Document:

COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and O. RICHARD WRIGHT, JR. (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    Article 1
                                   Definitions

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

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Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

     2.1 Normal  Retirement  Benefit.  Upon  Termination  of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit  described in this Section 2.1 in lieu of any other benefit
under this Agreement.

           2.1.1   Amount of Benefit.  The annual benefit under this Section 2.1
     is $19,200 (Nineteen Thousand Two Hundred Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

           2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

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     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

          2.2.1  Amount of Benefit.  The benefit  under this  Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

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            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

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                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

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claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

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event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

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

DIRECTOR:                                   COMPANY:
                                            COOPERATIVE BANK FOR SAVINGS

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

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                          COOPERATIVE BANK FOR SAVINGS
                             SPLIT DOLLAR AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the  "Company"),  and O. RICHARD WRIGHT,  JR. (the  "Director").
This Agreement  shall append the Split Dollar  Endorsement  entered into on even
date  herewith or as  subsequently  amended,  by and between the  aforementioned
parties.

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company  is  willing  to divide  the death  proceeds  of a life
insurance  policy on the  Director's  life.  The Company will pay life insurance
premiums from its general assets.

                                    AGREEMENT

     The Company and the Director agree as follows:

                                    ARTICLE I
                               GENERAL DEFINITIONS

     The following terms shall have the meanings specified:

     1.1 "Insurers" means  Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.

     1.2 "Policies" means insurance policy nos.  JP5195519 and ZUA3866929 issued
by the respective Insurers.

     1.3 "Insured" means the Director.

     1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.

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

     1.6  "Termination  of Service" means the Director  ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.

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                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

     2.1  Company  Ownership.  The  Company  is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership  except as otherwise
said  herein.  The  Company  shall  be the  beneficiary  of the  death  proceeds
remaining  after the Director's  interest has been paid according to Section 2.2
below.

     2.2 Director's Interest. The Director shall have the right to designate the
beneficiary  of an amount equal to 100 percent of the Net Death  Proceeds of the
Policy.  The Director  shall also have the right to elect and change  settlement
options that may be permitted.

     2.3 Option to Purchase.  The Company shall not sell,  surrender or transfer
ownership of the Policy while this  Agreement is in effect  without first giving
the Director or the Director's  transferee the option to purchase the Policy for
a period of 60 days from written  notice of such  intention.  The purchase price
shall be an  amount  equal  to the cash  surrender  value  of the  Policy.  This
provision shall not impair the right of the Company to terminate this Agreement.

     2.4  Comparable  Coverage.  Upon  adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no  event  shall  the  Company  amend,  terminate,  or  otherwise  abrogate  the
Director's interest in the Policy, unless the Company replaces the Policy with a
comparable  insurance policy to cover the benefit provided under this Agreement,
amends  the Split  Dollar  Agreement  and  executes a new  Endorsement  for said
comparable insurance policy. The Director agrees to provide the required medical
information to the Insurers for the  implementation of this Agreement and agrees
to  participate  with the Company if the Company  desires to obtain a comparable
insurance  policy  with  another  carrier,  whether  prior  to or  after  Normal
Retirement  Age.  The Policy or any  comparable  policy  shall be subject to the
claims of the Company's creditors.

                                    ARTICLE 3
                                    PREMIUMS

     3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

     3.2 Imputed  Income.  The Company shall impute income to the Director in an
amount equal to the current term rate for the  Director's  age multiplied by the
aggregate death benefit payable to the Director's beneficiary. The "current term
rate" is the minimum amount  required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.

                                    ARTICLE 4
                                   ASSIGNMENT

     The  Director  may  assign  without  consideration  all of  the  Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director  transfers all of the

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Director's  interest in the Policy,  then all of the Director's  interest in the
Policy and in the Agreement  shall be vested in the Director's  transferee,  who
shall be substituted as a party hereunder and the Director shall have no further
interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                    INSURERS

     The Insurers shall be bound only by the terms of their respective Policies.
Any payments the Insurers make or action the Insurers  take in  accordance  with
their  respective  Policies shall fully discharge such Insurers from all claims,
suits and demands of all entities or persons. The Insurers shall not be bound by
or be deemed to have notice of the provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURES

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

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

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<PAGE>

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1 Binding Effect.  This Agreement shall bind the Director and the Company
and their beneficiaries,  survivors, executors,  administrators and transferees,
and any Policy beneficiary.

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person agrees to assume and discharge the obligations of the Company.

     8.5 Notice. Any notice, consent or demand required or permitted to be given
under the  provisions  of this Split  Dollar  Agreement  by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States  certified  mail,  postage  prepaid,  to such
party, addressed to his or her last known address as shown on the records of the
Company.  The date of such  mailing  shall  be  deemed  the date of such  mailed
notice, consent or demand.

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

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

          (a) Interpreting the provisions of the Agreement;

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

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<PAGE>

          (c) Maintaining a record of benefit payments; and

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

     8.8 Named  Fiduciary.  The Company  shall be the named  fiduciary  and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

     IN WITNESS  WHEREOF,  the parties have executed this  Agreement the day and
year first above written.

DIRECTOR:                                     COMPANY:

                                              COOPERATIVE BANK FOR SAVINGS

/s/ O. Richard Wright, Jr.                    BY /s/ Frederick Willetts, III
------------------------------------             -------------------------------
O. RICHARD WRIGHT, JR.
                                              TITLE  /s/ President
                                                    ----------------------------

                                       5
<PAGE>
                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. JP5195519                            Insured:  O. Richard Wright, Jr.

Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company  ("Insurer") on September 28, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       6
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
      --------------------------------------
Title    /s/ President
      --------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

/s/ O. Richard Wright, Jr.
------------------------------------
O. Richard Wright, Jr.

                                       7
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. ZUA3866929                           Insured:  O. Richard Wright, Jr.

Supplementing  and amending  the  application  for  insurance to West Coast Life
Insurance Company  ("Insurer") on September 28, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       8
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
   --------------------------------------------------
Title    /s/ President
      -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured accepts and agrees to the foregoing and, subject to the rights of
the Owner as stated above, designates the following as beneficiary(s) of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

         /s/ O. Richard Wright, Jr.
-----------------------------------------------------
O. Richard Wright, Jr.

                                       9
<PAGE>

                          COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT  is adopted  this 17th day of Jan.,  2002,  by and  between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and HORACE THOMPSON KING, III (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

                                       1
<PAGE>

Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

     2.1 Normal  Retirement  Benefit.  Upon  Termination  of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit  described in this Section 2.1 in lieu of any other benefit
under this Agreement.

           2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
     $19,200  (Nineteen  Thousand Two Hundred  Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

           2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

                                       2
<PAGE>

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

            2.2.1 Amount of Benefit.  The benefit  under this Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

                                       3
<PAGE>

            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

                                       4
<PAGE>
                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

                                       5
<PAGE>

claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

                                       6
<PAGE>

event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

                                       7
<PAGE>
     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.

DIRECTOR:                                COMPANY:
                                         COOPERATIVE BANK FOR SAVINGS

  /s/ HORACE THOMPSON KING, III          BY:/s/ FREDERICK WILLETTS, III
-------------------------------             -----------------------------------
                                         NAME:  FREDERICK WILLETTS, III
                                              ---------------------------------
                                         TITLE:  /s/ PRESIDENT
                                              ---------------------------------

                                       8
<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                             SPLIT DOLLAR AGREEMENT

     THIS  AGREEMENT  is adopted  this 17th day of Jan.,  2002,  by and  between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company"), and H. THOMPSON KING, III (the "Director"). This
Agreement  shall append the Split Dollar  Endorsement  entered into on even date
herewith or as subsequently amended, by and between the aforementioned parties.

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company  is  willing  to divide  the death  proceeds  of a life
insurance  policy on the  Director's  life.  The Company will pay life insurance
premiums from its general assets.

                                    AGREEMENT

     The Company and the Director agree as follows:

                                    ARTICLE I
                               GENERAL DEFINITIONS

     The following terms shall have the meanings specified:

     1.1 "Insurers" means  Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.

     1.2 "Policies" means insurance  policy nos.  JP5195515 and ZUA386787 issued
by the respective Insurers.

     1.3 "Insured" means the Director.

     1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.

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

     1.6  "Termination  of Service" means the Director  ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.

                                       1
<PAGE>
                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

     2.1  Company  Ownership.  The  Company  is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership  except as otherwise
said  herein.  The  Company  shall  be the  beneficiary  of the  death  proceeds
remaining  after the Director's  interest has been paid according to Section 2.2
below.

     2.2 Director's Interest. The Director shall have the right to designate the
beneficiary  of an amount equal to 100 percent of the Net Death  Proceeds of the
Policy.  The Director  shall also have the right to elect and change  settlement
options that may be permitted.

     2.3 Option to Purchase.  The Company shall not sell,  surrender or transfer
ownership of the Policy while this  Agreement is in effect  without first giving
the Director or the Director's  transferee the option to purchase the Policy for
a period of 60 days from written  notice of such  intention.  The purchase price
shall be an  amount  equal  to the cash  surrender  value  of the  Policy.  This
provision shall not impair the right of the Company to terminate this Agreement.

     2.4  Comparable  Coverage.  Upon  adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no  event  shall  the  Company  amend,  terminate,  or  otherwise  abrogate  the
Director's interest in the Policy, unless the Company replaces the Policy with a
comparable  insurance policy to cover the benefit provided under this Agreement,
amends  the Split  Dollar  Agreement  and  executes a new  Endorsement  for said
comparable insurance policy. The Director agrees to provide the required medical
information to the Insurers for the  implementation of this Agreement and agrees
to  participate  with the Company if the Company  desires to obtain a comparable
insurance  policy  with  another  carrier,  whether  prior  to or  after  Normal
Retirement  Age.  The Policy or any  comparable  policy  shall be subject to the
claims of the Company's creditors.

                                    ARTICLE 3
                                    PREMIUMS

     3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

     3.2 Imputed  Income.  The Company shall impute income to the Director in an
amount equal to the current term rate for the  Director's  age multiplied by the
aggregate death benefit payable to the Director's beneficiary. The "current term
rate" is the minimum amount  required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.

                                    ARTICLE 4
                                   ASSIGNMENT

     The  Director  may  assign  without  consideration  all of  the  Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director  transfers all of the

                                       2
<PAGE>

Director's  interest in the Policy,  then all of the Director's  interest in the
Policy and in the Agreement  shall be vested in the Director's  transferee,  who
shall be substituted as a party hereunder and the Director shall have no further
interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                    INSURERS

     The Insurers shall be bound only by the terms of their respective Policies.
Any payments the Insurers make or action the Insurers  take in  accordance  with
their  respective  Policies shall fully discharge such Insurers from all claims,
suits and demands of all entities or persons. The Insurers shall not be bound by
or be deemed to have notice of the provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURES

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

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

                                       3
<PAGE>
                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1 Binding Effect.  This Agreement shall bind the Director and the Company
and their beneficiaries,  survivors, executors,  administrators and transferees,
and any Policy beneficiary.

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person agrees to assume and discharge the obligations of the Company.

     8.5 Notice. Any notice, consent or demand required or permitted to be given
under the  provisions  of this Split  Dollar  Agreement  by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States  certified  mail,  postage  prepaid,  to such
party, addressed to his or her last known address as shown on the records of the
Company.  The date of such  mailing  shall  be  deemed  the date of such  mailed
notice, consent or demand.

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

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

          (a) Interpreting the provisions of the Agreement;

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

                                       4
<PAGE>

          (c) Maintaining a record of benefit payments; and

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

     8.8 Named  Fiduciary.  The Company  shall be the named  fiduciary  and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

     IN WITNESS  WHEREOF,  the parties have executed this  Agreement the day and
year first above written.

DIRECTOR:                              COMPANY:

                                       COOPERATIVE BANK FOR SAVINGS

/s/ Horace Thompson King, III          BY /s/ Frederick Willetts, III
------------------------------------      --------------------------------------
H. THOMPSON KING, III
                                       TITLE /s/ President
                                             -----------------------------------

                                       5
<PAGE>
                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. JP5195515                             Insured:  H. Thompson King, III

Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company  ("Insurer") on September 20, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------
The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       6
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
   --------------------------------------------------
Title    /s/ President
      -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

/s/ H. Thompson King, III
------------------------------------
H. Thompson King, III

                                       7
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. ZUA386787                             Insured:  H. Thompson King, III

Supplementing  and amending  the  application  for  insurance to West Coast Life
Insurance Company  ("Insurer") on September 20, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       8
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
   --------------------------------------------------
Title    President
      -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

/s/ H. Thompson King, III
------------------------------------
H. Thompson King, III

                                       9
<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and FRANCIS PETER FENSEL, JR. (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

                                       1
<PAGE>

Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

     2.1 Normal  Retirement  Benefit.  Upon  Termination  of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit  described in this Section 2.1 in lieu of any other benefit
under this Agreement.

           2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
     $19,200  (Nineteen  Thousand Two Hundred  Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

           2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

                                       2
<PAGE>

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

            2.2.1 Amount of Benefit.  The benefit  under this Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

                                       3
<PAGE>
            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

                                       4
<PAGE>
                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

                                       5
<PAGE>

claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

                                       6
<PAGE>

event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

                                       7
<PAGE>

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

DIRECTOR:                                COMPANY:
                                         COOPERATIVE BANK FOR SAVINGS

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

                                       8
<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                             SPLIT DOLLAR AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company"),  and FRANCIS PETER FENSEL, JR. (the "Director").
This Agreement  shall append the Split Dollar  Endorsement  entered into on even
date  herewith or as  subsequently  amended,  by and between the  aforementioned
parties.

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company  is  willing  to divide  the death  proceeds  of a life
insurance  policy on the  Director's  life.  The Company will pay life insurance
premiums from its general assets.

                                    AGREEMENT

     The Company and the Director agree as follows:

                                    ARTICLE I
                               GENERAL DEFINITIONS

     The following terms shall have the meanings specified:

     1.1 "Insurers" means  Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.

     1.2 "Policies" means insurance  policy nos.  JP5195509 and ZUA386790 issued
by the respective Insurers.

     1.3 "Insured" means the Director.

     1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.

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

     1.6  "Termination  of Service" means the Director  ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.

                                       1
<PAGE>
                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

     2.1  Company  Ownership.  The  Company  is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership  except as otherwise
said  herein.  The  Company  shall  be the  beneficiary  of the  death  proceeds
remaining  after the Director's  interest has been paid according to Section 2.2
below.

     2.2 Director's Interest. The Director shall have the right to designate the
beneficiary  of an amount equal to 100 percent of the Net Death  Proceeds of the
Policy.  The Director  shall also have the right to elect and change  settlement
options that may be permitted.

     2.3 Option to Purchase.  The Company shall not sell,  surrender or transfer
ownership of the Policy while this  Agreement is in effect  without first giving
the Director or the Director's  transferee the option to purchase the Policy for
a period of 60 days from written  notice of such  intention.  The purchase price
shall be an  amount  equal  to the cash  surrender  value  of the  Policy.  This
provision shall not impair the right of the Company to terminate this Agreement.

     2.4  Comparable  Coverage.  Upon  adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no  event  shall  the  Company  amend,  terminate,  or  otherwise  abrogate  the
Director's interest in the Policy, unless the Company replaces the Policy with a
comparable  insurance policy to cover the benefit provided under this Agreement,
amends  the Split  Dollar  Agreement  and  executes a new  Endorsement  for said
comparable insurance policy. The Director agrees to provide the required medical
information to the Insurers for the  implementation of this Agreement and agrees
to  participate  with the Company if the Company  desires to obtain a comparable
insurance  policy  with  another  carrier,  whether  prior  to or  after  Normal
Retirement  Age.  The Policy or any  comparable  policy  shall be subject to the
claims of the Company's creditors.

                                    ARTICLE 3
                                    PREMIUMS

     3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

     3.2 Imputed  Income.  The Company shall impute income to the Director in an
amount equal to the current term rate for the  Director's  age multiplied by the
aggregate death benefit payable to the Director's beneficiary. The "current term
rate" is the minimum amount  required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.

                                    ARTICLE 4
                                   ASSIGNMENT

     The  Director  may  assign  without  consideration  all of  the  Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director  transfers all of the

                                       2
<PAGE>

Director's  interest in the Policy,  then all of the Director's  interest in the
Policy and in the Agreement  shall be vested in the Director's  transferee,  who
shall be substituted as a party hereunder and the Director shall have no further
interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                    INSURERS

     The Insurers shall be bound only by the terms of their respective Policies.
Any payments the Insurers make or action the Insurers  take in  accordance  with
their  respective  Policies shall fully discharge such Insurers from all claims,
suits and demands of all entities or persons. The Insurers shall not be bound by
or be deemed to have notice of the provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURES

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

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

                                       3
<PAGE>
                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1 Binding Effect.  This Agreement shall bind the Director and the Company
and their beneficiaries,  survivors, executors,  administrators and transferees,
and any Policy beneficiary.

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person agrees to assume and discharge the obligations of the Company.

     8.5 Notice. Any notice, consent or demand required or permitted to be given
under the  provisions  of this Split  Dollar  Agreement  by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States  certified  mail,  postage  prepaid,  to such
party, addressed to his or her last known address as shown on the records of the
Company.  The date of such  mailing  shall  be  deemed  the date of such  mailed
notice, consent or demand.

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

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

          (a) Interpreting the provisions of the Agreement;

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

                                       4
<PAGE>

          (c) Maintaining a record of benefit payments; and

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

     8.8 Named  Fiduciary.  The Company  shall be the named  fiduciary  and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

         IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.

DIRECTOR:                               COMPANY:

                                        COOPERATIVE BANK FOR SAVINGS

/s/ Francis Peter Fensel, Jr.           BY  /s/ Frederick Willetts, III
-----------------------------------         ------------------------------------
FRANCIS PETER FENSEL, JR.
                                        TITLE /s/ President
                                              ----------------------------------

                                       5
<PAGE>
                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. JP5195509                         Insured:  Francis Peter Fensel, Jr.

Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company  ("Insurer") on September 21, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       6
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By    /s/ Frederick Willetts, III
      -------------------------------------------------
Title President
      -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

/s/ Francis Peter Fensel, Jr.
-------------------------------------
Francis Peter Fensel, Jr.

                                       7
<PAGE>

                      SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. ZUA386790                         Insured:  Francis Peter Fensel, Jr.

Supplementing  and amending  the  application  for  insurance to West Coast Life
Insurance Company  ("Insurer") on September 21, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       8
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By     /s/ Frederick Willetts, III
       --------------------------------------------
Title  President
       ----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

/s/ Francis Peter Fensel, Jr.
----------------------------------------------
Francis Peter Fensel, Jr.

                                       9
<PAGE>

                          COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and PAUL G. BURTON (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

                                       1
<PAGE>

Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

     2.1 Normal  Retirement  Benefit.  Upon  Termination  of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit  described in this Section 2.1 in lieu of any other benefit
under this Agreement.

          2.1.1 Amount of Benefit.  The annual benefit under this Section 2.1 is
     $19,200  (Nineteen  Thousand Two Hundred  Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

           2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

                                       2
<PAGE>

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

            2.2.1 Amount of Benefit.  The benefit  under this Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

                                       3
<PAGE>

            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

                                       4
<PAGE>
                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

                                       5
<PAGE>

claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

                                       6
<PAGE>

event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

                                       7
<PAGE>
     IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.

DIRECTOR:                             COMPANY:
                                      COOPERATIVE BANK FOR SAVINGS

  /s/ PAUL G. BURTON                  BY:  /s/ FREDERICK WILLETTS, III
---------------------------                -------------------------------------
PAUL G. BURTON                        NAME:  FREDERICK WILLETTS, II
                                            ------------------------------------
                                      TITLE:  PRESIDENT
                                            ------------------------------------

                                       8
<PAGE>

                          COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and RICHARD ALLEN RIPPY (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

                                       1
<PAGE>

Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

     2.1 Normal  Retirement  Benefit.  Upon  Termination  of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit  described in this Section 2.1 in lieu of any other benefit
under this Agreement.

           2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
     $19,200  (Nineteen  Thousand Two Hundred  Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

          2.1.2 Payment of Benefit.  The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

                                       2
<PAGE>

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

            2.2.1 Amount of Benefit.  The benefit  under this Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

                                       3
<PAGE>

            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

                                       4
<PAGE>
                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

                                       5
<PAGE>

claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

                                       6
<PAGE>

event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

                                       7
<PAGE>

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

DIRECTOR:                               COMPANY:
                                        COOPERATIVE BANK FOR SAVINGS

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

<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                             SPLIT DOLLAR AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company"),  and RICHARD ALLEN RIPPY (the "Director").  This
Agreement  shall append the Split Dollar  Endorsement  entered into on even date
herewith or as subsequently amended, by and between the aforementioned parties.

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company  is  willing  to divide  the death  proceeds  of a life
insurance  policy on the  Director's  life.  The Company will pay life insurance
premiums from its general assets.

                                    AGREEMENT

     The Company and the Director agree as follows:

                                    ARTICLE I
                               GENERAL DEFINITIONS

     The following terms shall have the meanings specified:

     1.1 "Insurers" means  Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.

     1.2 "Policies" means insurance policy nos.  JP5195516 and ZUA3866786 issued
by the respective Insurers.

     1.3 "Insured" means the Director.

     1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.

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

     1.6  "Termination  of Service" means the Director  ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.

                                       1
<PAGE>
                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

     2.1  Company  Ownership.  The  Company  is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership  except as otherwise
said  herein.  The  Company  shall  be the  beneficiary  of the  death  proceeds
remaining  after the Director's  interest has been paid according to Section 2.2
below.

     2.2 Director's Interest. The Director shall have the right to designate the
beneficiary  of an amount equal to 100 percent of the Net Death  Proceeds of the
Policy.  The Director  shall also have the right to elect and change  settlement
options that may be permitted.

     2.3 Option to Purchase.  The Company shall not sell,  surrender or transfer
ownership of the Policy while this  Agreement is in effect  without first giving
the Director or the Director's  transferee the option to purchase the Policy for
a period of 60 days from written  notice of such  intention.  The purchase price
shall be an  amount  equal  to the cash  surrender  value  of the  Policy.  This
provision shall not impair the right of the Company to terminate this Agreement.

     2.4  Comparable  Coverage.  Upon  adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no  event  shall  the  Company  amend,  terminate,  or  otherwise  abrogate  the
Director's interest in the Policy, unless the Company replaces the Policy with a
comparable  insurance policy to cover the benefit provided under this Agreement,
amends  the Split  Dollar  Agreement  and  executes a new  Endorsement  for said
comparable insurance policy. The Director agrees to provide the required medical
information to the Insurers for the  implementation of this Agreement and agrees
to  participate  with the Company if the Company  desires to obtain a comparable
insurance  policy  with  another  carrier,  whether  prior  to or  after  Normal
Retirement  Age.  The Policy or any  comparable  policy  shall be subject to the
claims of the Company's creditors.

                                    ARTICLE 3
                                    PREMIUMS

     3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

     3.2 Imputed  Income.  The Company shall impute income to the Director in an
amount equal to the current term rate for the  Director's  age multiplied by the
aggregate death benefit payable to the Director's beneficiary. The "current term
rate" is the minimum amount  required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.

                                    ARTICLE 4
                                   ASSIGNMENT

     The  Director  may  assign  without  consideration  all of  the  Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director  transfers all of the

                                       2
<PAGE>

Director's  interest in the Policy,  then all of the Director's  interest in the
Policy and in the Agreement  shall be vested in the Director's  transferee,  who
shall be substituted as a party hereunder and the Director shall have no further
interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                    INSURERS

     The Insurers shall be bound only by the terms of their respective Policies.
Any payments the Insurers make or action the Insurers  take in  accordance  with
their  respective  Policies shall fully discharge such Insurers from all claims,
suits and demands of all entities or persons. The Insurers shall not be bound by
or be deemed to have notice of the provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURES

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

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

                                       3
<PAGE>

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1 Binding Effect.  This Agreement shall bind the Director and the Company
and their beneficiaries,  survivors, executors,  administrators and transferees,
and any Policy beneficiary.

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person agrees to assume and discharge the obligations of the Company.

         8.5 Notice. Any notice, consent or demand required or permitted to be
given under the provisions of this Split Dollar Agreement by one party to
another shall be in writing, shall be signed by the party giving or making the
same, and may be given either by delivering the same to such other party
personally, or by mailing the same, by United States certified mail, postage
prepaid, to such party, addressed to his or her last known address as shown on
the records of the Company. The date of such mailing shall be deemed the date of
such mailed notice, consent or demand.

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

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

          (a) Interpreting the provisions of the Agreement;

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

                                       4
<PAGE>

          (c) Maintaining a record of benefit payments; and

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

     8.8 Named  Fiduciary.  The Company  shall be the named  fiduciary  and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

     IN WITNESS  WHEREOF,  the parties have executed this  Agreement the day and
year first above written.

DIRECTOR:                            COMPANY:

                                     COOPERATIVE BANK FOR SAVINGS

/s/ Richard Allen Rippy              BY    /s/ Frederick Willetts, III
------------------------------             -------------------------------------
RICHARD ALLEN RIPPY
                                     TITLE President
                                           -------------------------------------

                                       5
<PAGE>
                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. JP5195516                               Insured:  Richard Allen Rippy

Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company  ("Insurer") on September 20, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       6
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
      -----------------------------------------------
Title    President
      -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at ____________________, North Carolina, this _______ day of
______________, 2002.

THE INSURED:

   /s/ Richard Allen Rippy
------------------------------
Richard Allen Rippy

                                       7
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. ZUA3866786                              Insured:  Richard Allen Rippy

Supplementing  and amending  the  application  for  insurance to West Coast Life
Insurance Company  ("Insurer") on September 20, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       8
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
      -----------------------------------------------
Title    President
      -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

    /s/ Richard Allen Rippy
-------------------------------
Richard Allen Rippy

                                       9
<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and JAMES HUNDLEY (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    Article 1
                                   Definitions

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

                                       1
<PAGE>

Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

     2.1 Normal  Retirement  Benefit.  Upon  Termination  of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit  described in this Section 2.1 in lieu of any other benefit
under this Agreement.

           2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
     $19,200  (Nineteen  Thousand Two Hundred  Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

           2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

                                       2
<PAGE>

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

            2.2.1 Amount of Benefit.  The benefit  under this Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

                                       3
<PAGE>
            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

                                       4
<PAGE>

                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

                                       5
<PAGE>

claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

                                       6
<PAGE>

event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

                                       7
<PAGE>

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

DIRECTOR:                             COMPANY:
                                      COOPERATIVE BANK FOR SAVINGS

  /s/ JAMES D. HUNDLEY                BY: /s/ FREDERICK WILLETTS, III
---------------------------               --------------------------------------
JAMES D. HUNDLEY                      NAME:  FREDERICK WILLETTS, III
                                            ------------------------------------
                                      TITLE:  PRESIDENT
                                            ------------------------------------

                                       7
<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                             SPLIT DOLLAR AGREEMENT

     THIS  AGREEMENT is adopted this 17th day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North  Carolina (the  "Company"),  and JAMES D. HUNDLEY (the  "Director").  This
Agreement  shall append the Split Dollar  Endorsement  entered into on even date
herewith or as subsequently amended, by and between the aforementioned parties.

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company  is  willing  to divide  the death  proceeds  of a life
insurance  policy on the  Director's  life.  The Company will pay life insurance
premiums from its general assets.

                                    AGREEMENT

     The Company and the Director agree as follows:

                                    ARTICLE I
                               GENERAL DEFINITIONS

     The following terms shall have the meanings specified:

     1.1 "Insurers" means  Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.

     1.2 "Policies" means insurance  policy nos.  JP5195512 and ZUA386788 issued
by the respective Insurers.

     1.3 "Insured" means the Director.

     1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.

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

     1.6  "Termination  of Service" means the Director  ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.

                                       1
<PAGE>
                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

     2.1  Company  Ownership.  The  Company  is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership  except as otherwise
said  herein.  The  Company  shall  be the  beneficiary  of the  death  proceeds
remaining  after the Director's  interest has been paid according to Section 2.2
below.

     2.2 Director's Interest. The Director shall have the right to designate the
beneficiary  of an amount equal to 100 percent of the Net Death  Proceeds of the
Policy.  The Director  shall also have the right to elect and change  settlement
options that may be permitted.

     2.3 Option to Purchase.  The Company shall not sell,  surrender or transfer
ownership of the Policy while this  Agreement is in effect  without first giving
the Director or the Director's  transferee the option to purchase the Policy for
a period of 60 days from written  notice of such  intention.  The purchase price
shall be an  amount  equal  to the cash  surrender  value  of the  Policy.  This
provision shall not impair the right of the Company to terminate this Agreement.

     2.4  Comparable  Coverage.  Upon  adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no  event  shall  the  Company  amend,  terminate,  or  otherwise  abrogate  the
Director's interest in the Policy, unless the Company replaces the Policy with a
comparable  insurance policy to cover the benefit provided under this Agreement,
amends  the Split  Dollar  Agreement  and  executes a new  Endorsement  for said
comparable insurance policy. The Director agrees to provide the required medical
information to the Insurers for the  implementation of this Agreement and agrees
to  participate  with the Company if the Company  desires to obtain a comparable
insurance  policy  with  another  carrier,  whether  prior  to or  after  Normal
Retirement  Age.  The Policy or any  comparable  policy  shall be subject to the
claims of the Company's creditors.

                                    ARTICLE 3
                                    PREMIUMS

     3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

     3.2 Imputed  Income.  The Company shall impute income to the Director in an
amount equal to the current term rate for the  Director's  age multiplied by the
aggregate death benefit payable to the Director's beneficiary. The "current term
rate" is the minimum amount  required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.

                                    ARTICLE 4
                                   ASSIGNMENT

     The  Director  may  assign  without  consideration  all of  the  Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director  transfers all of the

                                       2
<PAGE>

Director's  interest in the Policy,  then all of the Director's  interest in the
Policy and in the Agreement  shall be vested in the Director's  transferee,  who
shall be substituted as a party hereunder and the Director shall have no further
interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                    INSURERS

     The Insurers shall be bound only by the terms of their respective Policies.
Any payments the Insurers make or action the Insurers  take in  accordance  with
their  respective  Policies shall fully discharge such Insurers from all claims,
suits and demands of all entities or persons. The Insurers shall not be bound by
or be deemed to have notice of the provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURES

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

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

                                       3
<PAGE>
                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1 Binding Effect.  This Agreement shall bind the Director and the Company
and their beneficiaries,  survivors, executors,  administrators and transferees,
and any Policy beneficiary.

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person agrees to assume and discharge the obligations of the Company.

     8.5 Notice. Any notice, consent or demand required or permitted to be given
under the  provisions  of this Split  Dollar  Agreement  by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States  certified  mail,  postage  prepaid,  to such
party, addressed to his or her last known address as shown on the records of the
Company.  The date of such  mailing  shall  be  deemed  the date of such  mailed
notice, consent or demand.

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

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

          (a) Interpreting the provisions of the Agreement;

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

                                       4
<PAGE>

          (c) Maintaining a record of benefit payments; and

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

     8.8 Named  Fiduciary.  The Company  shall be the named  fiduciary  and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

         IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.

DIRECTOR:                              COMPANY:

                                       COOPERATIVE BANK FOR SAVINGS

/s/ James D. Hundley                   BY    /s/ Frederick Willetts, III
------------------------------               -----------------------------------
JAMES D. HUNDLEY
                                       TITLE /s/ President
                                             -----------------------------------

                                       5
<PAGE>
                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. JP5195512                                  Insured:  James D. Hundley

Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company  ("Insurer") on September 30, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       6
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By     /s/ Frederick Willetts, III
       ----------------------------------------------
Title  President
       ----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at ________________, North Carolina, this _______ day of ________, 2001.

THE INSURED:

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

                                       7
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. ZUA386788                                 Insured:  James D. Hundley

Supplementing  and amending  the  application  for  insurance to West Coast Life
Insurance Company  ("Insurer") on September 30, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       8
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By     /s/ Frederick Willetts, III
       -----------------------------------------------
Title  President
       -----------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 17th day of January, 2002.

THE INSURED:

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

                                       9
<PAGE>

                          COOPERATIVE BANK FOR SAVINGS
                          DIRECTOR RETIREMENT AGREEMENT

     THIS  AGREEMENT is adopted this 22nd day of January,  2002,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the "Company") and RUSSELL M. CARTER (the "Director").

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

     1.1 "Change of Control" means a change in the control of the Company or its
holding company,  Cooperative Bankshares, Inc. (the "Holding Company"). The term
control  shall  refer to the  ownership,  holding  or power to vote more than 25
percent of the Company's or the Holding  Company's  voting stock, the control of
the election of a majority of the Company's or the Holding Company's  directors,
or the exercise of a controlling  influence  over the  management or policies of
the  Company or the Holding  Company by any person or persons  acting as a group
within the meaning of Section 13(d) of the  Securities  Exchange Act of 1934, as
amended  followed  within twelve (12) months by the  Director's  Termination  of
Service for reasons other than death, Disability or retirement. The term "person
means an individual  other than the  Director,  or a  corporation,  partnership,
trust,  association,   joint  venture,  pool,  syndicate,  sole  proprietorship,
unincorporated  organization or any other form of entity not specifically listed
herein.

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

     1.3 "Disability"  means, if the Director is covered by a Company  sponsored
disability policy,  total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy,  Disability
means the  Director  suffering a sickness,  accident  or injury,  which,  in the
judgment  of a  physician  who is  satisfactory  to the  Company,  prevents  the
Director from performing  substantially  all of the Director's normal duties for
the Company.  As a condition to receiving any Disability  benefits,  the Company
may require the

                                       1
<PAGE>

Director  to submit to such  physical  or  mental  evaluations  and tests as the
Company's Board of Directors deems appropriate and reasonable.

     1.4 "Early  Termination"  means the  Termination  of Service  before Normal
Retirement Age for reasons other than death,  Disability,  Termination for Cause
or following a Change of Control.

     1.5 "Early  Termination  Date" means the month, day and year in which Early
Termination occurs.

     1.6 "Effective Date" means October 1, 2001.

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

     1.8 "Plan Year" means a  twelve-month  period  commencing  on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

     1.9 "Termination for Cause" See Section 5.2

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

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.

           2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
     $19,200  (Nineteen  Thousand Two Hundred  Dollars).  The Company's Board of
     Directors,  at its sole  discretion,  may increase the annual benefit under
     this Section 2.1.1;  however,  any increase shall require the recalculation
     of Schedule A.

           2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
     the Director in 12 equal monthly installments payable each month commencing
     with the month following the Director's  Normal  Retirement Age. The annual
     benefit shall be paid to the Director for 10 years.

           2.1.3 Benefit  Increases.  Commencing on the first anniversary of the
     first benefit payment, and continuing on each subsequent  anniversary,  the
     Company's  Board of  Directors,  at its sole  discretion,  may increase the
     benefit.

                                       2
<PAGE>

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall
pay to the  Director  the benefit  described  in this Section 2.2 in lieu of any
other benefit under this Agreement.

            2.2.1 Amount of Benefit.  The benefit  under this Section 2.2 is the
     Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
     immediately prior to the Early Termination Date,  determined by vesting the
     Director in 100 percent of the Accrual Balance.  Any increase in the annual
     benefit under Section  2.1.1 shall require the  recalculation  of the Early
     Termination benefit on Schedule A.

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

     2.3 Disability Benefit.  If the Director's  Termination of Service prior to
Normal  Retirement  Age is due  to  Disability,  the  Company  shall  pay to the
Director the benefit  described in this Section 2.3 in lieu of any other benefit
under this Agreement.

            2.3.1 Amount of Benefit.  The benefit  under this Section 2.3 is the
     Disability  Lump Sum set  forth in  Schedule  A for the  Plan  Year  ending
     immediately  prior to the date on which the  Termination of Service occurs,
     determined  by vesting the Director in 100 percent of the Accrual  Balance.
     Any increase in the annual  benefit  under  Section 2.1.1 would require the
     recalculation of the Disability benefit on Schedule A.

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

     2.4 Change of Control Benefit.  Upon a Change of Control, the Company shall
pay to the  Director  the benefit  described  in this Section 2.4 in lieu of any
other benefit under this Agreement.

            2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the
     Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
     immediately  prior to the  date in which  Termination  of  Service  occurs,
     determined  by vesting the  Director in the present  value of the stream of
     payments of the Normal  Retirement  Benefit described in Section 2.1.1. Any
     increase  in the annual  benefit  under  Section  2.1.1  would  require the
     recalculation of the Change of Control benefit on Schedule A.

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

                                    ARTICLE 3
                                 DEATH BENEFITS

     3.1 Death During Active  Service.  If the Director dies while in the active
service of the Company, the Company shall pay to the Director's  beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.

                                       3
<PAGE>

            3.1.1 Amount of Benefit.  The benefit  under this Section 3.1 is the
     Death  Benefit  Lump Sum set forth in Schedule A for the Plan Year in which
     the  Director's  death  occurs,  determined  by vesting the Director in 100
     percent of the  Accrual  Balance in said  Schedule  A. Any  increase in the
     annual benefit under Section 2.1.1 would require the  recalculation  of the
     Death benefit on Schedule A.

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

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

     3.3 Death After  Termination of Employment But Before Payment of a Lifetime
Benefit Commences.  If the Director is entitled to a Lifetime Benefit under this
Agreement,  but dies prior to the  commencement  of said benefit  payments,  the
Company shall pay the same benefit  payments to the Director's  beneficiary that
the Director  was  entitled to prior to death  except that the benefit  payments
shall  commence  on the  first  day of  the  month  following  the  date  of the
Director's death.

                                    ARTICLE 4
                                  BENEFICIARIES

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

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

                                       4
<PAGE>
                                    ARTICLE 5
                               GENERAL LIMITATIONS

     5.1  Internal  Revenue  Service  Section  280G  Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control,  the Director becomes
entitled to  acceleration  of benefits  under this  Agreement or under any other
benefit,  compensation  or  incentive  plan  or  arrangement  with  the  Company
(collectively,  the "Total Benefits"),  and if any part of the Total Benefits is
subject to the Excise Tax under  Section  280G and Section  4999 of the Internal
Revenue  Code (the  "Excise  Tax"),  the Company  shall pay to the  Director the
following  additional  amounts,  consisting of (a) a payment equal to the Excise
Tax payable by the  Director on the Total  Benefits  under  Section  4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment,  net of all income,  payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.

     5.2 Termination for Cause.  Notwithstanding any provision of this Agreement
to the contrary,  the Company shall not pay any benefit under this  Agreement if
the Company terminates the Director's service for:

          (a) Gross negligence or gross neglect of duties;

          (b) Commission of a felony or of a gross  misdemeanor  involving moral
turpitude; or

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

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

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

     6.1 Claims  Procedure.  The Company  shall  notify any person or entity who
makes a claim against this Agreement (the "Claimant") in writing, within 90 days
of Claimant's  written  application  for benefits,  of his or her eligibility or
noneligibility for benefits under this Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial,  (2) a specific reference to the
provisions of this Agreement on which the denial is based,  (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed,  (4) an explanation of this
Agreement's claims review procedure and other appropriate  information as to the
steps to be taken if the  Claimant  wishes to have the

                                       5
<PAGE>

claim  reviewed  and (5) a time within which  review must be  requested.  If the
Company  determines that there are special  circumstances  requiring  additional
time to make a decision,  the Company  shall  notify the Claimant of the special
circumstances  and the date by which a decision is expected to be made,  and may
extend the time for up to an additional 90 days.

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

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

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

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person  agrees to assume and discharge  the  obligations  of the Company
under this Agreement.  Upon the occurrence of such

                                       6
<PAGE>

event,  the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.

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

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

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

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

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

          (a) Interpreting the provisions of this Agreement;

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

          (c) Maintaining a record of benefit payments; and

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

     8.10 Named  Fiduciary.  The Company  shall be the named  fiduciary and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

                                       7
<PAGE>

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

DIRECTOR:                                   COMPANY:
                                            COOPERATIVE BANK FOR SAVINGS

/s/ RUSSELL M. CARTER                       BY:  /s/ FREDERICK WILLETTS, III
------------------------------------             -------------------------------
RUSSELL M. CARTER                           NAME:  FREDERICK WILLETTS, III
                                                   -----------------------------
                                            TITLE:  PRESIDENT
                                                   -----------------------------

                                       8
<PAGE>
                          COOPERATIVE BANK FOR SAVINGS
                             SPLIT DOLLAR AGREEMENT

     THIS  AGREEMENT is adopted this 22nd day of January,  2001,  by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock  Savings Bank located in Wilmington,
North Carolina (the  "Company"),  and RUSSELL M. CARTER (the  "Director").  This
Agreement  shall append the Split Dollar  Endorsement  entered into on even date
herewith or as subsequently amended, by and between the aforementioned parties.

                                  INTRODUCTION

     To  encourage  the  Director to remain a member of the  Company's  Board of
Directors,  the  Company  is  willing  to divide  the death  proceeds  of a life
insurance  policy on the  Director's  life.  The Company will pay life insurance
premiums from its general assets.

                                    AGREEMENT

     The Company and the Director agree as follows:

                                    ARTICLE I
                               GENERAL DEFINITIONS

     The following terms shall have the meanings specified:

     1.1 "Insurers" means  Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.

     1.2 "Policies" means insurance  policy nos.  JP5195510 and ZUA386789 issued
by the respective Insurers.

     1.3 "Insured" means the Director.

     1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.

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

     1.6  "Termination  of Service" means the Director  ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.

                                       1
<PAGE>

                                ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

     2.1  Company  Ownership.  The  Company  is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership  except as otherwise
said  herein.  The  Company  shall  be the  beneficiary  of the  death  proceeds
remaining  after the Director's  interest has been paid according to Section 2.2
below.

     2.2 Director's Interest. The Director shall have the right to designate the
beneficiary  of an amount equal to 100 percent of the Net Death  Proceeds of the
Policy.  The Director  shall also have the right to elect and change  settlement
options that may be permitted.

     2.3 Option to Purchase.  The Company shall not sell,  surrender or transfer
ownership of the Policy while this  Agreement is in effect  without first giving
the Director or the Director's  transferee the option to purchase the Policy for
a period of 60 days from written  notice of such  intention.  The purchase price
shall be an  amount  equal  to the cash  surrender  value  of the  Policy.  This
provision shall not impair the right of the Company to terminate this Agreement.

     2.4  Comparable  Coverage.  Upon  adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no  event  shall  the  Company  amend,  terminate,  or  otherwise  abrogate  the
Director's interest in the Policy, unless the Company replaces the Policy with a
comparable  insurance policy to cover the benefit provided under this Agreement,
amends  the Split  Dollar  Agreement  and  executes a new  Endorsement  for said
comparable insurance policy. The Director agrees to provide the required medical
information to the Insurers for the  implementation of this Agreement and agrees
to  participate  with the Company if the Company  desires to obtain a comparable
insurance  policy  with  another  carrier,  whether  prior  to or  after  Normal
Retirement  Age.  The Policy or any  comparable  policy  shall be subject to the
claims of the Company's creditors.

                                    ARTICLE 3
                                    PREMIUMS

     3.1 Premium Payment. The Company shall pay any premiums due on the Policy.

     3.2 Imputed  Income.  The Company shall impute income to the Director in an
amount equal to the current term rate for the  Director's  age multiplied by the
aggregate death benefit payable to the Director's beneficiary. The "current term
rate" is the minimum amount  required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.

                                    ARTICLE 4
                                   ASSIGNMENT

     The  Director  may  assign  without  consideration  all of  the  Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director  transfers all of the

                                       2
<PAGE>

Director's  interest in the Policy,  then all of the Director's  interest in the
Policy and in the Agreement  shall be vested in the Director's  transferee,  who
shall be substituted as a party hereunder and the Director shall have no further
interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                    INSURERS

     The Insurers shall be bound only by the terms of their respective Policies.
Any payments the Insurers make or action the Insurers  take in  accordance  with
their  respective  Policies shall fully discharge such Insurers from all claims,
suits and demands of all entities or persons. The Insurers shall not be bound by
or be deemed to have notice of the provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURES

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

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

                                       3
<PAGE>
                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

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

                                    ARTICLE 8
                                  MISCELLANEOUS

     8.1 Binding Effect.  This Agreement shall bind the Director and the Company
and their beneficiaries,  survivors, executors,  administrators and transferees,
and any Policy beneficiary.

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

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

     8.4 Reorganization. The Company shall not merge or consolidate into or with
another  company,  or  reorganize,  or sell  substantially  all of its assets to
another  company,  firm or person unless such succeeding or continuing  company,
firm or person agrees to assume and discharge the obligations of the Company.

     8.5 Notice. Any notice, consent or demand required or permitted to be given
under the  provisions  of this Split  Dollar  Agreement  by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States  certified  mail,  postage  prepaid,  to such
party, addressed to his or her last known address as shown on the records of the
Company.  The date of such  mailing  shall  be  deemed  the date of such  mailed
notice, consent or demand.

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

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

          (a) Interpreting the provisions of the Agreement;

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

                                       4
<PAGE>

          (c) Maintaining a record of benefit payments; and

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

     8.8 Named  Fiduciary.  The Company  shall be the named  fiduciary  and plan
administrator  under this Agreement.  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 ministerial duties to
qualified individuals.

     IN WITNESS  WHEREOF,  the parties have executed this  Agreement the day and
year first above written.

DIRECTOR:                                 COMPANY:

                                          COOPERATIVE BANK FOR SAVINGS

/s/ Russell M. Carter                     BY    /s/ Frederick Willetts, III
--------------------------------                --------------------------------
RUSSELL M. CARTER
                                          TITLE  President
                                                 -------------------------------

                                       5
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. JP5195510                                 Insured:  Russell M. Carter

Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company  ("Insurer") on September 17, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       6
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative  capacity and warrants that he or
she has the  authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 22nd day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
        ---------------------------------------------
Title    President
        ---------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed  at   ____________________,   North   Carolina,   this   _______  day  of
______________, 2002.

THE INSURED:

/s/ Russell M. Carter
---------------------------
Russell M. Carter

                                       7
<PAGE>
                       SPLIT DOLLAR POLICY ENDORSEMENT TO
               COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT

Policy No. ZUA386789                                 Insured:  Russell M. Carter

Supplementing  and amending  the  application  for  insurance to West Coast Life
Insurance Company  ("Insurer") on September 17, 2001, the applicant requests and
directs that:

                                  BENEFICIARIES
                                  -------------

     1.  COOPERATIVE  BANK FOR SAVINGS,  a  State/Stock  Savings Bank located in
Wilmington,  North  Carolina (the  "Company"),  shall be the  beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.

     2. The Insured or the Insured's  transferee shall designate the beneficiary
of an amount  equal to 100  percent  of the Net  Death  Proceeds  of the  Policy
(defined as the total  death  proceeds  of the Policy  minus the cash  surrender
value).

                                    OWNERSHIP
                                    ---------

     3. The Owner of the policy shall be the  Company.  The Owner shall have all
ownership  rights in the  Policy  except as may be  specifically  granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.

     4. The Insured or the Insured's  transferee  shall have the right to assign
his or her rights and  interests  in the Policy with  respect to that portion of
the death  proceeds  designated  in paragraph  (2) of this  endorsement,  and to
exercise all settlement options with respect to such death proceeds.

               MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
               ---------------------------------------------------

Upon the death of the Insured,  the interest of any  collateral  assignee of the
Owner of the Policy  designated  in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

                                OWNERS AUTHORITY
                                ----------------

The  Insurer is hereby  authorized  to  recognize  the  Owner's  claim to rights
hereunder  without  investigating  the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient  for the exercise of any rights under
this  Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release  therefore to the Insurer.  The Insurer may rely
on a sworn  statement in form  satisfactory  to it  furnished by the Owner,  its
successors or assigns,  as to their interest,  and any payments made pursuant to
such statement  shall discharge the Insurer  accordingly.  The owner accepts and
agrees to this split dollar endorsement.

                                       8
<PAGE>

Any transferee's rights shall be subject to this Endorsement.

The undersigned is signing in a representative capacity and warrants that he or
she has the authority to bind the entity on whose behalf this document is being
executed.

Signed at Wilmington, North Carolina, this 22nd day of January, 2002.

COOPERATIVE BANK FOR SAVINGS

By       /s/ Frederick Willetts, III
        ---------------------------------------------
Title   President
        --------------------------------------------

                     ACCEPTANCE AND BENEFICIARY DESIGNATION
                     --------------------------------------

The Insured  accepts and agrees to the foregoing  and,  subject to the rights of
the Owner as stated above,  designates  the following as  beneficiary(s)  of the
portion of the proceeds described in paragraph (2) above:

Primary Beneficiary:____________________________________________________________
         Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
         Relationship: _________________________________________________________

Signed at Wilmington, North Carolina, this 22nd day of January, 2002.

THE INSURED:

/s/ Russell M. Carter
---------------------------------
Russell M. Carter

                                       9COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

                                       1
<PAGE>

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 Election Changes

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

DIRECTOR                              COMPANY

                                      COOPERATIVE BANKSHARES, INC.

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

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

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

                                       1
<PAGE>

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 Election Changes

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>

                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

DIRECTOR                                    COMPANY

                                            COOPERATIVE BANKSHARES, INC.

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

                                       6
<PAGE>

                          COOPERATIVE BANKSHARES, INC.
                         DIRECTOR DEFERRED FEE AGREEMENT

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

                                       1
<PAGE>

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 Election Changes

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

DIRECTOR                               COMPANY

                                       COOPERATIVE BANKSHARES, INC.

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

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

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

                                       1
<PAGE>

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 Election Changes

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

Director                                 Company

                                         COOPERATIVE BANKSHARES, INC.

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

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

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 ELECTION CHANGES

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

DIRECTOR                               COMPANY

                                       COOPERATIVE BANKSHARES, INC.

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

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

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

                                       1
<PAGE>

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 Election Changes

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

DIRECTOR                                 COMPANY

                                         COOPERATIVE BANKSHARES, INC.

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

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

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

                                  INTRODUCTION

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

                                    AGREEMENT

     The Director and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

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

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

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

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

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

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

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

     1.7 "Effective Date" means October 1, 2001.

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

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

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

                                       1
<PAGE>

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

     1.12 "Plan Year" means the calendar year.

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

                                    ARTICLE 2
                                DEFERRAL ELECTION

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

     2.2 Election Changes

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

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

                                    ARTICLE 3
                                DEFERRAL ACCOUNT

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

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

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

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

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

                                    ARTICLE 4
                            BENEFITS DURING LIFETIME

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

                                       2
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       3
<PAGE>
                                    ARTICLE 5
                                 DEATH BENEFITS

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

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

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

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

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

                                    ARTICLE 6
                                  BENEFICIARIES

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

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

                                    ARTICLE 7
                               GENERAL LIMITATIONS

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

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

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

                                       4
<PAGE>

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

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

                                    ARTICLE 8
                          CLAIMS AND REVIEW PROCEDURES

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

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

                                    ARTICLE 9
                           AMENDMENTS AND TERMINATION

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

                                   ARTICLE 10
                                  MISCELLANEOUS

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

          (a)  Interpreting the provisions of the Agreement;

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

          (c)  Maintaining a record of benefit payments, and

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

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

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

DIRECTOR                                 COMPANY

                                         COOPERATIVE BANKSHARES, INC.

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

                                       6

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