Exhibit 10.14

LIFE INSURANCE

ENDORSEMENT METHOD SPLIT DOLLAR PLAN

AGREEMENT

 

Insurer:    Jefferson Pilot Life Insurance Company       Mass Mutual Life
Insurance Company    Policy Number:    JP5221287       0046689    Bank:    The
East Carolina Bank    Insured:    T. Olin Davis    Relationship of Insured to
Bank:    Executive    Trust:    Rabbi Trust for the Executive Supplemental
Retirement Plan Agreement, Director Supplemental Retirement Plan Agreement, and
the Endorsement Method Split Dollar Plan Agreement   

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

 

I. DEFINITIONS

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

 

II. POLICY TITLE AND OWNERSHIP

Title and ownership shall reside in the Trustee for the Rabbi Trust for the
Executive Supplemental Retirement Plan Agreement, Director Supplemental
Retirement Plan Agreement, and the Endorsement Method Split Dollar Plan

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Agreement for its use and for the use of the Insured all in accordance with this
Agreement. The Trustee at the direction of the Bank may, to the extent of the
Bank’s interest, exercise the right to borrow or withdraw on the policy cash
values. Where the Trustee at the direction of the Bank and the Insured (or
assignee, with the consent of the Insured) mutually agree to exercise the right
to increase the coverage under the subject policy, then, in such event, the
rights, duties and benefits of the parties to such increased coverage shall
continue to be subject to the terms of this Agreement.

 

III. BENEFICIARY DESIGNATION RIGHTS

The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive the Insured’s share of the proceeds of
the policy payable upon the death of the Insured, and to elect and change a
payment option for such beneficiary, subject to any right or interest of the
Bank or the Trust may have in such proceeds, as provided in this Agreement. Any
such designation by the Insured shall be made in writing in the form attached
hereto as Exhibit A and incorporated herein by reference. Any such designation
or change therein shall be effective three (3) business days from delivery of
said written notice by Insured to the Bank.

 

IV. PREMIUM PAYMENT METHOD

Subject to Subparagraph IX (B), the Bank or the Trustee at the direction of the
Bank shall pay an amount equal to the planned premiums and any other premium
payments that might become necessary to keep the policy in force.

 

V. TAXABLE BENEFIT

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

 

VI. DIVISION OF DEATH PROCEEDS

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

 

  A.

At the time of the Insured’s death, should the Insured be employed by the Bank,
retired from the Bank, or have had his or her employment terminated from the
Bank due to disability*, the Insured’s beneficiary(ies), designated in
accordance with Paragraph III or the Insured’s estate if no beneficiary has been
so designated, shall be entitled to an amount equal to eighty percent (80%) of
the net-at-risk insurance portion of the proceeds.

 

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The net-at-risk insurance portion is the total proceeds less the cash value of
the policy.

 

  B. Should the Insured not be employed by the Bank at the time of his or her
death for reasons other than disability* or retirement, the Insured’s
beneficiary(ies), designated in accordance with Paragraph III or the Insured’s
estate if no beneficiary has been so designated, shall be entitled to the
percentage as set forth hereinbelow of the proceeds described in Subparagraph VI
(A) above.

 

Date of Hire    10% for each full year of service from the date of first service
to a maximum of 80% PLUS    If Insured is at least 62 years of age on his or her
date of death   

20%

For a maximum total of 100%

*Subject to the Bank’s obligations and Insured’s rights under Title I of the
Americans with Disabilities Act and the Family and Medical Leave Act, if
applicable, and any other applicable federal or state laws, for purposes of this
Agreement, disability shall be defined as the Insured not being able to perform
the duties of the Insured’s own job and shall be as further defined in the
Bank’s long term disability policy in effect at the time of said disability. If
no such policy exists at the time of the disability, then disability shall be
defined as a physical or mental impairment of Insured which renders Insured
incapable of performing Insured’s normal and regular essential employment duties
and which shall be medically determined to be of permanent duration as the same
is construed for purposes of disability benefits under the federal Social
Security laws and regulations.

 

  C. The Bank shall be entitled to the remainder of such proceeds of the policy,
including but not limited to the cash surrender value as provided in Paragraph
VII herein.

 

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

 

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VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

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

 

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

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

 

IX. TERMINATION OF AGREEMENT

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

 

  A. The Insured is terminated by the Bank with cause. For purposes of this
Agreement, the term “with cause” shall have the same meaning as the Employment
Agreement between the Bank and the Insured. If no such employment agreement
exists at the time of termination, the term “with cause” shall be deemed to
mean, but is not limited to, personal dishonesty, incompetence, willful material
misconduct, breach of fiduciary duty, failure to perform the obligations of the
Insured as stated herein, willful violation of any law, rule, or regulation
(other than minor traffic infractions), or, any material breach of any provision
of this agreement.

 

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

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

 

  1) The Bank’s or the Trust’s share of the cash value of the policy on the date
of such assignment, as defined in this Agreement; or

 

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

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

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

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

 

X. INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS

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

 

XI. AGREEMENT BINDING UPON THE PARTIES

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

 

XII. ERISA PROVISIONS

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

 

  A. Named Fiduciary and Plan Administrator.

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

 

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  B. Funding Policy.

Subject to Subparagraph IX (B), the funding policy for this Split Dollar Plan
shall be to maintain the subject policy in force by paying, when due, all
premiums required.

 

  C. Basis of Payment of Benefits.

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

 

  D. Claim Procedures.

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

In the event that a claim is not eligible under the policy, the Insurer will
notify the Named Fiduciary of the denial pursuant to the requirements under the
terms of the policy. If the Named Fiduciary is dissatisfied with the denial of
the claim and wishes to contest such claim denial, they should contact the
office named above and they will assist in making an inquiry to the Insurer. All
objections to the Insurer’s actions should be in writing and submitted to the
office named above for transmittal to the Insurer.

 

  E. Notices.

All notices required or permitted to be given pursuant to this Agreement shall
be in writing, unless otherwise specified, and shall be delivered personally,
deposited in the United States mail, registered or certified and postage prepaid
with return receipt requested, or deposited with a reputable overnight courier
which provides a day and time stamped receipt, addressed to the Executive, Bank
or Trustee, as applicable, at the

 

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address set forth herein or to such other address as hereafter may be furnished
to the other parties in writing pursuant to this paragraph. All notices so given
shall be deemed effective and received upon the earlier of (i) actual receipt,
(ii) receipt and refusal; or (iii) five (5) days from (1) the postmark date, if
deposited with the United States Postal Service, or (2) the date of deposit, if
deposited with an overnight courier, unless otherwise provided herein.

 

Bank:    The East Carolina Bank       Hwy. 264       Engelhard, North Carolina
27824    Trustee:    Thomas A. Nussbaum       Eastern Bank & Trust Co.       2
Adams Place, AP06       Quincy, MA 02169-7456    Executive:    T. Olin Davis   
  

 

     

 

     

 

  

 

XIII. GENDER

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

 

XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

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

 

XV. CHANGE OF CONTROL

Change of Control shall mean the direct or indirect acquisition by another
person, firm or corporation, by merger, share exchange, consolidation, purchase
or otherwise, all or substantially all of the assets or stock of the Bank or its
parent company. Upon a Change of Control, if the Insured’s employment is
subsequently terminated, except for cause, then the Insured shall be one hundred
percent (100%) vested in the benefits promised in this Agreement and, therefore,

 

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upon the death of the Insured, the Insured’s beneficiary(ies) (designated in
accordance with Paragraph III) shall receive the death benefit provided herein
as if the Insured had died while employed by the Bank (See Subparagraph VI [A]).

 

XVI. AMENDMENT OR REVOCATION

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

 

XVII. EFFECTIVE DATE

The Effective Date of this Agreement shall be November 5, 2001.

 

XVIII. SEVERABILITY AND INTERPRETATION

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

 

XIX. APPLICABLE LAW

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

Executed at Engelhard, North Carolina this 22nd day of January, 2002.

 

    THE EAST CAROLINA BANK     Engelhard, North Carolina

/s/ Jo Ellen Cutrell

    By:  

/s/ J. Dorson White Executive Vice President

Witness      

    Title

/s/ Jo Ellen Cutrell

     

/s/ Thomas O. Davis

Witness       T. Olin Davis

 

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EXHIBIT A

BENEFICIARY DESIGNATION FORM

FOR LIFE INSURANCE ENDORSEMENT METHOD

SPLIT DOLLAR PLAN AGREEMENT

PRIMARY DESIGNATION:

 

Name   Address   Relationship

 

 

 

SECONDARY (CONTINGENT) DESIGNATION:

 

 

 

 

All sums payable under the Life Insurance Endorsement Method Split Dollar Plan
Agreement by reason of my death shall be paid to the Primary Beneficiary, if he
or she survives me, and if no Primary Beneficiary shall survive me, then to the
Secondary (Contingent) Beneficiary.

 

/s/ Thomas O. Davis

     1/25/2002 T. Olin Davis      Date

 

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