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                                                                    EXHIBIT 10.1


                                COOPERATIVE BANK
                   SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

         This SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (this "Agreement") is
entered into as of this 1st day of January, 2008, by and between Cooperative
Bank (the "Bank") and Frederick Willetts, III (the "Executive").

         WHEREAS, the Executive has contributed substantially to the success of
the Bank and the Bank desires that the Executive continue in its employ;

         WHEREAS, to encourage the Executive to remain an employee of the Bank,
the Bank had previously entered into the Executive Indexed Retirement Agreement
(January 17, 2012) with the Executive (the "Prior Agreement");

         WHEREAS, the Bank wishes to restate the prior agreement to ensure that
the Executive will receive benefits consistent with the projections considered
by the parties when the Agreement was originally entered into and to ensure
consistency with the benefits of similarly situated executives employed by
institutions in the Bank's peer group;

         WHEREAS, the parties hereto intend that this Agreement shall be
considered an unfunded arrangement payable from the Bank's general assets and
maintained primarily to provide supplemental retirement benefits for the
Executive, and to be considered a non-qualified benefit plan for purposes of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA");

         NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency which are hereby
acknowledged, the Executive and the Bank hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         ACCRUAL BALANCE means, as of any date, the liability that should be
accrued by the Bank under generally accepted accounting principles ("GAAP") for
the Bank's obligation to the Executive under this Agreement determined without
regard to the amount actually accrued by the Bank as of such date. The Accrual
Balance shall be calculated using an interest rate assumption determined by the
Plan Administrator in a manner consistent with reasonable standards according to
GAAP. Notwithstanding anything in this Plan to the contrary, for purposes of
determining the amount payable to the Executive under any provision of the
Agreement, the Accrual Balance shall never be less than the amount accrued by
the Bank as of December 31, 2007 with respect to the Bank's obligation to the
Executive under the Prior Agreement.

         BENEFICIARY means each designated person, or the estate of the deceased
Executive, entitled to benefits, if any, upon the death of the Executive,
determined according to Article 3.

         BENEFICIARY DESIGNATION FORM means the form established from time to
time by the Plan Administrator that the Executive completes, signs, and returns
to the Plan Administrator to designate one or more Beneficiaries.

         CHANGE IN CONTROL shall mean a change in control as defined in Internal
Revenue Code Section 409A and rules, regulations, and guidance of general
application thereunder issued by the Department of the Treasury, including -


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         (a)      CHANGE IN OWNERSHIP: a change in ownership of Cooperative
                  -------------------
                  Bankshares, Inc., a corporation of which the Bank is a wholly
                  owned subsidiary, occurs on the date any one person or group
                  accumulates ownership of Cooperative Bankshares, Inc. stock
                  constituting more than 50% of the total fair market value or
                  total voting power of Cooperative Bankshares, Inc. stock,

         (b)      CHANGE IN EFFECTIVE CONTROL: (i) any one person or more than
                  ---------------------------
                  one person acting as a group acquires within a 12-month period
                  ownership of Cooperative Bankshares, Inc. stock possessing 30%
                  or more of the total voting power of Cooperative Bankshares,
                  Inc. stock, or (ii) a majority of Cooperative Bankshares,
                  Inc.'s board of directors is replaced during any 12-month
                  period by directors whose appointment or election is not
                  endorsed in advance by a majority of Cooperative Bankshares,
                  Inc.'s board of directors, or

         (c)      CHANGE IN OWNERSHIP OF A SUBSTANTIAL PORTION OF ASSETS:  a
                  ------------------------------------------------------
                  change in ownership of a substantial portion of Cooperative
                  Bankshares, Inc.'s assets occurs if in a 12-month period any
                  one person or more than one person acting as a group acquires
                  from Holding Company assets having a total gross fair market
                  value equal to or exceeding 40% of the total gross fair market
                  value of all of Cooperative Bankshares, Inc.'s assets
                  immediately before the acquisition or acquisitions. For this
                  purpose, gross fair market value means the value of
                  Cooperative Bankshares, Inc.'s assets, or the value of the
                  assets being disposed of, determined without regard to any
                  liabilities associated with the assets.

         CODE means the Internal Revenue Code of 1986, as amended, and rules,
regulations, and guidance of general application issued thereunder by the
Department of the Treasury.

         CONSIDERED COMPENSATION means, on any date, the highest rate of annual
base salary received by the Executive during the 60-month period preceding such
date.

         DISABILITY means, because of a medically determinable physical or
mental impairment that can be expected to result in death or that can be
expected to last for a continuous period of at least 12 months, (i) the
Executive is unable to engage in any substantial gainful activity, or (ii) the
Executive is receiving income replacement benefits for a period of at least
three months under an accident and health plan of the employer. Medical
determination of disability may be made either by the Social Security
Administration or by the provider of an accident or health plan covering
employees of the Bank. Upon request of the Plan Administrator, the Executive
must submit proof to the Plan Administrator of the Social Security
Administration's or provider's determination.

         EARLY TERMINATION means Separation from Service before Normal
Retirement Age for reasons other than death, Disability, or Termination for
Cause. Early Termination shall also exclude Separation from Service after a
Change in Control.

         EFFECTIVE DATE means January 1, 2008.

         NORMAL RETIREMENT AGE means the Executive's 65th birthday.

         PLAN ADMINISTRATOR or ADMINISTRATOR means the plan administrator
described in Article 7.

         PLAN YEAR means a twelve-month period commencing on January 1 and
ending on December 31 of each year. The initial Plan Year shall commence on the
effective date of this Agreement.

         SEPARATION FROM SERVICE means the Executive's service as an executive
to the Bank and any member of a controlled group, as defined in Code Section
414, terminates for any reason, other than because of a leave of absence
approved by the Bank or the Executive's death. For purposes of this Agreement,
if there is a dispute about the employment status of the Executive or the date
of the Executive's Separation from Service, the Bank shall have the sole and
absolute right to decide the dispute unless a Change in Control shall have
occurred.

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         TERMINATION FOR CAUSE and CAUSE shall have the same meaning specified
in any effective severance or employment agreement existing on the date hereof
or hereafter entered into between the Executive and the Bank and/or Cooperative
Bankshares, Inc.. If the Executive is not a party to a severance or employment
agreement containing a definition of termination for cause, Termination for
Cause means the Bank terminates the Executive's employment for any of the
following reasons -

         (a)      the Executive's gross negligence or gross neglect of duties or
                  intentional and material failure to perform stated duties
                  after written notice thereof, or

         (b)      disloyalty or dishonesty by the Executive in the performance
                  of the Executive's duties, or a breach of the Executive's
                  fiduciary duties for personal profit, in any case whether in
                  the Executive's capacity as a director or officer, or

         (c)      intentional wrongful damage by the Executive to the business
                  or property of the Bank or its affiliates, including without
                  limitation the reputation of the Bank, which in the judgment
                  of the Bank causes material harm to the Bank or affiliates, or

         (d)      a willful violation by the Executive of any applicable law or
                  significant policy of the Bank or an affiliate that, in the
                  Bank's judgment, results in an adverse effect on the Bank or
                  the affiliate, regardless of whether the violation leads to
                  criminal prosecution or conviction. For purposes of this
                  Agreement applicable laws include any statute, rule,
                  regulatory order, statement of policy, or final
                  cease-and-desist order of any governmental agency or body
                  having regulatory authority over the Bank, or

         (e)      an intentional act of fraud, embezzlement, or theft by the
                  Executive in the course of employment. For purposes of this
                  Agreement no act or failure to act on the part of the
                  Executive shall be deemed to have been intentional if it was
                  due primarily to an error in judgment or negligence. An act or
                  failure to act on the Executive's part shall be considered
                  intentional if it is not in good faith and if it is without a
                  reasonable belief that the action or failure to act is in the
                  best interests of the Bank, or

         (f)      the Executive is removed from office or permanently prohibited
                  from participating in the Bank's affairs by an order issued
                  under section 8(e)(4) or section 8(g)(1) of the Federal
                  Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

         (g)      conviction of the Executive for or plea of no contest to a
                  felony or conviction of or plea of no contest to a misdemeanor
                  involving moral turpitude, or the actual incarceration of the
                  Executive for 45 consecutive days or more.

         YEARLY BENEFIT AMOUNT means an amount calculated as of the first date
the Executive becomes entitled to receive a payment under this Plan following
his Separation from Service (i) on or after attaining Normal Retirement Age,
(ii) by reason of his Disability or (iii) following a Change in Control, by:

         (a)      multiplying 75% times the Executive's Considered Compensation
                  (determined as of the effective date of his Separation from
                  Service); and by

         (b)      subtracting from such result the following items:

                  (i)      one-half of the annual amount payable (before any
                           earnings reduction) to the Executive as a primary
                           Social Security retirement benefit at age 65;

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                  (ii)     the annual benefit payable to the Executive as a
                           single life annuity under any tax-qualified defined
                           benefit pension plan of the Bank in which the
                           Executive was a participant during his period
                           employment with the Bank; and

                  (iii)    the annual benefit that would be payable to the
                           Executive under any tax-qualified defined
                           contribution plan of the Bank, such as a 401(k) plan,
                           if the Executive received the balance to his account
                           under such plan(s) in the form of an actuarially
                           equivalent single-life annuity; provided, however,
                           that the amount considered in the determination of
                           such annuity shall be limited to amounts actually
                           contributed by the Bank to such plan(s) on the
                           Executive's behalf in the form of matching or other
                           contributions and any earnings thereon. In no event
                           shall the determination required by this paragraph
                           consider any individual contributions made by the
                           Executive (including elective deferrals, salary
                           reduction contributions or other amounts) and the
                           earnings thereon.

If the Executive would be entitled to a benefit described in clauses (i)-(iii)
of (b) above but for his failure to apply for such benefit, the determination of
the Executive's Yearly Benefit Amount will be made as if the Executive had
applied for and received the benefit. Changes in a benefit described in
described in clauses (i)-(iii) of (b) above that occur after commencement of the
Executive's benefit under this Plan because of changes in the plan or program
under which the benefit is provided or because of cost of living adjustments
will not change the amount of the reduction determined above. The calculation of
the actuarial equivalent of any benefit necessary to the determination of the
Executive's Yearly Benefit Amount shall be determined by reference to the
discount rates, mortality tables and other assumptions expressed in Section
417(e) of the Code.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      NORMAL RETIREMENT BENEFIT. Upon the Executive's Separation
                  -------------------------
from Service on or after attaining Normal Retirement Age, the Bank shall pay to
the Executive the benefit described in this section 2.1 instead of any other
benefit under this Agreement.

         2.1.1    AMOUNT OF BENEFIT. The annual benefit under this Section 2.1
                  -----------------
                  is the Yearly Benefit Amount.

         2.1.2    PAYMENT OF BENEFIT. Beginning with the month immediately after
                  ------------------
                  the month in which the Executive's Separation of Service
                  occurs, the Bank shall commence payment of the Yearly Benefit
                  Amount to the Executive in equal monthly installments on the
                  first day of each month. The annual benefit shall be paid to
                  the Executive for 24 years.

         2.2      EARLY TERMINATION BENEFIT. Upon the Executive's Early
                  -------------------------
Termination, the Bank shall pay to the Executive the benefit described in this
Section 2.2 instead of any other benefit under this Agreement.

         2.2.1    AMOUNT OF BENEFIT. The benefit under this Section 2.2 is the
                  -----------------
                  Accrual Balance existing at the end of the month immediately
                  before the month in which Early Termination occurs.

         2.2.2    PAYMENT OF BENEFIT. The Bank shall pay the benefit under this
                  ------------------
                  Section 2.2 to the Executive in a lump sum not later than
                  thirty (30) days following his Early Termination.

         2.3      DEATH OR DISABILITY BENEFIT. Upon the Executive's Separation
                  ---------------------------
from Service by reason of Disability or the Executive's death prior to his
Normal Retirement Age, the Bank shall pay to the Executive the benefit described
in this Section 2.3 instead of any other benefit under this Agreement.

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         2.3.1    AMOUNT OF BENEFIT. The annual benefit under this Section 2.3
                  -----------------
                  is the Yearly Benefit Amount determined as of the date of the
                  Executive's Disability or death.

         2.3.2    PAYMENT OF BENEFIT. Beginning with the month immediately
                  ------------------
                  following the month in which the Executive's Disability or
                  death occurs, the Bank shall pay the Yearly Benefit Amount to
                  the Executive (or his Beneficiary) in equal monthly
                  installments on the first day of each month. The annual
                  benefit shall be paid to the Executive (or his beneficiary)
                  for 24 years.

         2.4      CHANGE-IN-CONTROL BENEFIT. If a Change in Control occurs
                  -------------------------
before the Executive's Normal Retirement Age and thereafter, the Executive has a
Separation from Service, the Bank shall pay to the Executive the benefit
described in this Section 2.4 instead of any other benefit under this Agreement.

         2.4.1    AMOUNT OF BENEFIT: The benefit under this Section 2.4 is the
                  -----------------
                  Normal Retirement Age Accrual Balance that would be required
                  by Section 2.1 to pay the Executive the Yearly Benefit Amount
                  determined by reference to his Considered Compensation at the
                  Change in Control effective date, without discount for the
                  time value of money.

         2.4.2    PAYMENT OF BENEFIT: The Bank shall pay the benefit under
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                  Section 2.4 of this Agreement to the Executive in a lump sum
                  not later than ten (10) days after the Separation from Service
                  occurs.

         2.5      LUMP-SUM PAYMENT OF NORMAL RETIREMENT BENEFIT, EARLY
                  ----------------------------------------------------
TERMINATION BENEFIT, OR DISABILITY BENEFIT BEING PAID TO THE EXECUTIVE WHEN A
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CHANGE IN CONTROL OCCURS. If, when a Change in Control occurs, the Executive is
------------------------
receiving the Normal Retirement Age benefit under Section 2.1, the Bank shall
pay the remaining salary continuation benefits to the Executive in a lump sum
not later than ten (10) days after the effective date of the Change in Control.
If, when a Change in Control occurs, the Executive is receiving or is entitled
to receive the benefit under Sections 2.2 or 2.3, the Bank shall pay the
remaining salary continuation benefits to the Executive in a lump sum not later
than ten (10) days after the effective date of the Change in Control. The
lump-sum payment due to the Executive as a result of a Change in Control shall
be an amount equal to the Accrual Balance amount corresponding to the particular
benefit when the Change in Control occurs.

         2.6      ANNUAL BENEFIT STATEMENT. Within 120 days after the end of
                  ------------------------
each Plan Year the Plan Administrator shall provide or cause to be provided to
the Executive an annual benefit statement showing benefits payable or
potentially payable to the Executive under this Agreement. Each annual benefit
statement shall supersede the previous year's annual benefit statement. If there
is a contradiction between this Agreement and the annual benefit statement
concerning the amount of a particular benefit payable or potentially payable to
the Executive, then the amount of the benefit determined under the Agreement
shall control.

         2.7     SAVINGS CLAUSE RELATING TO COMPLIANCE WITH CODE SECTION 409A.
                 ------------------------------------------------------------
Despite any contrary provision of this Agreement, if, when the Executive's
employment terminates, the Executive is a "specified employee," as defined in
Code Section 409A, and if any payments under Article 2 of this Agreement will
result in additional tax or interest to the Executive because of Section 409A,
the Executive shall not be entitled to the payments under Article 2 until the
earliest of (i) the date that is at least six months after termination of the
Executive's employment for reasons other than the Executive's death, (ii) the
date of the Executive's death, or (iii) any earlier date that does not result in
additional tax or interest to the Executive under Section 409A. If any provision
of this Agreement would subject the Executive to additional tax or interest
under Section 409A, the Bank shall reform the provision. However, the Bank shall
maintain to the maximum extent practicable the original intent of the applicable
provision without subjecting the Executive to additional tax or interest.

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                                    ARTICLE 3
                                  BENEFICIARIES

         3.1   BENEFICIARY DESIGNATIONS. The Executive shall have the right to
               ------------------------
designate at any time a Beneficiary to receive any benefits payable under this
Agreement at the Executive's death. The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive participates.

         3.2   BENEFICIARY DESIGNATION CHANGE. The Executive shall designate a
               ------------------------------
Beneficiary by completing and signing the Beneficiary Designation Form and
delivering it to the Plan Administrator or its designated agent. The Executive's
Beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Executive or if the Executive names a spouse as Beneficiary and
the marriage is subsequently dissolved. The Executive shall have the right to
change a Beneficiary by completing, signing, and otherwise complying with the
terms of the Beneficiary Designation Form and the Plan Administrator's rules and
procedures, as in effect from time to time. Upon the acceptance by the Plan
Administrator of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled. The Plan Administrator shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Executive and accepted by the Plan Administrator before the Executive's death.

         3.3   ACKNOWLEDGMENT. No designation or change in designation of a
               --------------
Beneficiary shall be effective until received, accepted, and acknowledged in
writing by the Plan Administrator or its designated agent.

         3.4   NO BENEFICIARY DESIGNATION. If the Executive dies without a valid
               --------------------------
beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive's spouse shall be the designated Beneficiary. If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive's estate.

         3.5   FACILITY OF PAYMENT. If a benefit is payable to a minor, to a
               -------------------
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay such benefit to the
guardian, legal representative, or person having the care or custody of the
minor, incapacitated person, or incapable person. The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit. Distribution shall completely discharge the Bank
from all liability for the benefit.

                                    ARTICLE 4
                               GENERAL LIMITATIONS

         4.1   TERMINATION FOR CAUSE. Despite any contrary provision of this
               ---------------------
Agreement, the Bank shall not pay any benefit under this Agreement and this
Agreement shall terminate if the Executive's Separation from Service is a
Termination for Cause.

         4.2   REMOVAL. If the Executive is removed from office or permanently
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prohibited from participating in the Bank's affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order.

         4.3   DEFAULT. Despite any contrary provision of this Agreement, if the
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Bank is in "default" or "in danger of default," as those terms are defined in
section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all
obligations under this Agreement shall terminate.

                                       6

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                                    ARTICLE 5
                          CLAIMS AND REVIEW PROCEDURES

         5.1      CLAIMS PROCEDURE.  A person or beneficiary ("claimant") who
                  ----------------
has not received benefits under this Agreement that he or she believes should be
paid shall make a claim for such benefits as follows -

         5.1.1    INITIATION - WRITTEN CLAIM. The claimant initiates a claim by
                  --------------------------
                  submitting to the Administrator a written claim for the
                  benefits. If the claim relates to the contents of a notice
                  received by the claimant, the claim must be made within 60
                  days after the notice was received by the claimant. All other
                  claims must be made within 180 days after the date of the
                  event that caused the claim to arise. The claim must state
                  with particularity the determination desired by the claimant.

         5.1.2    TIMING OF BANK RESPONSE. The Bank shall respond to the
                  -----------------------
                  claimant within 90 days after receiving the claim. If the Bank
                  determines that special circumstances require additional time
                  for processing the claim, the Bank may extend the response
                  period by an additional 90 days by notifying the claimant in
                  writing before the end of the initial 90-day period that an
                  additional period is required. The notice of extension must
                  state the special circumstances and the date by which the Bank
                  expects to render its decision.

         5.1.3    NOTICE OF DECISION. If the Bank denies part or all of the
                  ------------------
                  claim, the Bank shall notify the claimant in writing of the
                  denial. The Bank shall write the notification in a manner
                  calculated to be understood by the claimant. The notification
                  shall set forth -

                  5.1.3.1  the specific reasons for the denial,

                  5.1.3.2  a reference to the specific provisions of the
                           Agreement on which the denial is based,

                  5.1.3.3  a description of any additional information or
                           material  necessary for the claimant to perfect the
                           claim and an explanation of why it is needed,

                  5.1.3.4  an explanation of the Agreement's review procedures
                           and the time limits applicable to such procedures,
                           and

                  5.1.3.5  a statement of the claimant's right to bring a civil
                           action under ERISA Section 502(a) following an
                           adverse benefit determination on review.

         5.2      REVIEW PROCEDURE.  If the Bank denies part or all of the
                  ----------------
claim, the claimant shall have the opportunity for a full and fair review by the
Bank of the denial, as follows -

         5.2.1    INITIATION - WRITTEN REQUEST. To initiate the review, the
                  ----------------------------
                  claimant, within 60 days after receiving the Bank's notice of
                  denial, must file with the Bank a written request for review.

         5.2.2    ADDITIONAL SUBMISSIONS - INFORMATION ACCESS. The claimant
                  -------------------------------------------
                  shall then have the opportunity to submit written comments,
                  documents, records, and other information relating to the
                  claim. The Bank shall also provide the claimant, upon request
                  and free of charge, reasonable access to and copies of all
                  documents, records, and other information relevant (as defined
                  in applicable ERISA regulations) to the claimant's claim for
                  benefits.

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<PAGE>

         5.2.3    CONSIDERATIONS ON REVIEW. In considering the review, the Bank
                  ------------------------
                  shall take into account all materials and information the
                  claimant submits relating to the claim, without regard to
                  whether the information was submitted or considered in the
                  initial benefit determination.

         5.2.4    TIMING OF BANK RESPONSE. The Bank shall respond in writing to
                  -----------------------
                  the claimant within 60 days after receiving the request for
                  review. If the Bank determines that special circumstances
                  require additional time for processing the claim, the Bank may
                  extend the response period by an additional 60 days by
                  notifying the claimant in writing before the end of the
                  initial 60-day period that an additional period is required.
                  The notice of extension must state the special circumstances
                  and the date by which the Bank expects to render its decision.

         5.2.5    NOTICE OF DECISION. The Bank shall notify the claimant in
                  ------------------
                  writing of its decision on review. The Bank shall write the
                  notification in a manner calculated to be understood by the
                  claimant. The notification shall set forth -

                  5.2.5.1  the specific reason for the denial,

                  5.2.5.2  a reference to the specific provisions of the
                           Agreement on which the denial is based,

                  5.2.5.3  a statement that the claimant is entitled to receive,
                           upon request and free of charge, reasonable access to
                           and copies of all documents, records, and other
                           information relevant (as defined in applicable ERISA
                           regulations) to the claimant's claim for benefits,
                           and

                  5.2.5.4  a statement of the claimant's right to bring a civil
                           action under ERISA section 502(a).

                                    ARTICLE 6
                                  MISCELLANEOUS

         6.1      AMENDMENTS AND TERMINATION. This Agreement may be amended
                  --------------------------
solely by a written agreement signed by the Bank and by the Executive, and
except for termination occurring under Article 4 this Agreement may be
terminated solely by a written agreement signed by the Bank and by the
Executive.

         6.2      BINDING EFFECT. This Agreement shall bind the Executive, the
                  --------------
Bank, and their beneficiaries, survivors, executors, successors, administrators,
and transferees.

         6.3      NO GUARANTEE OF EMPLOYMENT. This Agreement is not an
                  --------------------------
employment policy or contract. It does not give the Executive the right to
remain an employee of the Bank nor does it interfere with the Bank's right to
discharge the Executive. It also does not require the Executive to remain an
employee or interfere with the Executive's right to terminate employment at any
time.

         6.4     NON-TRANSFERABILITY. Benefits under this Agreement may not be
                 -------------------
sold, transferred, assigned, pledged, attached, or encumbered.

         6.5     SUCCESSORS; BINDING AGREEMENT. By an assumption agreement in
                 -----------------------------
form and substance satisfactory to the Executive, the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform this Agreement had no
succession occurred.

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<PAGE>

         6.6     TAX WITHHOLDING. The Bank shall withhold any taxes that are
                 ---------------
required to be withheld from the benefits provided under this Agreement.

         6.7     APPLICABLE LAW. This 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.

         6.8     UNFUNDED ARRANGEMENT. The Executive and Beneficiary are general
                 --------------------
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits.
Rights to benefits are not subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any
insurance on the Executive's life is a general asset of the Bank to which the
Executive and Beneficiary have no preferred or secured claim.

         6.9     ENTIRE AGREEMENT. This Agreement constitutes the entire
                 ----------------
agreement between the Bank and the Executive concerning the subject matter. No
rights are granted to the Executive under this Agreement other than those
specifically set forth. This Agreement is intended for all purposes as a
complete amendment and restatement of the Prior Agreement.

         6.10    SEVERABILITY. If any provision of this Agreement is held
                 ------------
invalid, such invalidity shall not affect any other provision of this Agreement
not held invalid, and each such other provision shall continue in full force and
effect to the full extent consistent with law. If any provision of this
Agreement is held invalid in part, such invalidity shall not affect the
remainder of the provision not held invalid, and the remainder of such provision
together with all other provisions of this Agreement shall continue in full
force and effect to the full extent consistent with law.

         6.11    HEADINGS. Caption headings and subheadings herein are included
                 --------
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement.

         6.12    NOTICES. All notices, requests, demands and other
                 -------
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice. If to the Bank,
notice shall be given to the Board of Directors, Cooperative Bankshares, Inc.,
201 Market Street, Wilmington, NC 28401, or to such other or additional person
or persons as the Bank shall have designated to the Executive in writing. If to
the Executive, notice shall be given to the Executive at the Executive's address
appearing on the Bank's records, or to such other or additional person or
persons as the Executive shall have designated to the Bank in writing.

         6.13    PAYMENT OF LEGAL FEES. The Bank is aware that after a Change in
                 ---------------------
Control management of the Bank could cause or attempt to cause the Bank to
refuse to comply with its obligations under this Agreement, or could institute
or cause or attempt to cause the Bank to institute litigation seeking to have
this Agreement declared unenforceable, or could take or attempt to take other
action to deny Executive the benefits intended under this Agreement. The Bank
desires that the Executive not be forced to negotiate settlement of rights under
this Agreement under threat of incurring expenses. Accordingly, if, after a
Change in Control occurs, it appears to the Executive that (i) the Bank has
failed to comply with any of its obligations under this Agreement, or (ii) the
Bank or any other person has taken any action to declare this Agreement void or
unenforceable, or instituted any litigation or other legal action designed to
deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, the Bank irrevocably authorizes the
Executive from time to time to retain counsel of the Executive's choice, at the
Bank's expense as provided in this Section 6.13, to represent the Executive in

                                       9

<PAGE>

the initiation or defense of any litigation or other legal action, whether by or
against the Bank or any director, officer, stockholder, or other person
affiliated with the Bank, in any jurisdiction. The Bank's obligation to pay the
Executive's legal fees and related expenses provided by this Section 6.13
operates separately from and in addition to any legal fee reimbursement
obligation the Bank may have with the Executive under any separate employment,
severance, or other agreement between the Executive and the Bank. Despite any
contrary provision within this Agreement, however, the Bank shall not be
required to pay or reimburse the Executive's legal expenses if doing so would
violate section 18(k) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)]
and the regulations issued thereunder.

                                    ARTICLE 7
                           ADMINISTRATION OF AGREEMENT

         7.1     PLAN ADMINISTRATOR DUTIES. This Agreement shall be administered
                 -------------------------
by a Plan Administrator consisting of the Bank's board of directors or such
committee or person(s) as the board shall appoint. The Plan Administrator shall
also have the discretion and authority to (x) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of this
Agreement and (y) decide or resolve any and all questions, including
interpretations of this Agreement, as may arise in connection with the
Agreement.

         7.2     AGENTS. In the administration of this Agreement, the Plan
                 ------
Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and
may from time to time consult with counsel, who may be counsel to the Bank.

         7.3     BINDING EFFECT OF DECISIONS. The decision or action of the Plan
                 ---------------------------
Administrator concerning any question arising out of the administration,
interpretation, and application of the Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Agreement. No Executive or Beneficiary shall be
deemed to have any right, vested or nonvested, regarding the continued use of
any previously adopted actuarial or accounting related assumptions.

         7.4     INDEMNITY OF PLAN ADMINISTRATOR. The Bank shall indemnify and
                 -------------------------------
hold harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.


                                       10
<PAGE>


         IN WITNESS WHEREOF, the Executive and a duly authorized officer of the
Bank have executed this Supplemental Executive Retirement Agreement as of the
date first written above.


                                         COOPERATIVE BANK


                                         /s/ James D. Hundley
                                         ---------------------------------------

                                         Name:  James D. Hundley
                                                --------------------------------

                                         Title: Chairman, Personnel Committee,
                                                --------------------------------
                                                Board of Directors



                                         /s/ Frederick Willetts, III
                                         ---------------------------------------
                                         Frederick Willetts, III



                                       11

<PAGE>


                                COOPERATIVE BANK
                   SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

                             BENEFICIARY DESIGNATION


I, Frederick Willetts, III, designate the following as beneficiary of any death
benefits under this Supplemental Executive Retirement Agreement -

Primary:
         -----------------------------------------------------------------------

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

Contingent:
            --------------------------------------------------------------------

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

NOTE: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement. I understand that I may
change these beneficiary designations by filing a new written designation with
the Bank. I further understand that the designations will be automatically
revoked if the beneficiary predeceases me, or if I have named my spouse as
beneficiary and our marriage is subsequently dissolved.

Signature:                                      Date:
           ----------------------------------         -------------------

Accepted by the Bank this      day of                       , 2008
                          ----        ----------------------

By:
               -------------------------------------------
Print Name:
               -------------------------------------------
Title:
               -------------------------------------------





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