Document:

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                                                                Exhibit 10(viii)

                                 LIFE INSURANCE

                      ENDORSEMENT METHOD SPLIT DOLLAR PLAN

                                    AGREEMENT

Insurer:

Policy Number:

Bank:                              Carolina Bank

Insured:

Relationship of Insured to Bank:   Executive

Trust:                             Rabbi Trust for the Executive Supplemental
                                   Retirement Plan Agreement and the Life
                                   Insurance Endorsement Method Split Dollar
                                   Plan Agreement

The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:

I.   DEFINITIONS

     Refer to the policy contract for the definition of any terms in this
     Agreement that are not defined herein. If a definition of a term in the
     policy is inconsistent with the definition of a term in this Agreement,
     then the definition of the term as set forth in this Agreement shall
     supersede and replace the definition of the terms as set forth in the
     policy.

II.  POLICY TITLE AND OWNERSHIP

     Title and ownership shall reside in the Trustee for the Rabbi Trust for the
     Executive Supplemental Retirement Plan Agreement and the Life Insurance
     Endorsement Method Split Dollar Plan Agreement for its use and for the use
     of the Insured all in accordance with this Agreement. The Trustee at the
     direction of the Bank may, to the extent of its interest, exercise the
     right to borrow or withdraw on the policy cash values. Where the Trustee at
     the direction of the Bank and the Insured (or assignee, with the consent of
     the Insured) mutually agree

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     to exercise the right to increase the coverage under the subject Split
     Dollar policy, then, in such event, the rights, duties and benefits of the
     parties to such increased coverage shall continue to be subject to the
     terms of this Agreement.

III. BENEFICIARY DESIGNATION RIGHTS

     The Insured (or assignee) shall have the right and power to designate a
     beneficiary or beneficiaries to receive the Insured's share of the proceeds
     payable upon the death of the Insured, and to elect and change a payment
     option for such beneficiary, subject to any right or interest the Trustee
     at the direction of the Bank or the Trust may have in such proceeds, as
     provided in this Agreement.

IV.  PREMIUM PAYMENT METHOD

     The Bank or the Trustee at the direction of the Bank shall pay an amount
     equal to the planned premiums and any other premium payments that might
     become necessary to keep the policy in force.

V.   TAXABLE BENEFIT

     Annually the Insured will receive a taxable benefit equal to the assumed
     cost of insurance as required by the Internal Revenue Service. The Bank or
     the Trustee at the direction of the Bank will report to the Insured the
     amount of imputed income each year on Form W-2 or its equivalent.

VI.  DIVISION OF DEATH PROCEEDS

     Subject to Paragraphs VII and IX herein, the division of the death proceeds
     of the policy is as follows:

     A.   Should the Insured be employed by the Bank at the time of death, the
          Insured's beneficiary(ies), designated in accordance with Paragraph
          III, shall be entitled to an amount equal to eighty percent (80%) of
          the net-at-risk insurance portion of the proceeds. The net-at-risk
          insurance portion is the total proceeds less the cash value of the
          policy.

     B.   Should the Insured not be employed by the Bank at the time of his or
          her death for reasons other than disability the Insured's
          beneficiary(ies), designated in accordance with Paragraph III, shall
          be entitled to the percentage as set forth hereinbelow of the proceeds
          described in Subparagraph VI (A) above that corresponds to the number
          of full years the Insured has been employed by the Bank since the date
          of first employment and the age of Insured while employed by the Bank
          only.

                                        2

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          Total Years of
          Employment and Age of
          Executive while employed    Vested Percentage
          by the Bank only            (to a maximum of 75%)
          ------------------------    ---------------------

          1-10 and prior to           7.5% per year
          attaining age 62 while      to a maximum of 75%
          employed by the Bank only

          Age 62 while employed       100% and the provisions of
          by the Bank only            Subparagraph VI (A) would apply

     C.   The Bank shall be entitled to the remainder of such proceeds.

     D.   The Bank and the Insured (or assignees) shall share in any interest
          due on the death proceeds on a pro rata basis as the proceeds due each
          respectively bears to the total proceeds, excluding any such interest.

VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

     The Bank or the Trust shall at all times be entitled to an amount equal to
     the policy's cash value, as that term is defined in the policy contract,
     less any policy loans and unpaid interest or cash withdrawals previously
     incurred by the Bank or the Trustee at the direction of the Bank and any
     applicable surrender charges. Such cash value shall be determined as of the
     date of surrender or death as the case may be.

VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS

     In the event the policy involves an endowment or annuity element, the
     Bank's or the Trust' right and interest in any endowment proceeds or
     annuity benefits, on expiration of the deferment period, shall be
     determined under the provisions of this Agreement by regarding such
     endowment proceeds or the commuted value of such annuity benefits as the
     policy's cash value. Such endowment proceeds or annuity benefits shall be
     considered to be like death proceeds for the purposes of division under
     this Agreement.

IX.  TERMINATION OF AGREEMENT

     This Agreement shall terminate upon the occurrence of any one of the
     following:

     A.   The Insured shall be discharged from employment with the Bank for
          cause. The term "for cause" shall mean any of the following that
          result in

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          an adverse effect on the Bank: (i) gross negligence or gross neglect;
          (ii) the commission of a felony or gross misdemeanor involving moral
          turpitude, fraud, or dishonesty; (iii) the willful violation of any
          law, rule, or regulation (other than a traffic violation or similar
          offense); (iv) an intentional failure to perform stated duties; or (v)
          a breach of fiduciary duty involving personal profit; or

     B.   Surrender, lapse, or other termination of the Policy by the Bank.

     Upon such termination, the Insured (or assignee) shall have a fifteen (15)
     day option to receive from the Bank or the Trustee at the direction of the
     Bank an absolute assignment of the policy in consideration of a cash
     payment to the Bank or the Trustee at the direction of the Bank, whereupon
     this Agreement shall terminate. Such cash payment referred to hereinabove
     shall be the greater of:

     A.   The Bank's or the Trust' share of the cash value of the policy on the
          date of such assignment, as defined in this Agreement; or

     B.   The amount of the premiums which have been paid by the Bank or the
          Trustee at the direction of the Bank prior to the date of such
          assignment.

     If, within said fifteen (15) day period, the Insured fails to exercise said
     option, fails to procure the entire aforestated cash payment, or dies, then
     the option shall terminate and the Insured (or assignee) agrees that all of
     the Insured's rights, interest and claims in the policy shall terminate as
     of the date of the termination of this Agreement.

     The Insured expressly agrees that this Agreement shall constitute
     sufficient written notice to the Insured of the Insured's option to receive
     an absolute assignment of the policy as set forth herein.

     Except as provided above, this Agreement shall terminate upon distribution
     of the death benefit proceeds in accordance with Paragraph VI above.

X.   INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS

     The Insured may not, without the written consent of the Bank, assign to any
     individual, trust or other organization, any right, title or interest in
     the subject policy nor any rights, options, privileges or duties created
     under this Agreement.

XI.  AGREEMENT BINDING UPON THE PARTIES

     This Agreement shall bind the Insured and the Bank or the Trustee at the
     direction of the Bank, their heirs, successors, personal representatives
     and assigns.

                                        4

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XII. ERISA PROVISIONS

     The following provisions are part of this Agreement and are intended to
     meet the requirements of the Employee Retirement Income Security Act of
     1974 ("ERISA"):

     A.   Named Fiduciary and Plan Administrator.

          The "Named Fiduciary and Plan Administrator" of this Endorsement
          Method Split Dollar Agreement shall be Carolina Bank until its
          resignation or removal by the Board of Directors. As Named Fiduciary
          and Plan Administrator, the Bank or the Trustee at the direction of
          the Bank shall be responsible for the management, control, and
          administration of this Split Dollar Plan as established herein. The
          Named Fiduciary may delegate to others certain aspects of the
          management and operation responsibilities of the Plan, including the
          employment of advisors and the delegation of any ministerial duties to
          qualified individuals.

     B.   Funding Policy.

          The funding policy for this Split Dollar Plan shall be to maintain the
          subject policy in force by paying, when due, all premiums required.

     C.   Basis of Payment of Benefits.

          Direct payment by the Insurer is the basis of payment of benefits
          under this Agreement, with those benefits in turn being based on the
          payment of premiums as provided in this Agreement.

     D.   Claim Procedures.

          Claim forms or claim information as to the subject policy can be
          obtained by contacting Benmark, Inc. (800-544-6079). When the Named
          Fiduciary has a claim which may be covered under the provisions
          described in the insurance policy, they should contact the office
          named above, and they will either complete a claim form and forward it
          to an authorized representative of the Insurer or advise the named
          Fiduciary what further requirements are necessary. The Insurer will
          evaluate and make a decision as to payment. If the claim is payable, a
          benefit check will be issued in accordance with the terms of this
          Agreement.

          In the event that a claim is not eligible under the policy, the
          Insurer will notify the Named Fiduciary of the denial pursuant to the
          requirements under the terms of the policy. If the Named Fiduciary is
          dissatisfied with

                                        5

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          the denial of the claim and wishes to contest such claim denial, they
          should contact the office named above and they will assist in making
          an inquiry to the Insurer. All objections to the Insurer's actions
          should be in writing and submitted to the office named above for
          transmittal to the Insurer.

XIII. GENDER

     Whenever in this Agreement words are used in the masculine or neuter
     gender, they shall be read and construed as in the masculine, feminine or
     neuter gender, whenever they should so apply.

XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

     The Insurer shall not be deemed a party to this Agreement, but will respect
     the rights of the parties as herein developed upon receiving an executed
     copy of this Agreement. Payment or other performance in accordance with the
     policy provisions shall fully discharge the Insurer from any and all
     liability.

XV.  CHANGE OF CONTROL

     Change of Control shall be deemed to be the cumulative transfer of more
     than fifty percent (50%) of the voting stock of the Bank from the date of
     this Agreement. For the purposes of this Agreement, transfers on account of
     death or gifts, transfers between family members, or transfers to a
     qualified retirement plan maintained by the Bank shall not be considered in
     determining whether there has been a Change of Control. Upon a Change of
     Control, if the Insured's employment is subsequently terminated, except for
     cause, then the Insured shall be one hundred percent (100%) vested in the
     benefits promised in this Agreement and, therefore, upon the death of the
     Insured, the Insured's beneficiary(ies) (designated in accordance with
     Paragraph III) shall receive the death benefit provided herein as if the
     Insured had died while employed by the Bank (See Subparagraph VI [A]).

XVI. AMENDMENT OR REVOCATION

     It is agreed by and between the parties hereto that, during the lifetime of
     the Insured, this Agreement may be amended or revoked at any time or times,
     in whole or in part, by the mutual written consent of the Insured and the
     Bank.

XVII. EFFECTIVE DATE

     The Effective Date of this Agreement shall be December 24, 2002.

                                        6

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XVIII. SEVERABILITY AND INTERPRETATION

     If a provision of this Agreement is held to be invalid or unenforceable,
     the remaining provisions shall nonetheless be enforceable according to
     their terms. Further, in the event that any provision is held to be over
     broad as written, such provision shall be deemed amended to narrow its
     application to the extent necessary to make the provision enforceable
     according to law and enforced as amended.

XIX. APPLICABLE LAW

     The validity and interpretation of this Agreement shall be governed by the
     laws of the State of North Carolina.

Executed at Greensboro, North Carolina this      day of            , 2003.
                                            ----        -----------

                                        CAROLINA BANK
                                        Greensboro, North Carolina

                                        By:
-----------------------------------        -------------------------------------
Witness                                                                  Title

-----------------------------------        -------------------------------------
Witness                                     Insured

                                        7

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                          BENEFICIARY DESIGNATION FORM
                    FOR THE LIFE INSURANCE ENDORSEMENT METHOD
                           SPLIT DOLLAR PLAN AGREEMENT

I.   PRIMARY DESIGNATION
          (You may refer to the beneficiary designation information prior to
          completion.)

     A.   Person(s) as a Primary Designation:
          (Please indicate the percentage for each beneficiary.)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     B.   Estate as a Primary Designation:

     My Primary Beneficiary is The Estate of
                                             ----------------------------------
     as set forth in the last will and testament dated the       day of
                                                           -----
                  ,         and any codicils thereto.
     -------------  -------

     C.   Trust as a Primary Designation:

     Name of the Trust:
                        --------------------------------------------------------

     Execution Date of the Trust:       /       /
                                  -----   -----   ---------

     Name of the Trustee:
                          ------------------------------------------------------

     Beneficiary(ies)of the Trust (please indicate the percentage for each
     beneficiary):

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

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

     Is this an Irrevocable Life Insurance Trust?          Yes          No
                                                  --------     --------
     (If yes and this designation is for a Split Dollar agreement, an Assignment
     of Rights form should be completed.)

                                       8

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II.  SECONDARY (CONTINGENT) DESIGNATION

     A.   Person(s) as a Secondary (Contingent) Designation:
          (Please indicate the percentage for each beneficiary.)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     Name                               Relationship                  /        %
         ------------------------------             -----------------   -------

     Address:
             -------------------------------------------------------------------
               (Street)                 (City)           (State)          (Zip)

     B.   Estate as a Secondary (Contingent) Designation:

     My Secondary Beneficiary is The Estate of
                                               ---------------------------------
     as set forth in the last will and testament dated the       day of
                                                           -----
                  ,         and any codicils thereto.
     -------------  -------

     C.   Trust as a Secondary (Contingent) Designation:

     Name of the Trust:
                        --------------------------------------------------------

     Execution Date of the Trust:       /       /
                                  -----   -----   ---------

     Name of the Trustee:
                          ------------------------------------------------------

     Beneficiary(ies)of the Trust (please indicate the percentage for each
     beneficiary):

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

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

     All sums payable under the Life Insurance Endorsement Method Split Dollar
     Plan Agreement by reason of my death shall be paid to the Primary
     Beneficiary(ies), if he or she survives me, and if no Primary
     Beneficiary(ies) shall survive me, then to the Secondary (Contingent)
     Beneficiary(ies). This beneficiary designation is valid until the
     participant notifies the bank in writing.

     -----------------------------           -----------------------------------
     Participant                             Date

                                       9<PAGE>

                                                                  Exhibit 10(ix)

                                  CAROLINA BANK
                            DIRECTORS' DEFERRAL PLAN

By a vote of the Carolina Bank Board of Directors, (hereinafter referred to as
the, "Bank") on the 10th day of March, 2003, the Bank has established the
Carolina Bank Directors' Deferral Plan (hereinafter referred to as the, "Benefit
Plan") to allow eligible Directors the opportunity to participate in the Plan
and defer all or a portion of their fees or salary in accordance therewith;

     It is the intent of the Bank that this Benefit Plan be considered an
unfunded arrangement maintained primarily to provide supplemental retirement
benefits and to be considered a non-qualified benefit plan for purposes of the
Employee Retirement Security Act of 1974, as amended ("ERISA").

I.   ELIGIBILITY

     Those individuals selected by the Board of Directors and designated in
     resolutions of the Board and members of the Board of Directors shall be
     eligible to become a Director in this Benefit Plan (hereinafter referred to
     as the, "Director").

II.  FEES AND COMPENSATION

     The fees covered under this Benefit Plan shall be any and all amounts paid
     to the Director for the Director's services, including but not limited to
     annual fees, meeting fees, and committee fees. Directors may elect to defer
     no more than one hundred percent (100%) of fees and compensation. The
     deferred fees covered under this Benefit Plan shall be credited to the
     Director subject to the election requirement of Subparagraph III (A)
     hereinbelow.

III. DEFERRED COMPENSATION

     A.   Election of Director's Deferred Compensation:

          The Director shall at the same time as entering this Benefit Plan file
          a written statement with the Bank notifying the Bank as to whether the
          Director is going to defer zero percent (0%) or one hundred percent
          (100%) of fees and compensation as defined in Paragraph II that are to
          be deferred and the actual investments [as defined in Subparagraph VI
          (G)] (hereinafter referred to as the, "Election Form"). The Director
          may only defer zero percent (0%) or one hundred percent (100%), no
          more and no less. A copy of the said Election Form is attached hereto
          and marked as

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          Exhibit "A-1". The election to defer fees and compensation may only be
          made for fees and compensation not yet earned as of the date of said
          election. Signed written statements filed under this section, unless
          modified or revoked, shall be valid for all succeeding years. Any
          modification or revocation of a signed written statement must be in
          writing, made one (1) year prior to receiving benefits hereunder, and
          shall be effective for calendar years succeeding the year in which the
          modification or revocation is made. At any time prior to said one (1)
          year as set forth above, the Director may change its election to defer
          fees within thirty (30) days of the end of each quarter for deferral
          of fees not yet earned only.

     B.   Payment of Director's Deferred Compensation:

          At all times, the Director shall be one hundred percent (100%) vested
          in the Director's Deferred Compensation Account [as defined in
          Subparagraph IV (A)(i)]. Payment of the Director's Deferred Account
          balance shall commence on the first day of the calendar month
          following the end of the Director's term of office due to resignation,
          removal, failure to be re-elected, retirement, or hardship as further
          set forth hereinbelow. Said payment shall be made in one lump sum only
          and shall be made in Bank Stock only.

          (i)  Retirement: Retirement age for Directors shall be age seventy
               (70) or such other date as the Director may actually retire.

          (ii) Early Withdrawal: The Bank shall permit early withdrawals if,
               under the discretion of the Board of Directors, the Director
               requires said early withdrawal due to an "unforeseeable
               emergency." An "unforeseeable emergency" for purposes of early
               withdrawal is defined as an unanticipated emergency that is
               caused by an event beyond the control of the Director or
               beneficiary and that would result in severe financial hardship if
               the early withdrawal were not permitted. To receive an early
               withdrawal due to unforeseen emergency, the Director must submit
               an application for an in-service early withdrawal to the Board of
               Directors and specify grounds to constitute the unforeseeable
               emergency. If, in the discretion of the Board, the Director is
               permitted to take an early withdrawal due to an unforeseeable
               emergency, the Board shall cause the Trustee to pay an in-service
               distribution to such Director from the Director's Account.

               Alternatively, upon approval by the Board of Directors, the
               Director may receive an early withdrawal for other reasons not
               qualifying as an "unforeseeable emergency," provided that the

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               Director forfeits a penalty amount equivalent to twenty percent
               (20%) of the requested early distribution. If, in the discretion
               of the Board, the Director is permitted to take an early
               withdrawal with said penalty forfeiture, the Board shall cause
               the Trustee to pay an in-service distribution to such Director
               from the Director's Account.

               Under either case, such distribution shall be paid in Bank stock
               as soon as administratively feasible, after the Board determines
               that the Director is permitted to take an early withdrawal. The
               amount of such payment shall be limited to the amount reasonably
               necessary to meet the Director's requirements resulting from said
               unforeseeable emergency, or the sum of the alternative stated
               reason for an early withdrawal and the additional twenty percent
               (20%) penalty.

     C.   Investment of Director's Deferred Compensation:

          The Director shall at the same time as entering this Benefit Plan
          notifying the Bank on the Election Form as to the percent (%) of
          deferred compensation that is to be allocated among the "actual
          investment" choices as defined in Subparagraph VI (G) herein.

     D.   Bank Contributions:

          The Bank shall make a matching contribution equal to twenty-five
          percent (25%) of the Director's deferral contribution hereunder, to
          this Benefit Plan for the benefit of the Director. The Director shall
          be one hundred percent (100%) vested in the Bank's contributions
          hereunder.

     E.   Payment of Bank's Contributions:

          The vested amounts in the Director's Deferred Compensation Account
          attributed to bank contributions shall be paid under the same terms
          and conditions as payment of the Director's deferred compensation
          [Subparagraph III (B)].

     F.   Investment of Bank's Contribution to the Director's Deferred
          Compensation Account:

          The Bank's contribution to the Director's Deferred Compensation
          Account, if any, shall be invested under the same terms and conditions
          as the investment of the Director's Deferred Compensation
          [Subparagraph III (C)].

                                        3

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IV.  DIRECTOR'S DEFERRED COMPENSATION ACCOUNT AND RABBI TRUST

     A.   Rabbi Trust:

          The Bank shall establish a Rabbi Trust for the Benefit Plan. The Bank
          shall pay all deferral amounts and matching contributions, if any, to
          the Rabbi Trust. Said Trustee shall make actual investments and
          payments in accordance with this Benefit Plan.

          (i)  Director's Deferred Compensation Account:

               The Trustee shall establish and maintain an account on behalf of
               each Director. A Director's Account shall be credited with (i)
               the amount of Fees and Compensation the Director elects to defer
               under the Election Form, (ii) other Bank Contributions, if any,
               and (iii) earnings or losses attributable to the Account. Each
               Account of a Director shall be maintained until the value thereof
               has been distributed to or on behalf of such Director or the
               Director's beneficiary(ies). The value of said account shall be
               calculated quarterly.

V.   DEATH OF DIRECTOR

     A.   Prior to Commencement of Payments:

          In the event of the death of the Director prior to commencement of
          payments, within ninety (90) days after the Director's death, the
          Director's Deferred Compensation Account balance as of the date of
          death shall be paid as set forth in the Election Form, or in a lump
          sum, at the discretion of the Bank, to such individual or individuals
          as the Director may have designated in writing and filed with the
          Bank. In the event no designation is made, the Director's account
          balance shall be paid as set forth herein to the duly qualified
          executor or administrator of the Director's estate.

     B.   Subsequent to Commencement of Payments:

          In the event of the death of the Director after commencement of
          payments but prior to the Director receiving all payments due the
          Director under this Benefit Plan, within ninety (90) days after the
          Director's death, the remaining Deferred Compensation Account balance
          as of the date of death shall be paid as set forth in the Election
          Form, or in a lump sum, at the discretion of the Bank, to such
          individual or individuals as the Director may have designated in
          writing and filed with the Bank. In the event no designation is made,
          the Director's account balance shall be paid as set

                                        4

<PAGE>

          forth herein to the duly qualified executor or administrator of the
          Director's estate.

VI.  MISCELLANEOUS

     A.   Amendment or Revocation:

          It is understood that, during the lifetime of the Director, this
          Benefit Plan may be amended or revoked at any time or times, in whole
          or in part, by the mutual written consent of the Director, the Bank,
          and the Trustee.

     B.   Gender:

          Whenever in this Benefit Plan words are used in the masculine or
          neuter gender, they shall be read and construed as in the masculine,
          feminine or neuter gender, whenever they should so apply.

     C.   Effect on Other Bank Benefit Plans:

          Nothing contained in this Benefit Plan shall affect the right of the
          Director to participate in or be covered by any qualified or
          non-qualified pension, profit-sharing, group, bonus or other
          supplemental compensation or fringe benefit plan constituting a part
          of the Bank's existing or future compensation structure.

     D.   Headings:

          Headings and subheadings in this Benefit Plan are inserted for
          reference and convenience only and shall not be deemed a part of this
          Benefit Plan.

     E.   Partial Invalidity:

          If any term, provision, covenant, or condition of this Benefit Plan is
          determined by an arbitrator or a court, as the case may be, to be
          invalid, void, or unenforceable, such determination shall not render
          any other term, provision, covenant, or condition invalid, void, or
          unenforceable, and this Benefit Plan shall remain in full force and
          effect notwithstanding such partial invalidity.

     F.   Continuation as Director:

          Neither this Benefit Plan nor the payments of any benefits thereunder
          shall be construed as giving to the Director any right to be retained
          as a member of the Board of Directors of the Bank.

                                        5

<PAGE>

     G.   Actual Investments:

          The only "investment allocation" of the Director's Deferred
          Compensation Account shall be Bank stock. The performance of the
          deemed investments will be used to determine the earnings or losses to
          credit to the Director's Deferred Compensation Account.

VII. CHANGE OF CONTROL

     The Director shall be one hundred percent (100%) vested in all benefits
     provided in this Benefit Plan upon a Change of Control. A Change of Control
     shall be as defined in Subsection XIII (d) in the Rabbi Trust for the
     Carolina Bank Directors Deferral Plan.

VIII. ADMINISTRATION AND CLAIMS

     A.   Plan Administrator:

          The Plan Administrator of this Benefit Plan shall be the Carolina Bank
          until its resignation or removal by the Board. As Plan Administrator,
          the Carolina Bank shall be responsible for the management and
          administration of this Benefit Plan. The Plan Administrator may
          delegate to others certain aspects of the management and operation
          responsibilities of this Benefit Plan including the employment of
          advisors and the delegation of ministerial duties to qualified
          individuals.

     B.   Claims Procedure and Arbitration:

          In the event a dispute arises over benefits under this Benefit Plan
          and benefits are not paid to the Director (or to the Director's
          beneficiary(ies) in the case of the Director's death) and such
          claimants feel they are entitled to receive such benefits, then a
          written claim must be made to the Plan Administrator named above
          within sixty (60) days from the date payments are refused. The Plan
          Administrator shall review the written claim and if the claim is
          denied, in whole or in part, they shall provide in writing within
          sixty (60) days of receipt of such claim the specific reasons for such
          denial, reference to the provisions of this Benefit Plan upon which
          the denial is based and any additional material or information
          necessary to perfect the claim. Such written notice shall further
          indicate the additional steps to be taken by claimants if a further
          review of the claim denial is desired. A claim shall be deemed denied
          if the Plan Administrator fails to take any action within the
          aforesaid sixty-day period.

          If claimants desire a second review they shall notify the Plan
          Administrator in writing within sixty (60) days of the first claim
          denial.

                                        6

<PAGE>

          Claimants may review This Benefit Plan or any documents relating
          thereto and submit any written issues and comments it may feel
          appropriate. In their sole discretion, the Plan Administrator shall
          then review the second claim and provide a written decision within
          sixty (60) days of receipt of such claim. This decision shall likewise
          state the specific reasons for the decision and shall include
          reference to specific provisions of this Benefit Plan upon which the
          decision is based.

          If claimants continue to dispute the benefit denial, then claimants
          may submit the dispute to an Arbitrator for final arbitration. The
          Arbitrator shall be selected by mutual agreement of the Bank and the
          claimants. The Arbitrator shall operate under any generally recognized
          set of arbitration rules. The parties hereto agree that they and their
          heirs, personal representatives, successors and assigns shall be bound
          by the decision of such Arbitrator with respect to any controversy
          properly submitted to it for determination.

                                            CAROLINA BANK
                                            Greensboro, NC

                                            By: /s/ John D. Cornet
                                                --------------------------------
                                                Chairman of the Board

                                        7

<PAGE>

                 DIRECTORS' DEFERRAL PLAN DEFERRAL, INVESTMENT,
                         AND DISTRIBUTION ELECTION FORM

Name of Plan   CAROLINA BANK DIRECTORS' DEFERRAL PLAN

Please complete the following accurately with a ballpoint pen; print clearly.
The information you provide should be current as of the date the form is
completed. All Directors who have fulfilled the eligibility requirements to
participate in the plan must complete the five sections of the form.

SECTION I - General Information (Please complete and review and correct any
information as needed.)

----------------------   --------------------   --------------   ---------------
Last Name                First Name             MI               Sex (M or F)

----------------------   --------------------   --------------   ---------------
Social Security Number   Date of Birth          Employee #       Date of Hire
                         (mmddyy)               (if applicable)  (mmddyy)

----------------------   --------------------
Home phone               Work phone

--------------------------------------------------------------------------------
Street Address

--------------------------------------------------------------------------------
Mailing Address

------------------------------   --------------   ------------
City                             State            Zip

SECTION II - Deferral Election (Check Yes & fill in % or check No)

          Yes, I want to make pre-tax deferral contributions to the Plan. I
------    authorize the Bank to deduct 100% of my fees or salary from each
          paycheck and to credit that amount to pre-tax deferral portion of my
          Account.

------    No, I do not wish to contribute to the Plan at this time.

SECTION III - Investment Election

Whether or not you have elected to contribute to the Plan, you must elect
investment options. This investment election will be applied should any employer
discretionary contributions be made on your behalf.

I hereby authorize all future contributions to be invested as follows:

                                                   Percentage
                  Investment Options            to be Invested*
                  ------------------            ---------------
                      Bank Stock                      100%

           *Note: Whole percentage (%) only, no fractions or decimals.

                                        8

<PAGE>

                   Total % of all funds chosen must equal 100%

SECTION IV - Authorization

I authorize the Bank to effect the elections specified on this Deferral,
Investment, and Distribution Election form. I understand that any modification
or revocation of this Election Form must be made at least one (1) year prior to
receiving benefits hereunder. I also understand that my elections will remain in
effect until I submit a change according to the provisions of the Plan.

----------------------------------------                   ---------------------
Your Signature                                             Date

                                        9

<PAGE>

                      BENEFICIARY DESIGNATION FORM FOR THE
                       DIRECTORS' DEFERRAL PLAN AGREEMENT

I.   PRIMARY DESIGNATION
           (You may refer to the beneficiary designation information prior to
completion of this form.)

     A.   Person(s) as a Primary Designation:
          (Please indicate the percentage for each beneficiary.)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     B.   Estate as a Primary Designation:

     My Primary Beneficiary is The Estate of
                                            ------------------------------------
     as set forth in the last will and testament dated the       day of
                                                           -----        --------
     ,       and any codicils thereto.
       ----

     C.   Trust as a Primary Designation:

     Name of the Trust:
                       ---------------------------------------------------------

     Execution Date of the Trust:       /       /
                                  -----   -----   ---------

     Name of the Trustee:
                         -------------------------------------------------------

     Beneficiary(ies) of the Trust (please indicate the percentage for each
     beneficiary):

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

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

     Is this an Irrevocable Life Insurance Trust?          Yes          No
                                                 --------     --------
     (If yes and this designation is for a Split Dollar agreement, an Assignment
     of Rights form should be completed.)

                                       10

<PAGE>

II.  SECONDARY (CONTINGENT) DESIGNATION

     A.   Person(s) as a Secondary (Contingent) Designation:
          (Please indicate the percentage for each beneficiary.)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     Name                               Relationship                  /        %
         -----------------------------              -----------------   -------

     Address:
             -------------------------------------------------------------------
                  (Street)                  (City)        (State)       (Zip)

     B.   Estate as a Secondary (Contingent) Designation:

     My Secondary Beneficiary is The Estate of                            as set
                                              ---------------------------
     forth in the last will and testament dated the       day of          ,
                                                    -----        ---------  ----
     and any codicils thereto.

     C.   Trust as a Secondary (Contingent) Designation:

     Name of the Trust:
                       ---------------------------------------------------------

     Execution Date of the Trust:       /       /
                                  -----   -----   ---------

     Name of the Trustee:
                         -------------------------------------------------------

     Beneficiary(ies) of the Trust (please indicate the percentage for each
     beneficiary):

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

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

     All sums payable under the Directors' Deferral Plan Agreement by reason of
     my death shall be paid to the Primary Beneficiary(ies), if he or she
     survives me, and if no Primary Beneficiary(ies) shall survive me, then to
     the Secondary (Contingent) Beneficiary(ies). This beneficiary designation
     is valid until the Director notifies the bank in writing.

     -----------------------------------                   ---------------------
     Director                                              Date

                                       11

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