FIRST BANCORP /NC/
<DOCUMENT>
<TYPE>EX-10.P
<SEQUENCE>7
<FILENAME>ex10p.txt
<TEXT>

                                                                    Exhibit 10.p
                                                                   Pages 147-153


                              EMPLOYMENT AGREEMENT

    THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated and effective this 17th
day of May, 2001, is by and between FIRST BANCORP, a North Carolina corporation
(the "Company") and James G. Hudson, Jr. (the "Employee"). References to the
"Company" herein shall be deemed to refer to the Company and its subsidiaries
taken as a whole, unless the context requires or this Agreement provides
otherwise.

    The Company desires to employ the Employee, and the Employee desires to be
employed by the Company, on the terms and subject to the conditions hereinafter
set forth. Accordingly, in consideration of employment, the compensation the
Company agrees to pay the Employee, the mutual covenants contained herein, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties mutually agree as follows:

    1. Employment and Term. Commencing on the date hereof, the Company (or one
of its subsidiaries) will employ the Employee, and the Employee will be employed
by the Company as an Executive Vice President for a term of three (3) years,
unless sooner terminated as hereinafter provided. The term of this Agreement
shall automatically be extended for an additional period of one (1) year on each
anniversary of the date of this Agreement unless either party gives the other
party written notice on or prior to such anniversary date that such extension
will not occur.

    2. Duties. The Employee shall at all times faithfully and diligently perform
the Employee's obligations under this Agreement and shall act in the best
interests of the Company and its affiliated companies. The Employee's duties
hereunder shall be to act in such office or capacity as the Company may direct
or change from time to time, and the Employee shall perform all duties necessary
or advisable in order to carry out such functions of such office in an efficient
manner. The Employee shall, during the term of the Employee's employment
hereunder, devote the Employee's full time, best efforts and ability, skill, and
attention exclusively to the furtherance of the business objectives and
interests of the Company and its affiliated companies during such hours and in
such a manner as is generally customary for the employees of the Employee's
position in businesses of the Company's type.

    3.  Compensation.

        (a)Salary. As compensation for the services and agreements described
herein, the Company shall pay the Employee an annual base salary of not less
than $135,000 plus an amount equal to the first year's increase in the
Employee's personal cost of health insurance at the Company as compared to such
cost with the Employee's employer immediately prior to the date of this
Agreement, payable in accordance with the customary payroll practices of the
Company. The Employee's salary shall be subject to increase upon annual reviews
of the Employee's performance. The Employee will receive an annual increase that
is at least as much as any percentage increase in the U.S. Consumer Price Index
during the twelve (12) months preceding the date of the Employee's annual
review. Any such increase will be considered in determining the Employee's base
salary for all purposes hereunder. The Employee shall also be eligible for
bonuses, to be awarded from time to time in accordance with policies and
procedures established by the Company and applicable to its officers having
positions similar to that of the Employee. During the time the Employee serves
as a director of the Company or any of its subsidiaries, the Employee shall be
paid the director fees payable to non-employee directors of the Company.

        (b)Reimbursement of Expenses. The Company shall pay or reimburse the
Employee for all reasonable and necessary travel and other expenses incurred by
the Employee in performing the Employee's obligations under this Agreement;
provided that the Employee shall present to the Company from time to time an
itemized account of such expenses in any form required by the Company. The

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Company further agrees to furnish the Employee with such other assistance and
accommodations as shall be suitable to the character of the Employee's position
with the Company and adequate for the performance of the Employee's duties
hereunder.

        (c)Fringe Benefits. The Employee shall be entitled to such insurance,
pension, profit-sharing and other benefit plans as are or may be available
generally to the employees of the Company to the extent permitted by applicable
laws or government regulations. The Employee will also be eligible for
participation in the Company's Supplemental Executive Retirement Plan or, at his
option, the Company or a subsidiary thereof will assume the obligations of Home
Savings, Inc. SSB relating to the Employee under its two existing Supplemental
Income Plans and the Company's Split Dollar Insurance Plan and Stock Option
Plan. The Employee will receive an initial grant of 10,000 options under the
Company's Stock Option Plan on the date hereof.

        (d)Leave. The Employee shall be entitled to reasonable time off for
vacation, sick leave, bereavement leave, jury duty and military obligations as
are or may become available to the employees of the Company in positions similar
to those of the Employee, as provided by the Company's policies as they may be
in effect from time to time.

        (e) Automobile. On the date hereof, the Company will transfer to
Employee title to the automobile previously being provided to Employee by his
employer that is being merged with the Company or its affiliates.


        4. Termination. In addition to the termination of the term (or any
renewal thereof) specified in Section 1 hereunder, employment may be terminated
under any of the following provisions:

        (a)The employment of the Employee under this Agreement may be terminated
immediately by the Company if the Company finds that the Employee shall have (i)
demonstrated gross negligence or willful misconduct in the execution of the
Employee's duties, (ii) committed an act of dishonesty or moral turpitude, (iii)
been convicted of a felony or other serious crime or (iv) violated the
provisions of Section 5(c) or Section 5(d) hereof. All future compensation and
benefits, not then accrued, will automatically terminate if the Employee is
terminated under this subsection (a).

        (b)The employment of the Employee under this Agreement shall be
automatically terminated on the date of the Employee's death.

        (c)Company may terminate the Employee's employment hereunder for any
reason other than as provided in subsections (a) and (b), but in such case
Company shall be obligated to pay the Employee's base salary to the Employee for
the remainder of the term specified in Section 1 hereof (the "Remaining Term").

        (d)Employment hereunder may be terminated voluntarily by the Employee on
forty-five (45) days' written notice to the Company's Chief Executive Officer or
Chairman of the Company's Board of Directors, in which case the Employee will
receive his compensation, vested rights and the employee benefits accrued
through the date of termination of employment.

        5. Other Obligations. All payments and benefits to the Employee under
this Agreement shall be subject to the Employee's compliance with the following
provisions:

        (a)Assistance in Litigation. During the term of this Agreement and for
three (3) full years after the expiration or termination hereof, the Employee
shall, upon reasonable notice, furnish such information and proper assistance to
the Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party. In connection with such assistance, if substantial effort or
expense is required of the Employee after the termination of the Employee's
employment hereunder, the Company will pay reasonable compensation to the

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Employee and will reimburse him for reasonable out-of-pocket expenses.

        (b)Long-Term Disability. If the Employee has become disabled as
determined under the Company's long-term disability plan or policy then in
effect and is terminated from active employment, any remaining benefits of this
contract shall be reduced by any benefits received by the Employee under the
Company's long-term disability plan or policy. Additionally, if such a
circumstance occurs, the Employee is under an affirmative duty to actively seek
and accept reasonable alternative employment following termination. Any
compensation received by the Employee following such termination or compensation
earnable with reasonable diligence will be deducted from any future compensation
due the Employee under this Agreement. In the event the Employee fails to seek
reasonable alternative employment after such termination, the Company's
obligation to pay future compensation shall cease.

        (c)Confidential Information. The Employee acknowledges that in the
course of the Employee's employment, he will acquire knowledge of trade and
business secrets and other confidential data of the Company, its subsidiaries
and any affiliated companies. Such trade and business secrets and other
confidential data may include, but are not limited to, confidential product
information, methods by which the Company proposes to compete with its business
competitors, strategic plans, confidential reports prepared by business
consultant(s) and similar information relating to the Company's, its
subsidiaries' or its affiliated companies' products, customers, and operations.
The Employee recognizes that the possible restrictions on the Employee's
activities are required for the reasonable protection of the Company. The
Employee covenants not to knowingly disclose or reveal to any unauthorized
person such confidential business secrets or other confidential data both during
the term of this Agreement and for a period of two (2) years following
termination of this Agreement. Upon expiration or termination of the Employee's
employment by the Company, the Employee agrees to return to the Company all
documents (both originals and copies), including without limitation, customer
lists, books and records, form agreements, manuals, and other information (in
whatever form such information may exist, whether written, recorded, in magnetic
media, or other form) that comes into the Employee's possession during, by
virtue of and in the course of the Employee's employment and which are in any
way connected with or related to the Company's business.

        (d)Noncompetition Covenants and Other Covenants For Protection of the
Company. During the term of the Employee's employment hereunder and during the
period following the termination of such employment specified below as the
"Restricted Period," the Employee separately covenants for the benefit of the
Company as follows:

                  (i) The Employee shall not, directly or indirectly, promote,
         be employed by, participate or engage in any activity or business that
         is in competition with the business of the Company, or any of its
         subsidiaries and affiliated companies, including acting, either singly
         or jointly or as agent for, or as an employee of, any person or
         persons, firm or corporation whether directly or indirectly (as a
         director, shareholder or investor, partner, lessor, lessee, proprietor,
         principal agent, independent contractor, representative, consultant or
         otherwise), in the "Restricted Territory" (as defined below). Ownership
         by the Employee of 5% or less of the outstanding capital stock of any
         corporation that is actively publicly traded will not be a violation of
         this covenant;

                  (ii) The Employee covenants that the Employee will not employ
         or assist others by active solicitation to recruit and employ the
         employees of the Company or any of the Company's subsidiaries or
         affiliate companies; and

                  (iii) The Employee agrees that the Employee will not, directly
         or indirectly, on behalf of himself or any third party, make any sales
         contacts with, or actively solicit business from any customer of the
         Company or its subsidiaries or affiliate companies, for any products or

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         services competitive with those offered by the Company or its
         subsidiaries or affiliated companies within the "Restricted Territory"
         (as defined below).

    The "Restricted Period" following termination of employment during which the
Employee will observe the covenants contained in this Section 5(d) shall be (A)
one year following termination of employment under Section 4(a) hereof or if the
Employee voluntarily terminates his employment hereunder and (B) for the
Remaining Term (as defined in Section 4(c) hereof) if employment is terminated
pursuant to Section 4(c) hereof.

    "Restricted Territory" is defined as the area located within the 50-mile
radius of Thomasville, North Carolina.

    Notwithstanding the foregoing, the aforesaid limitations on the Employee
contained in this Section 5(d) shall be null and void if the Employee's
employment hereunder is terminated within one year following a Change in Control
(as defined in Section 8 hereof).

        (e)It is further understood and agreed that the Company's right to
require the Employee to keep confidential information secret or not to compete
against the Company for the agreed upon period shall not be in lieu of the
Company's right to monetary damages in the event the Employee is in breach of
any obligation contained in this Agreement, and that in the event of any breach
or threatened breach of any of these covenants, the Company may either, with or
without pursuing any action for damages, obtain and enforce an injunction
prohibiting the Employee from violating said covenants.

        (f)The parties hereby agree that all of the above obligations in this
Section 5 are reasonable in nature and are designed to reasonably protect the
Company's interests.

    6. Source of Payment. Subject to the terms of any the employee benefit plan
established by the Company and except as otherwise provided by law, all payments
provided under this Agreement shall be paid in cash from the general funds of
the Company, and no special or separate fund shall be established, and no other
segregation of assets shall be made to assure payment. The Employee shall have
no right, title or interest whatsoever in or to any investments which the
Company may make to aid the Company in meeting its obligations hereunder.
Nothing contained in this Agreement, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind for the
benefit of the Employee. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater than
the right of an unsecured creditor of the Company.

    7. Payments by Company. If the Company shall find that any person to whom
any amount is or was payable hereunder is unable to care for the Employee's
affairs because of illness or accident, or is a minor, or has died, then the
Company, if it so elects, may direct that any payment due him or the Employee's
estate (unless a prior claim therefor has been made by a duly appointed legal
representative) or any part thereof be paid or applied for the benefit of such
person or to or for the benefit of such person's spouse, children or other
dependents, an institution maintaining or having custody of such person, any
other person deemed by the Company to be a proper recipient on behalf of such
person otherwise entitled to payment, or any of them in such manner and
proportion as the Company may deem proper. Any such payment shall be in complete
discharge of the liability of the Company therefor.

    8.  Change in Control.

        (a) If a "Change in Control" occurs while the Employee is employed by
the Company, and the Employee's employment is terminated by the Company or the
Employee, for any reason or no reason, other than a termination pursuant to
Section 4(a) by the Company herein, within twelve (12) months after the Change
in Control, the Company shall pay the Severance Payment provided in Section 8(b)
to the Employee within ten (10) days of the Employee's date of termination of
employment, provide benefits pursuant to Section 8(c) and cause the acceleration
of vesting of benefits described in Section 8(d) to occur. Notwithstanding the

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foregoing, the Employee's termination of employment shall not be deemed due to a
Change in Control if such termination is due to the Employee's death pursuant to
Section 4(b), the Employee's disability pursuant to Section 5(b), the Employee's
retirement in accordance with the Company's retirement policy, or pursuant to
Section 4(a).

                  In the event of successive Changes of Control, the provisions
of this Agreement shall apply with respect to each Change of Control.

        (b) The Employee's severance payment shall be an amount equal to the
lesser of (i) 2.9 times the amount of the Employee's base salary in effect on
the date of the Change in Control and (ii) the product ------ of 2.99 and the
"base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended, and applicable rules and regulations thereunder (the
"Severance Payment").

        (c) The Company shall provide to the Employee and the Employee's spouse
or other qualified dependents, at a cost to the Employee no greater than the
cost of such benefits to the Employee at the time of the Change in Control, such
hospitalization, health, medical and dental insurance benefits as were available
to the Employee (and the Employee's spouse or qualified dependents) immediately
prior to the Change in Control until the earlier to occur of (i) two years
following the date of the Change in Control or (ii) the Employee accepting
employment pursuant to which he is eligible for comparable health insurance
benefits.

        (d) Any non-vested option to purchase securities of the Company will
vest and become immediately exercisable upon a Change in Control.

        (e) "Control" means the power, directly or indirectly, to direct the
management or policies of the Company or to vote forty percent (40%) or more of
any class of voting securities of the Company. "Change in Control" shall mean a
change in Control of the Company, except that any merger, consolidation or
corporate reorganization in which the owners of the capital stock entitled to
vote ("Voting Stock") in the election of directors of the Company prior to said
combination own sixty-one percent (61%) or more of the resulting entity's Voting
Stock shall not be considered a change in control for the purpose of this
Agreement; provided, that, without limitation, a Change in Control shall be
deemed to have occurred if (i) any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company, is or becomes the beneficial owner (as that term is used in Section
13(d) of the Securities Exchange Act of 1934), directly or indirectly, of
thirty-three percent (33%) or more of the Voting Stock of the Company or its
successors; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the Company
or its successors (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof; provided, that any person who becomes a director of
the Company after the beginning of such period whose election was approved by a
vote of at least three-quarters of the directors comprising the Incumbent Board
shall be considered a member of the Incumbent Board; or (iii) there occurs the
sale of all or substantially all of the assets of the Company. Notwithstanding
the foregoing, no Change in Control shall be deemed to occur by virtue of any
transaction which results in the Employee, or a group of persons including the
Employee, acquiring, directly or indirectly, thirty-three percent (33%) or more
of the combined voting power of the Company's outstanding securities. For
purposes of this subsection (e), references to the "Company" shall be deemed to
refer to First Bancorp only, and not to its subsidiaries.

    9.  Modification and Waiver.

        (a)Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.

        (b)Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall

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operate only as to the specific term and condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.

    10. Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.

    11.  General Provisions.

        (a)Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, the Employee's beneficiaries, or
legal representatives without the Company's prior written consent; provided,
that nothing in this paragraph shall preclude the executors, administrators, or
other legal representative of the Employee or the Employee's estate from
assigning any rights hereunder to the person or persons entitled thereto. The
Company may assign this Agreement to any wholly owned subsidiary of the Company.

        (b)No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge of hypothecation or to
execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.

        (c)Binding Effect. This Agreement shall be binding upon, and inure to
the benefit of, the Employee and the Company and their respective successors and
assigns.

        (d)Headings. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.

        (e)Notice. For purposes of this Agreement, written notice shall be
effective if personally delivered or if sent by certified mail, return receipt
requested, to the following addresses or to such other addresses as either may
designate in writing to the other party:

           Employee:  James G. Hudson, Jr.
                      -------------------

           Company:   341 North Main Street
                  Post Office Box 508
                  Troy, North Carolina  27371
                  Attention:  Chief Executive Officer


For purpose of computing time, all time requirements under this Agreement will
start on the date mailed or if personally delivered, when delivered.

        12. Governing Law. This Agreement has been executed and delivered in the
State of North Carolina, and its validity, interpretation, performance and
enforcement shall be governed by the laws of such State.

    13. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties with reference to the employment of the
Employee, and supersedes any prior employment agreement, understanding or
arrangement between the Employee and the Company, its subsidiaries or
affiliates.


                       [Signatures contained on next page]

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<PAGE>


    IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above stated.

                                          FIRST BANCORP


                                          By:        /s/ James H. Garner
                                                     -------------------
                                          Name:      James H. Garner
                                          Title:     President and CEO


                                          EMPLOYEE


                                                     /s/ James G. Hudson, Jr.
                                                     ------------------------
                                                     James G. Hudson, Jr.



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