CONSULTING AGREEMENT
 
THIS CONSULTING AGREEMENT (this “Agreement”), dated as of December 4, 2006, is
by and between First Bancorp (the “Company”) and James H. Garner (“Consultant”).
 
Background Statement
 
Consultant has skills, knowledge and expertise in the banking industry that will
benefit the Company. The Company desires to engage Consultant to perform certain
services, and Consultant agrees to provide such services according to the terms
and conditions set forth hereafter.
 
Statement of Agreement
 
Now, therefore, in consideration of the mutual covenants and benefits flowing
between the parties, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
 
1. Term. The Company hereby contracts with Consultant for a term of one (1) year
commencing on January 1, 2007, unless terminated sooner pursuant to the
provisions of Section 8 hereof.
 
2. Responsibilities of Consultant. Consultant shall perform such consulting
services as requested from time to time by the Company’s Chief Executive
Officer, including assistance with public relations and employee relations
activities. Although the Company has the right to specify the objectives,
general nature and parameters of Consultant’s work, Consultant is, and at all
times shall be solely responsible for the control and direction of his services
for the Company. Consultant agrees to conduct himself in manner consistent with
the best interests of the Company, and to perform his obligations hereunder in a
good and workmanlike manner, utilizing his best efforts. Consultant shall also
serve as Director Emeritus to the Company’s board of directors (the “Board”);
provided that this designation shall not entitle Consultant to any voting rights
on matters brought before the Board. Consultant shall have observation rights
for meetings of the Board only to the extent provided from time to time by the
Board.
 
3. Noncompetition.
 
(a) In the course of performing services under this Agreement, Consultant will
be provided with and have access to trade secrets of the Company, including,
without limitation, knowledge and information of customer lists and other
confidential information related to the business operations of the Company.
Consultant acknowledges that such information is highly confidential. Consultant
agrees that he will not use, divulge, publish or otherwise reveal, either
directly or indirectly, to any person, firm or organization, during and after
the term of this Agreement, any such knowledge or information and shall retain
such knowledge and information for the sole benefit of the Company and its
affiliates and successors and assigns.
(b) Based on Consultant’s acknowledgement of the confidential nature and unique
value to the Company of the knowledge and information referred to above, and for
the valuable
 
 

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consideration provided herein, Consultant agrees that during the term of this
Agreement and for a period of two (2) years (not including any period(s) of
violation or period(s) of time required for litigation to enforce the covenants
herein) after any expiration or termination of this Agreement, Consultant will
not, without the prior written consent of the Board, (i) either as a principal,
agent, manager, employee, owner (if the percentage of ownership exceeds two
percent (2%) of the net worth of the business), partner (whether general or
limited), director, officer, consultant or in any other capacity participate in
any business that competes with the Company or its subsidiaries within fifty
(50) miles of any North Carolina office of the Company or its subsidiaries (the
“Territory”), such determination of the geographic scope of this covenant to be
made as of the date of this Agreement, or (ii) solicit business in competition
with the Company or its subsidiaries, from any customer with whom Consultant had
any substantial or nonincidental contact or communications during the two years
prior to termination of this Agreement; provided, however, that for the period
following expiration or termination of this Agreement, Consultant may be
employed or associated with a business in competition with the Company to the
extent that such employment or association does not involve Consultant (i)
working in a capacity related to the work he did for the Company; or (ii)
utilizing any contacts or knowledge of trade and business secrets or other
confidential data of the Company. Consultant acknowledges that the restrictive
covenants contained in this Section are fair and reasonable. The parties intend
the restrictions on competition contained in this paragraph 3 to be completely
severable and independent, and any invalidity or unenforceability of any one or
more such restrictions or requirements shall not render invalid or unenforceable
any one or more of the other restrictions or requirements. The Company shall
have the right to limit, unilaterally, the scope of any provision of this
paragraph 3 to ensure the enforceability of Consultant’s agreement not to
compete with the Company.
 
4. Compensation. In consideration of the services to be performed by Consultant
hereunder, the Company shall pay to Consultant in cash an annual fee equal to
the sum of $100,000, payable in arrears in equal monthly installments beginning
on January 31, 2007.
 
5. Benefits. Consultant shall be entitled, during the term of this Agreement and
subject to the Company’s policies, to prompt reimbursement of out-of-pocket
expenses of Consultant in connection with his performance of the consulting
services described herein. In addition, the Company will, during the term of
this Agreement, provide the following benefits to Consultant: (i) office space
at the Company’s headquarters; (ii) administrative support at the Company’s
headquarters; and (iii) expenses related to representation of the Company at
state and national banking conventions (to the extent representation is
requested by the Company). Except as specifically provided herein or in separate
agreements or benefit plans, Consultant shall not be entitled to any fringe
benefits from the Company, including, without limitation, retirement, life,
disability and health insurance, and coverage under workers’ compensation and
unemployment compensation laws.
 
6. Compliance with Laws. Consultant acknowledges that the Company will not be
withholding any federal, state, local or social security taxes and that
Consultant is solely responsible for the payment of all such taxes. Consultant,
as an independent contractor of the Company, agrees to abide by, and comply
with, all federal, state and local laws insofar as they relate to the filing of
all necessary forms and the payments of all amounts relating to any and all
withholding amounts and taxes, including but not limited to, income taxes,
workers’

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compensation, social security taxes, and/or unemployment compensation. If this
independent contractor relationship is determined by tax or other legal
authorities to constitute an employment relationship, (a) Consultant hereby
waives, for the period prior to the date such determination becomes final, any
and all claims to coverage under Company pension, profit-sharing, health,
dental, welfare, or similar type plans that are generally provided to Company
employees, unless otherwise agreed by the Company in writing; and (b) Consultant
agrees to indemnify and hold harmless the Company and its affiliates and their
respective employees, officers, managers, employees, directors, equity holders
and agents from any attorney’s fees, costs, claims, suits, judgments, taxes,
assessments, penalties, interest and related liabilities arising therefrom.
Consultant agrees to indemnify, defend and hold harmless the Company and its
affiliates and their respective employees, officers, managers, directors,
shareholders and agents from and against any and all other liabilities, claims,
costs, damages, expenses, losses, and attorney’s fees resulting from, or
attributable to, any act or omission of Consultant related to the performance of
Consultant’s obligations under this Agreement or from any breach of Consultant’s
obligations under this Agreement. All indemnification obligations set forth in
this Section shall survive any termination of this Agreement.
 
7. Independent Contractor Status/Further Assurance. The parties hereto expressly
intend that Consultant be an independent contractor of the Company and not an
employee, partner, joint venturer, or agent. Consultant shall have no authority
in the affairs of the Company, nor any authority to bind the Company to any form
of contract or commitment, whether or not in writing. Consultant, upon request
of the Company or its legal or tax counsel, agrees to sign all documents,
provide any and all assistance and documentation requested (including but not
limited to Form 1099, and federal tax returns) that may be of assistance to the
Company or said counsel to dispute or explain any finding or inquiry regarding
the nature of this independent contractor relationship. Consultant further
appoints the Company, or its legal or tax counsel, as its attorney in fact for
those purposes, and authorizes the Company or its qualified agent to sign and
submit IRS Form 2848 or similar forms for those purposes.
 
8. Termination. This Agreement shall terminate: (i) upon the death of
Consultant; (ii) upon the Disability (as defined below) of Consultant; or
(iii) for cause (as defined below), immediately upon notice from the Company to
Consultant, or at such later time as the notice may specify. For purposes of
this Agreement, “Disability” means the inability of Consultant, for physical or
mental reasons, to perform Consultant’s duties under this Agreement for
60 consecutive days, or an aggregate of 120 days during any 12-month period, as
determined by a medical doctor selected by the Company. For purposes of this
Agreement, “Cause” means any of the following as determined in the good faith
judgment of the Chief Executive Officer of the Company: (i) the failure of
Consultant satisfactorily to perform his duties hereunder, (ii) the commission
of a felony or other crime involving dishonesty by Consultant or (iii) any
breach by Consultant of any material provision of this Agreement. In the event
of a termination of this Agreement, Consultant shall be entitled only to payment
for services rendered through the date of termination, and all benefits provided
hereunder shall cease as of the date of termination.
 
9. Governing Law. This Agreement shall be construed and governed in accordance
with the substantive laws of the State of North Carolina without regard to the
effect of choice-of-law principles.
 

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10. Assignment. Consultant may not assign this Agreement, or delegate or
transfer any responsibilities hereunder, to another party without the prior
written consent of the Company. The Company may assign this Agreement to any of
its affiliates or subsidiaries without the prior consent of Consultant.
 
11. Notices. All notices hereunder shall be by facsimile and delivery by regular
mail or overnight courier, addressed as follows:
 

 
To Company:
 
First Bancorp
     
341 North Main Street
     
Troy, North Carolina 27371
     
Attn: Chief Executive Officer
     
Facsimile: (910) 576-1070
 
To Consultant:
 
James H. Garner
     
116 Garner Britt Drive
     
Robbins, North Carolina 27325
     
Facsimile: (910) 464-6214

Any party may change its address for notice by giving notice thereof to the
other party in accordance with this Section.
 
12. Entire Agreement. This Agreement represents the entire agreement between the
parties concerning the subject matter hereof. No addition, alteration or
modification hereto and no waiver of any of the provisions hereof shall be valid
unless made in writing and executed by both parties. The invalidity or
unenforceability of a particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

COMPANY:
CONSULTANT:
   
FIRST BANCORP
     
By: /s/ Anna G. Hollers
/s/ James H. Garner
Name: Anna G. Hollers
James H. Garner
Title: Corporate Secretary
 

 
 
 
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