COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this 28th day of March,  2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and FRANCIS PETER FENSEL, JR. (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              -----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

     1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.


                                       1
<PAGE>

     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 Election Changes

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

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<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

          4.3.1  Amount of Benefit.  The benefit  under this  Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.

          4.3.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

               (a) Gross negligence or gross neglect of duties to the Company;

                (b)  Commission of a felony or of a gross misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


DIRECTOR                              COMPANY


                                      COOPERATIVE BANKSHARES, INC.


/s/ FRANCIS PETER FENSEL, JR.         BY  /s/ FREDERICK WILLETTS, III
----------------------------------        --------------------------------------
FRANCIS PETER FENSEL, JR.
                                      TITLE  PRESIDENT
                                            ------------------------------------

                                       6
<PAGE>
                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this _____ day of _____, 2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and RUSSELL CARTER (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              ----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

     1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.

                                       1
<PAGE>

     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 Election Changes

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                                       2
<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

          4.3.1  Amount of Benefit.  The benefit  under this  Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.

          4.3.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.

                                       3
<PAGE>

                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

                (a) Gross negligence or gross neglect of duties to the Company;

                (b) Commission of a felony or of a gross  misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


DIRECTOR                                    COMPANY


                                            COOPERATIVE BANKSHARES, INC.


                                            BY
------------------------------------           ---------------------------------
RUSSELL CARTER
                                            TITLE
                                                 -------------------------------


                                       6
<PAGE>

                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this 28th day of March,  2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and JAMES HUNDLEY (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              -----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

         1.5 "Deferrals" means the amount of the Director's Fees, which the
Director elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.

                                       1
<PAGE>

     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 Election Changes

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                                       2
<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

          4.3.1  Amount of Benefit.  The benefit  under this  Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.

          4.3.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

                (a) Gross negligence or gross neglect of duties to the Company;

                (b) Commission of a felony or of a gross  misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


DIRECTOR                               COMPANY


                                       COOPERATIVE BANKSHARES, INC.


/s/ JAMES HUNDLEY                      BY  /s/ FREDERICK WILLETTS, III
------------------------------------       ------------------------------------
JAMES HUNDLEY
                                       TITLE  PRESIDENT
                                            -----------------------------------

                                       6
<PAGE>
                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this 28th day of March,  2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and HORACE THOMPSON KING, III (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              -----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

     1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.

                                       1
<PAGE>

     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 Election Changes

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                                       2
<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

          4.3.1  Amount of Benefit.  The benefit  under this  Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.

          4.3.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

                (a) Gross negligence or gross neglect of duties to the Company;

                (b) Commission of a felony or of a gross  misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


Director                                 Company


                                         COOPERATIVE BANKSHARES, INC.


/s/ Horace Thompson King, III            By /s/ Frederick Willetts, III
------------------------------------        ------------------------------------
Horace Thompson King, III
                                         Title  President
                                              ----------------------------------


                                       6
<PAGE>
                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this 28th day of March,  2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and RICHARD RIPPY (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              -----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

     1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.


                                       1
<PAGE>
     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 ELECTION CHANGES

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                                       2
<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

          4.3.1  Amount of Benefit.  The benefit  under this  Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.

          4.3.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

                (a) Gross negligence or gross neglect of duties to the Company;

                (b) Commission of a felony or of a gross  misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


DIRECTOR                               COMPANY


                                       COOPERATIVE BANKSHARES, INC.


/s/ RICHARD RIPPY                      BY /s/ FREDERICK WILLETTS, III
------------------------------------      --------------------------------------
RICHARD RIPPY
                                       TITLE  PRESIDENT
                                             -----------------------------------

                                       6
<PAGE>
                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this 28th day of March,  2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and O. RICHARD WRIGHT, JR. (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              ----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

     1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.

                                       1
<PAGE>

     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 Election Changes

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                                       2
<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

                  4.3.1 Amount of Benefit. The benefit under this Section 4.3 is
the Deferral Account balance at the Directors' Termination of Service.

                  4.3.2 Payment of Benefit. The Company shall pay the benefit to
the Director in a lump sum within 60 days following the Director's Termination
of Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

                (a) Gross negligence or gross neglect of duties to the Company;

                (b) Commission of a felony or of a gross  misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


DIRECTOR                                 COMPANY


                                         COOPERATIVE BANKSHARES, INC.


/s/ O. RICHARD WRIGHT, JR.               BY /s/ FREDERICK WILLETTS, III
------------------------------------        ------------------------------------
O. RICHARD WRIGHT, JR.
                                         TITLE  PRESIDENT
                                               ---------------------------------


                                       6
<PAGE>
                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT


     THIS  AGREEMENT  is adopted  this 28th day of March,  2002,  by and between
COOPERATIVE  BANKSHARES,  INC.,  located  in  Wilmington,  North  Carolina  (the
"Company"), and PAUL BURTON (the "Director").

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company is willing  to provide to the  Director a deferred  fee
opportunity.  The Company will pay the  Director's  benefits  from the Company's
general assets.

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:

     1.1 "Anniversary Date" means December 31 of each year.

     1.2  "Change in  Control"  means the  transfer  of shares of the  Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire  when  applying  Section  318 of the Code)  more than 25  percent of the
                                                              -----------
Company's  outstanding voting common stock followed within twelve (12) months by
the Director's  Termination of Service for reasons other than death,  Disability
or retirement.

     1.3 "Code" means the Internal Revenue Code of 1986, as amended.

     1.4 "Deferral  Account"  means the Company's  accounting of the  Director's
accumulated Deferrals plus accrued interest.

     1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.

     1.6 "Disability"  means, if the Director is covered by a  Company-sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company. As a condition to any Disability benefits,  the Company may require
the Director to submit to such physical or mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.7 "Effective Date" means October 1, 2001.

     1.8 "Election Form" means the Form attached as Exhibit 1.

     1.9 "Fees" means the total fees payable to the Director during a Plan Year.

     1.10  "Normal   Retirement   Age"  means  the  Director's   72nd  birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.

                                       1
<PAGE>

     1.11 "Normal  Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.

     1.12 "Plan Year" means the calendar year.

     1.13 "Termination of Service" means that the Director ceases to be a member
of  the   Company's   Board  of  Directors  for  any  reason,   voluntarily   or
involuntarily,  other  than by  reason  of a leave of  absence  approved  by the
Company.

                                    ARTICLE 2
                                DEFERRAL ELECTION


     2.1 Initial Election.  The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the  amount of Fees to be  deferred  and shall be  effective  to defer only Fees
earned after the date the Election Form is received by the Company.

     2.2 Election Changes

          2.2.1 Generally.  Upon the Company's approval, the Director may modify
the amount of Fees to be deferred  annually by filing a new  Election  Form with
the Company  prior to the beginning of the Plan Year in which the Fees are to be
deferred.  The  modified  deferral  election  shall not be  effective  until the
calendar  year  following  the year in which  the  subsequent  Election  Form is
received and approved by the Company.

          2.2.2 Hardship.  If an unforeseeable  financial emergency arising from
the death of a family member, divorce,  sickness, injury, catastrophe or similar
event  outside the control of the  Director  occurs,  the  Director,  by written
instructions to the Company, may reduce future deferrals under this Agreement.

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

     3.1  Establishing  and  Crediting.  The Company shall  establish a Deferral
Account on its books for the Director  and shall credit to the Deferral  Account
the following amounts:

          3.1.1 Deferrals.  The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.

          3.1.2  Interest.  On  each  Anniversary  Date of  this  Agreement  and
immediately prior to the payment of any benefits, but only until commencement of
the benefit  payments  under this  Agreement,  interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.

     3.2  Statement  of Accounts.  The Company  shall  provide to the  Director,
within 120 days after each  Anniversary  Date,  a  statement  setting  forth the
Deferral Account balance.

     3.3  Accounting  Device Only.  The Deferral  Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind.  The  Director  is a general  unsecured  creditor of the
Company for the payment of  benefits.  The benefits  represent  the mere Company
promise to pay such  benefits.  The  Director's  rights  are not  subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment, or garnishment by the Director's creditors.

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

     4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director  the benefit  described in this Section 4.1 in lieu of
any other benefit under this Agreement.

                                       2
<PAGE>

          4.1.1.  Amount of Benefit.  The benefit  under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.

          4.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in 120  monthly  installments  commencing  on the month  following  the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.

     4.2 Early  Retirement  Benefit.  Upon  Termination  of Service prior to the
Normal  Retirement  Age for  reasons  other  than  death,  Change of  Control or
Disability,  the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.

          4.2.1  Amount of Benefit.  The benefit  under this  Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.

          4.2.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 4.3 in lieu of any other benefit
under this Agreement.

          4.3.1  Amount of Benefit.  The benefit  under this  Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.

          4.3.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

     4.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 4.4 in lieu of any
other benefit under this Agreement.

          4.4.1  Amount of Benefit.  The benefit  under this  Section 4.4 is the
greater of: (a) the Deferral  Account  balance at the Director's  Termination of
Service; or (b) $77,158.

          4.4.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director in a lump sum within 60 days  following the  Director's  Termination of
Service.

          4.4.3 Internal  Revenue Service Section 280G Gross Up. If, as a result
of a Change of  Control,  the  Director  becomes  entitled  to  acceleration  of
benefits  under  this  Agreement  or under any other  benefit,  compensation  or
incentive  plan or  arrangement  with  the  Company  (collectively,  the  "Total
Benefits"),  and if any part of the Total  Benefits is subject to the Excise Tax
under  Section 280G and Section  4999 of the Internal  Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following  additional  amounts,
consisting  of (a) a payment  equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal  Revenue Code (the "Excise
Tax  Payment"),  and (b) a payment equal to the amount  necessary to provide the
Excise Tax Payment net of all income,  payroll and excise taxes.  Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.

     4.5  Hardship  Distribution.  Upon the  Board of  Director's  determination
(following  petition  by  the  Director)  that  the  Director  has  suffered  an
unforeseeable  financial  emergency as described in Section  2.2.2,  the Company
shall  distribute  to the  Director  all or a portion  of the  Deferral  Account
balance as determined by the Company,  but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.


                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

     5.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit  described in this Section 5.1 in lieu of any other  benefit  under this
Agreement.

          5.1.1  Amount of Benefit.  The benefit  under this  Section 5.1 is the
Deferral Account balance at the Director's death.

          5.1.2  Payment of Benefit.  The  Company  shall pay the benefit to the
Director's  beneficiary  in a lump sum within 60 days  following the  Director's
death.

     5.2 Death During  Payment of a Benefit.  If the Director dies after benefit
payments  have  commenced  under this  Agreement  but before  receiving all such
payments,  the  Company  shall  pay the  remaining  benefits  to the  Director's
beneficiary  at the same time and in the same  amounts they would have been paid
to the Director had the Director survived.

     5.3  Death  After  Termination  of  Service  But  Before  Benefit  Payments
Commence.  If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit  payments,  the Company shall
pay the benefit  payments to the  Director's  beneficiary  that the Director was
entitled to prior to death except that the benefit  payments  shall  commence on
the first day of the month following the date of the Director's death.

                                    ARTICLE 6
                                  BENEFICIARIES

     6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation.  However,  designations
will only be  effective  if signed by the  Director  and received by the Company
during the Director's lifetime. The Director's beneficiary  designation shall be
deemed automatically  revoked if the beneficiary  predeceases the Director or if
the Director  names a spouse as  beneficiary  and the  marriage is  subsequently
dissolved.  If the Director dies without a valid  beneficiary  designation,  all
payments shall be made to the Director's estate.

     6.2  Facility of Payment.  If a benefit is payable to a minor,  to a person
declared  incompetent,  or to a person  incapable of handling the disposition of
his or her  property,  the Company may pay such benefit to the  guardian,  legal
representative  or person having the care or custody of such minor,  incompetent
person or  incapable  person.  The Company may  require  proof of  incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such  distribution  shall  completely  discharge  the Company from all
liability with respect to such benefit.

                                    ARTICLE 7
                               GENERAL LIMITATIONS

     7.1 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the  Director's  Deferrals  (i.e.,  the  interest  earned on the
Deferral Account) if the Company terminates the Director's service for:

                (a) Gross negligence or gross neglect of duties to the Company;

                (b) Commission of a felony or of a gross  misdemeanor  involving
          moral  turpitude  in  connection  with the  Director's  service to the
          Company; or

                                       4
<PAGE>

                (c) Fraud,  disloyalty,  dishonesty or willful  violation of any
          law or  significant  Company policy  committed in connection  with the
          Director's service and resulting in an adverse effect on the Company.

     7.2 Suicide or  Misstatement.  The Company  shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company,  or on any application for any benefits provided by the
Company to the Director.

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

     8.1 Claims  Procedure.  The Company  shall notify any person or entity that
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of the Agreement on which the denial is based,  (3) a description  of
any additional information or material necessary for the Claimant to perfect his
or her claim,  and a description of why it is needed,  (4) an explanation of the
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the claim  reviewed and (5) a
time within which review must be requested. If the Company determines that there
are special  circumstances  requiring  additional  time to make a decision,  the
Company shall notify the Claimant of the special  circumstances  and the date by
which a decision is  expected  to be made,  and may extend the time for up to an
additional 90 days.

     8.2 Review  Procedure.  If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different  benefits,  the Claimant  shall have the  opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company  within 60 days after receipt of the notice issued by the Company.  Said
petition shall state the specific  reasons which the Claimant  believes  entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the  petition,  the Company  shall afford the Claimant
(and  counsel,  if any) an  opportunity  to present  his or her  position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent  documents.  The Company shall notify the Claimant of its decision
in writing  within  the 60-day  period,  stating  specifically  the basis of its
decision,  written in a manner  calculated  to be understood by the Claimant and
the specific  provisions  of the  Agreement on which the decision is based.  If,
because of the need for a  hearing,  the 60-day  period is not  sufficient,  the
decision  may be  deferred  for up to  another  60 days at the  election  of the
Company, but notice of this deferral shall be given to the Claimant.

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

     This  Agreement  may be amended or terminated  only by a written  agreement
signed by the Company and the Director.

                                   ARTICLE 10
                                  MISCELLANEOUS

     10.1  Binding  Effect.  This  Agreement  shall  bind the  Director  and the
Company,  and their  beneficiaries,  survivors,  executors,  administrators  and
transferees.

     10.2  No  Guarantee  of  Service.  This  Agreement  is not a  contract  for
services.  It does not give the  Director  the right to remain in the service of
the Company,  nor does it interfere with the shareholders' rights to replace the
Director.  It also does not require the Director to remain in the service of the
Company nor interfere  with the  Director's  right to terminate  services at any
time.

     10.3  Non-Transferability.  Benefits under this  Agreement  cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

                                       5
<PAGE>

     10.4 Tax  Withholding.  The  Company  shall  withhold  any  taxes  that are
required to be withheld from the benefits provided under this Agreement.

     10.5  Applicable  Law.  The  Agreement  and all rights  hereunder  shall be
governed  by the laws of the  State  of North  Carolina,  except  to the  extent
preempted by the laws of the United States of America.

     10.6 Unfunded Arrangement.  The Director and the Director's beneficiary are
general  unsecured  creditors  of the Company for the payment of benefits  under
this  Agreement.  The benefits  represent the mere promise by the Company to pay
such  benefits.  The  rights  to  benefits  are not  subject  in any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a  general  asset  of the  Company  to which  the  Director  and the  Director's
beneficiary have no preferred or secured claim.

     10.7  Reorganization.  The Company shall not merge or  consolidate  into or
with another company, or reorganize,  or sell substantially all of its assets to
another company,  firm, or person unless such succeeding or continuing  company,
firm, or person agrees to assume and  discharge the  obligations  of the Company
under this Agreement.  Upon the occurrence of such event,  the term "Company" as
used in this  Agreement  shall be deemed to refer to the  successor  or survivor
company.

     10.8 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
between the Company and the Director as to the subject matter hereof.  No rights
are  granted  to the  Director  by virtue of this  Agreement  other  than  those
specifically set forth herein.

     10.9  Administration.  The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:

          (a)  Interpreting the provisions of the Agreement;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
Agreement;

          (c)  Maintaining a record of benefit payments, and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
desirable to administer the Agreement.

     10.10 Named  Fiduciary.  The Company shall be the named  fiduciary and plan
administrator  under the Agreement.  The named  fiduciary may delegate to others
certain  aspects of the  management and operation  responsibilities  of the plan
including the Service of advisors and the  delegation of  ministerial  duties to
qualified individuals.

     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.


DIRECTOR                                 COMPANY


                                         COOPERATIVE BANKSHARES, INC.


/s/ PAUL BURTON                          BY  /s/ FREDERICK WILLETTS, III
--------------------------------------       -----------------------------------
PAUL BURTON
                                         TITLE  PRESIDENT
                                               ---------------------------------

                                       6