Permanent  and  Total   Disability,   the  Optionee  (or  his  or  her  personal
representative) may exercise this Option,  within a period ending on the earlier
of (a) the last day of the one year period  following the  Optionee's  Permanent
and Total Disability or (b) the expiration date of this Option, to the extent of
the  number of  shares  which  were  Purchasable  hereunder  at the date of such
termination.

     (e) In the event of the  Optionee's  death while employed by the Company or
any of its  Subsidiaries  or within  three months  after a  termination  of such
employment (if such  termination was neither (i) for Cause nor (ii) voluntary on
the part of the Optionee and without the written  consent of the  Company),  the
appropriate  persons  described  in Section 5 hereof or persons to whom all or a
portion of this Option is  transferred  in accordance  with Section 4 hereof may
exercise  this Option at any time  within a period  ending on the earlier of (a)
the last day of the one year period  following the  Optionee's  death or (b) the
expiration  date of this Option.  If the Optionee was an employee of the Company
at the time of death,  this  Option  may be so  exercised  to the  extent of the
number of shares that were  Purchasable  hereunder at the date of death.  If the
Optionee's  employment  terminated prior to his or her death, this Option may be
exercised  only to the  extent of the number of shares  covered  by this  Option
which were Purchasable hereunder at the date of such termination.

     8.  Compliance with Regulatory Matters.  The Optionee acknowledges that the
         ----------------------------------
issuance of capital  stock of the Company is subject to  limitations  imposed by
federal and state law and the Optionee  hereby agrees that the Company shall not
be  obligated  to issue any shares of Stock upon  exercise  of this  Option that
would cause the Company to violate law or any rule, regulation, order or consent
decree of any regulatory  authority (including without limitation the Securities
and Exchange  Commission)  having  jurisdiction over the affairs of the Company.
The  Optionee  agrees  that  he or  she  will  provide  the  Company  with  such
information  as is  reasonably  requested  by  the  Company  or its  counsel  to
determine  whether the issuance of Stock complies with the provisions  described
by this Section 8.

     9.  Forfeiture.  The  purpose of the Stock  Incentive  Plan is to  attract,
         ----------
retain,  and reward  employees,  to increase stock ownership and  identification
with the Company's  interests,  and to provide  incentive for remaining with and
enhancing the value of the Company over the  long-term.  Therefore,  the Company
and the Optionee agree as follows:

     (a) If, at any time within the later of (i) one year after  termination  of
the Optionee's  employment or (ii) one year after the Optionee's exercise of any
portion of this Option, the Optionee engages in any activity which constitutes a
violation of any confidentiality,  noncompetition,  nonsolicitation,  or similar
provision  of any  employment  or other  agreement  between  the Company and the
Optionee  (or, if no agreement is in place between the Company and the Optionee,
any Company policies pertaining to such matters),  or if the Optionee engages in
any activity  which is inimical,  contrary,  or harmful to the  interests of the
Company (including conduct related to the Optionee's employment for which either
criminal or civil  penalties  against the Optionee may be sought or violation of
the Company's  policies,  including the Company's insider trading policy),  then
(1) this Option shall terminate  effective the date on which the Optionee enters
into such activity,  unless  terminating  sooner by operation of another term or
condition of this Option or the Stock  Incentive  Plan,  and (2) any Option Gain
realized by the


<PAGE>

Optionee  from  exercising  all or a portion of this Option shall be paid by the
Optionee to the Company.  "Option Gain" shall mean the gain  represented  by the
mean market price on the date of exercise over the Exercise Price, multiplied by
the number of shares purchased through exercise of the Option, without regard to
any  subsequent  market price decrease or increase.  The  forfeiture  provisions
described  in this  Section  shall  apply  even if the  Company  does not  elect
otherwise to enforce the  employment  agreement or take other action against the
Optionee,  but shall not apply if termination of the Optionee's  employment with
the Company  occurs in  connection  with or  following  a Corporate  Transaction
involving the Company (as defined in the Stock Incentive Plan).

     (b) By accepting this Agreement,  the Optionee consents to a deduction from
any amounts the Company owes the Optionee from time to time  (including  amounts
owed as wages or other compensation,  fringe benefits,  or vacation pay), to the
extent of the amounts the Optionee owes the Company under this Section.  Whether
or not the  Company  elects  to make any  set-off  in  whole or in part,  if the
Company  does not  recover  by  means of  set-off  the full  amount  owed by the
Optionee to the Company,  calculated as set forth above,  the Optionee shall pay
immediately the unpaid balance to the Company.  The Optionee hereby appoints the
Company  as its  attorney-in-fact  to  execute  any  documents  or do  any  acts
necessary to exercise its rights under this Section.

     (c) The Optionee may be released  from its  obligations  under this Section
only if the Board of Directors (or its duly appointed  agent)  determines in its
sole discretion that such action is in the best interests of the Company.

     10. Miscellaneous.
         -------------

     (a) This  Agreement  shall be  binding  upon the  parties  hereto and their
representatives, successors and assigns.

     (b) Unless the context clearly  indicates to the contrary,  all capitalized
terms used herein shall have the meanings as set forth in this Agreement,  or in
the event a capitalized  term is not clearly  described in this  Agreement,  the
meanings as set forth in the Coastal Banking Company,  Inc. 2000 Stock Incentive
Plan dated February    , 2000.
                    ---

     (c) This  Agreement is executed and  delivered in, and shall be governed by
the laws of, the State of South Carolina.

     (d) Any requests or notices to be given  hereunder  shall be deemed  given,
and any elections or exercises to be made or  accomplished  shall be deemed made
or accomplished,  upon actual delivery thereof to the designated  recipient,  or
three days after deposit thereof in the United States mail,  registered,  return
receipt  requested and postage prepaid,  addressed,  if to the Optionee,  at the
address set forth below and, if to the Company,  to the executive offices of the
Company at 1001 Bay Street, Suite 202, Beaufort, South Carolina 29902.

     (e) This Agreement may not be modified  except in writing  executed by each
of the parties hereto.


<PAGE>

     IN WITNESS  WHEREOF,  the Board of Directors of the Company has caused this
Stock Option Agreement to be executed on behalf of the Company and the Company's
seal  to be  affixed  hereto  and  attested  by the  Secretary  or an  Assistant
Secretary  of the  Company,  and the  Optionee  has  executed  this Stock Option
Agreement under seal, all as of the day and year first above written.

                                 COASTAL BANKING COMPANY, INC.


                                 By:
                                    --------------------------------------------
                                    Name:  Randolph C. Kohn
                                    Title: President and Chief Executive Officer


                                 OPTIONEE

                                 By:
                                    --------------------------------------------

                                 Name: ********

                                 Address:
                                         ---------------------------------------

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


<PAGE>


                                   SCHEDULE A

                               NOTICE OF EXERCISE

                 To exercise Stock Options, the Optionee should
        complete this Schedule, execute it, and return it to the Company




     The  undersigned   hereby  notifies  Coastal  Banking   Company,   Inc.(the
"Company")  of this  election  to exercise  the  undersigned's  stock  option to
purchase               shares of the Company's common stock, par value $0.01 per
         -------------
share  (the  "Common  Stock"),  pursuant  to the  Stock  Option  Agreement  (the
"Agreement") between the undersigned and the Company dated                     .
                                                           --------------------
Accompanying this Notice is a check in the amount of  $                  payable
                                                       -----------------
to the Company such amount being equal to the purchase price per share set forth
in the Agreement multiplied by the number of shares being purchased hereby.

     IN WITNESS  WHEREOF,  the  undersigned has set his hand and seal, this
                                                                            ----
day of                  ,        .
       -----------------  -------

                                    OPTIONEE [OR OPTIONEE'S
                                    ADMINISTRATOR,
                                    EXECUTOR OR PERSONAL
                                    REPRESENTATIVE]



                                    Name:
                                         ---------------------------------------
                                    Print Name:
                                               ---------------------------------