Exhibit 10.06

                           1998 SPLIT-DOLLAR AGREEMENT

                                ERNEST J. SEWELL


      THIS  Agreement  made  is  effective  ___________________,  _____,  by and
between FNB Southeast or its successor  (herein called the  "Company"),  a North
Carolina  corporation having its principal office in Reidsville,  North Carolina
(hereinafter  called the "Company") and Ernest J. Sewell (hereinafter called the
"Employee");

                                 R E C I T A L S

      The Employee is a valued employee of the Company,  and the Company desires
to retain him in its employ. As an inducement to such continued employment,  the
Company wishes to assist the Employee with his personal life insurance  program.
The Company has  initiated  a program to purchase a policy of  insurance  on the
lives of certain  key  employees.  The  Employee  wishes to  participate  in the
program provided by the Company as described herein.

      NOW, THEREFORE, the parties hereto agree as follows:

Section 1 - Policy of Insurance
---------

      The life  insurance  policy  subject to this  Agreement  is Policy  Number
[____] (hereinafter  referred to as "the Policy") issued by the General American
Life  Insurance  Company  (hereinafter  called the "Insurer") on the life of the
Employee in the fact amount of $200,000.

Section 2 - Ownership of Insurance
---------

      The Employee  shall be the owner of the Policy,  but as a condition of the
Agreement  agrees to make a "Collateral  Assignment" to the Company in an amount
equal to the sum of the  cumulative  annual  premiums  paid by the Company.  The
Employee may exercise all rights of ownership with respect to the Policy, except
as otherwise hereinafter provided. It is the express intention of the parties to
reserve to the Employee certain rights in and to the Policy granted to it by the
terms of the  Policy,  but  excluding  the right to  designate  and  change  the
beneficiary  of that  portion of the  proceeds  to which the Company is entitled
under Section 5 hereunder.


Section 3 - Payment of Premiums on Policy and Annual Policy Dividends
---------

      All premiums on the Policy  shall be paid by the Company each year,  until
the fifteenth (15th) Policy anniversary date unless this Agreement is terminated
as provided in Section 6 below.  The Company shall pay each annual premium on or
before the premium  date,  or within the grace period  allowed by the Policy for
the payment of the premium.  Any annual  dividend  paid by the Insurer under the
Policy shall be used to purchase paid-up annual  additions,  which shall be used
to increase the face amount of the Policy.

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<PAGE>

Section 4 - Loan and Surrender of Policy
---------

      The Employee  shall have the right at his discretion to borrow on the cash
value,  subject to the  Collateral  Assignment  in Section 2. In  addition,  the
Employee may  surrender the Policy and receive the entire cash  surrender  value
thereof, subject to the Collateral Assignment in Section 2.

Section 5 - Death Claims
---------

      (a)  Company's  Proceeds:  When the Employee  dies,  the Company  shall be
           -------------------
entitled to receive from the Insurer that amount from the death benefit provided
under the  Policy  which is equal to the sum of the total  premiums  paid by the
Company,  reduced by any Policy  indebtedness  under the  Collateral  Assignment
(policy loan) of the Company to the Insurer under;

      (b)  Employee's  Proceeds:  When the Employee  dies,  the  beneficiary  or
           --------------------
beneficiaries  named by the Employee shall be entitled to receive the balance of
the death benefit  provided  under the Policy in excess of the amount payable to
the  Company  under  Section  5(a) above.  This  amount  shall be paid under the
settlement option elected by the Employee or the Employee's beneficiary.  If the
Employee  has not  named  a  beneficiary  by the  time  of his  death,  or is no
beneficiary  named by the Employee shall be living at the death of the Employee,
the beneficiary shall be the Employee's Estate.

Section 6 - Termination of Agreement Prior to Death of Employee
---------

      This  Agreement  and Policy may not be  terminated  by the Company (or its
successor entity) prior to the death of the Employee, except in the event of (i)
bankruptcy of the Company, (ii) the mutual written agreement between the parties
(iii) the voluntary  termination  of  employment  by the  Employee,  or (iv) the
Employee is terminated  "for cause."  Retirement of Employee shall not terminate
this  Agreement or Policy,  but this Agreement and Policy shall remain in effect
until the death of the Employee.

Section 7 - Disposition of Policy on Termination of Agreement

         If the Agreement is terminated under the provisions of Section 6, the
Employee shall have sixty (60) days in which to pay to the Company the amount
which the Company would be entitled to receive, said amount being the lesser of
(i) the cash surrender value of the policy, or (ii) the cumulative premiums paid
by the Employer under Section 5 (if the Employee's death had occurred at that
time). Upon receipt of this amount, the Company shall cancel any Collateral
Assignment made to it as a security interest in the Policy. If the Employee does
not pay such amount to the Company within sixty (60) days, the Company may
enforce any security interest it has through the Collateral Assignment, which it
has under the policy.

Section 8 - Insurance Company Not a Party
---------


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<PAGE>

      The Insurer  shall not be deemed to be a party to this  Agreement  for any
purpose  and is not in any  way  responsible  for  its  validity;  shall  not be
obligated to inquire as to the  distribution of any monies payable or paid by it
under the Policy on the  Employee's  life acquired  pursuant to the terms of the
Agreement;  and shall be fully  discharged  from any and all liability under the
terms of any  Policy  issued  by it upon  payment  or other  performance  of its
obligations in accordance with the terms of such Policy.


ection 9 - Amendment of Agreement
---------

      This  Agreement  shall not be modified or amended except by mutual written
agreement as signed by the Company (or its  successor)  and the  Employee.  This
Agreement shall be binding upon the heirs,  administrators or executors, and the
successors and assigns of each party to this Agreement.

Section 10 - Merger, Acquisition or Change in Control
----------

      In the event that the Company is acquired by,  merged  with,  or otherwise
has a "change  in  control"  (change  of 25% or more in its  outstanding  voting
shares of common  stock),  the  successor  entity shall be obligated to continue
this Agreement,  unless otherwise mutually agreed in writing by the Employee and
the successor entity.

Section 11 - Applicable Law
----------

      The Agreement shall be subject to and shall be construed under the laws of
the State of North Carolina.


      IN WITNESS  WHEREOF,  the parties hereto have executed the Agreement as of
this ___ day of ______________, ____.


ATTEST:                                     FNB SOUTHEAST


/s/ Richard Powell                          By: /s/ Ernest J. Sewell
------------------                              --------------------
Asst. Secretary                                 President/CEO
[Corporate Seal]


                                            EMPLOYEE

                                            By: /s/ Ernest J. Sewell
                                                --------------------
                                                Ernest J. Sewell


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