INDEPENDENT CONTRACTOR CONSULTING AGREEMENT

 

Exhibit No. 10.21

 

                             INDEPENDENT CONTRACTOR

                              CONSULTING AGREEMENT

 

      WHEREAS,  Ernest J. Sewell ("Sewell"),  FNB Financial Services Corporation

("FNB"),  and FNB  Southeast  ("Bank") are parties to the  Employment  Agreement

between  Sewell  and,  as the joint  employer,  FNB and the Bank  (jointly,  the

"Company"),  dated May 18,  1995 and  amended  on May 18,  2002,  amended  as of

January 1, 2004,  amended on May 19,  2004,  and amended as of October 20, 2005;

and

 

      WHEREAS,  Sewell  desires to retire from  employment  by the Company as of

January 31, 2006; and

 

      WHEREAS,  the Company  desires to continue to have the benefit of Sewell's

experience  and  expertise  in  the   maintenance  and  development  of  banking

relationships after his retirement; and

 

      WHEREAS,  Sewell  desires to advise the  Company  in the  maintenance  and

development of banking relationships; and

 

      WHEREAS,  Sewell  and the  Company  desire  to set  forth  the  terms  and

conditions of Sewell's engagement as an independent contractor consultant to the

Company.

 

      NOW, THEREFORE, the parties agree as follows:

 

      Section 1.  Services.  Sewell shall be engaged by the Company for the Term

(as defined in Section 2 below) as an independent contractor to consult with and

advise  the Bank  concerning  the  maintenance  of the Bank's  current,  and the

development  of  additional,  banking  relationships  within  the State of North

Carolina,  including in particular, but not by way of limitation, in New Hanover

County,  North Carolina and adjacent  geographical  areas. Sewell shall dedicate

such of his time as is  reasonable  and  necessary  to provide  such  consulting

services.  He shall be the Senior  Advisor of the Company and shall consult with

the Executive Committee of the Board of Directors concerning his activities.

 

      Section 2. Term.  The term of  Sewell's  engagement  under this  Agreement

shall  commence  on  February  1, 2006 and expire on January  31,  2011,  unless

earlier  terminated  as  provided  herein (the  "Term").  Sewell and the Company

acknowledge  that  they have  separately  agreed  that  Sewell  shall  remain an

employee of the Company through January 31, 2006 with all the rights and subject

to all of the conditions set forth in his Employment Agreement, as amended.

 

      Section 3. Compensation. Beginning February 1, 2006 and continuing through

the  remainder  of the  Term,  Sewell  shall  receive  from the  Bank a  monthly

consulting fee of $5,000, payable $2,500 on each of the 15th day and 30th day of

each calendar month.

 

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      Section 4. Expense  Reimbursement.  Sewell shall be entitled to payment of

all reasonable  out-of-pocket  expenses incurred by him in providing  consulting

services under this Agreement upon  presentation by him of itemized  accounts of

such expenses and appropriate documentation therefore.

 

      Section 5. Stock Option Grant. Sewell and the Company acknowledge that the

Board of Directors of FNB and the "Committee" administering FNB's Omnibus Equity

Compensation   Plan   ("Option   Plan")  have   determined  to  award  Sewell  a

non-qualified  option to acquire  50,000 shares of FNB's common stock on October

31, 2005,  such option  having an exercise  price equal to the closing  price of

FNB's  common  stock on The Nasdaq  Stock  Market,  Inc. on the last trading day

prior to October 31, 2005 (the "Option").  The Committee has determined that the

Option shall vest and become exercisable on January 31, 2011, except as follows:

 

      a.    The Option shall terminate and be of no further force or effect upon

            the termination of Sewell's engagement under this Agreement prior to

            the expiration of the Term (i) by Sewell voluntarily, (ii) by reason

            of Sewell's  Disability (as defined in Section 6 below), or (iii) by

            the Company for Cause (as defined in Section 6 below);

 

      b.    The Option shall be immediately  vested and be exercisable by Sewell

            upon the  occurrence of an  "Acceleration  Event," as defined in the

            Option Plan, and as provided in the Option Plan; and

 

      c.    Upon the death of Sewell  during the Term,  one-fifth  of the Option

            (i.e. 10,000 shares) shall be deemed vested and exercisable for each

            twelve (12) month  period from  February  1st through  January  31st

            occurring during the Term and prior to Sewell's death.

 

The  Committee has  additionally  determined  that the period of time  following

Sewell's  "Retirement"  (as defined in the Option  Plan) within which the Option

may be exercised by Sewell shall be the period  ending on the first  anniversary

of the date the Option first becomes vested and exercisable. The award agreement

with respect to the Option shall set forth the above provisions.

 

      Section 6. Termination.

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      a.    In the event of the death or Disability (as defined below) of Sewell

            during the Term,  Sewell's  engagement  under this  Agreement  shall

            terminate  immediately.  "Disability"  shall mean the inability,  by

            reason  of bodily  injury or  physical  or  mental  disease,  or any

            combination  thereof,  of Sewell to provide the consulting  services

            specified  under  this  Agreement  for a  period  of  more  than  90

            consecutive days. In the event the parties are unable to agree as to

            whether  Sewell is  suffering a  Disability,  Sewell and the Company

            shall each select a physician and the two physicians so chosen shall

            make the  determination  or, if they are unable to agree, they shall

            select a third physician, and the determination as to whether Sewell

            is