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                                                                   Exhibit 10(i)

                             UNITED FINANCIAL, INC.
                        1999 INCENTIVE STOCK OPTION PLAN

     United Financial, Inc., a North Carolina corporation (hereinafter referred
to as the "Corporation"), does herein set forth the terms of the United
Financial, Inc. 1999 Incentive Stock Option Plan (hereinafter referred to as
this "Plan") which was adopted by the Corporation's Board of Directors
(hereinafter referred to as the "Board").

     1. Purpose of the Plan. The purpose of this Plan is to provide for the
grant of Incentive Stock Options (hereinafter referred to as "Option" or
"Options") qualifying for the tax treatment afforded by Section 422 of the
Internal Revenue Code of 1986, as amended, to eligible officers and employees of
the Corporation and its subsidiaries (hereinafter referred to as "Eligible
Employees") who wish to invest in the Corporation's common stock (hereinafter
referred to as "Common Stock"). The Corporation believes that participation in
the ownership of the Corporation by Eligible Employees will be to the mutual
benefit of the Corporation and Eligible Employees. The existence of this Plan
will enhance the Corporation's ability to attract capable individuals to
employment in key employee positions.

     2. Administration of the Plan.

        (a) This Plan shall be administered by the Compensation Committee of
the Board (hereinafter referred to as the "Committee"). The Committee shall
consist of three (3) members of the Board all of whom shall qualify as
disinterested persons as provided in Section 16(b) and the rules and regulations
thereunder of the Securities Exchange Act of 1934, as amended. The members of
the Committee shall be appointed by the Board and shall serve at the pleasure of
the Board, which may remove members from, add members to, or fill vacancies in
the Committee.

        (b) The Committee shall decide to whom Options shall be granted under
this Plan, the number of shares as to which Options shall be granted subject to
the limitations set forth in Paragraph 11 of this Plan, the Option Price (as
hereinafter defined) for such shares and such additional terms and conditions
for such Options as the Committee deems appropriate.

        (c) A majority of the Committee shall constitute a quorum and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved unanimously in writing by the Committee, shall be
considered as valid actions by the Committee.

        (d) The Board may designate any officers or employees of the
Corporation or any subsidiary thereof to assist in the administration of this
Plan. The Board may authorize such individuals to execute documents on its
behalf and may delegate to them such other ministerial and limited discretionary
duties as the Board may deem fit.

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     3. Shares of Common Stock Subject to the Plan. The maximum number of shares
of Common Stock that shall be available initially for Options under this Plan is
[SIXTY-EIGHT THOUSAND NINE HUNDRED THIRTY-NINE (68,939)] shares, subject to
adjustment as provided in Paragraph 15 hereof. Shares subject to Options which
expire or terminate prior to the issuance of the shares of Common Stock shall
again be available for future grants of Options under this Plan.

     4. Eligibility. Options under this Plan may be granted to any Eligible
Employee as determined by the Committee. An individual may hold more than one
Option under this or other plans adopted by the Corporation.

     5. Grant of Options

        (a) The Committee shall authorize that Options for shares of Common
Stock shall be granted to certain Eligible Employees which Options shall be
granted based upon the past service and the continued participation of those
individuals in the operations of the Corporation or its subsidiaries. The
allocation of said Options shall be as determined by a majority vote of the
Committee at one or more meetings called for such purpose.

        (b) Upon the forfeiture of an Option for whatever reason prior to the
expiration of the Option Period (as defined in Paragraph 10 hereof) the shares
of Common Stock covered by a forfeited Option shall be available for the
granting of additional Options to Eligible Employees during the remaining term
of this Plan upon such terms and conditions as may be determined by the
Committee. The number of additional Options to be granted to specific Eligible
Employees during the term of this Plan shall be determined by the Committee as
provided in Paragraph 2(b) hereof.

     6. Vesting of Options

        (a) Options granted under this Plan shall vest and the right of an
Optionee to exercise an Option shall be nonforfeitable in accordance with the
following schedules:

            (i) With respect to the Options which are granted as of the
Effective Date (as hereinafter defined):

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     Date When Such Options                        Percentage of Such
         Become Vested                               Options Vested
        ---------------                             ----------------
     Effective Date of Plan                               20%
     First Anniversary of Effective Date                  20%
     Second Anniversary of Effective Date                 20%
     Third Anniversary of Effective Date                  20%
     Fourth Anniversary of Effective Date                 20%

            (ii) With respect to any Options which may be granted after the
Effective Date:

     Date When Such Options                        Percentage of Such
         Become Vested                               Options Vested
        ---------------                             ----------------
     Date of grant                                          20%
     First Anniversary of the date of grant                 20%
     Second Anniversary of the date of grant                20%
     Third Anniversary of the date of grant                 20%
     Fourth Anniversary of the date of grant                20%

        (b) In determining the number of shares of Common Stock under each
Option vested under the above vesting schedules, an Optionee shall not be
entitled to exercise an Option to purchase a fractional number of shares of the
Common Stock. If the product resulting from multiplying the vested percentage
times the Option results in a fractional number of shares of Common Stock, then
an Optionee's vested right shall be to the whole number of shares of Common
Stock disregarding any fractional shares of Common Stock.

        (c) In the event the employment of any Optionee with the Corporation
or its subsidiaries to whom Options are granted under this Plan is terminated
for any reason, other than the Optionee's disability, death, retirement (as
defined in Paragraph 13(b) below), or after a "change in control" of the
Corporation, and such Optionee does not have a 100% vested interest in the
Optionee's Options under this Plan, then any Options which are not vested, based
upon the applicable schedule in Paragraph 6(a) above, shall be forfeited and
shall be available again for grant to Eligible Employees as may be determined by
the Committee.

        (d) In the event that the employment of an Optionee with the
Corporation or its subsidiaries should terminate because of such Optionee's
disability, death, retirement or after a "change in control" of the Corporation
prior to the date when all Options allocated to the Optionee would be 100%
vested in accordance with the applicable schedule in Paragraph 6(a) above, then,
notwithstanding the foregoing schedules in Paragraph 6(a) above, all Options
allocated to such Optionee shall immediately become fully vested and
nonforfeitable. For purposes of this Plan, the term disability shall be defined
in the same manner as such term is defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended. When used in this Plan, the phrase "change in
control" refers to (i) the acquisition by any person, group of

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persons or entity of the beneficial ownership or power to vote more than
twenty-five (25%) percent of the Corporation's outstanding stock, (ii) during
any period of two (2) consecutive years, a change in the majority of the Board
unless the election of each new Director was approved by at least two-thirds of
the Directors then still in office who were Directors at the beginning of such
two (2) year period, or (iii) a reorganization, merger, or consolidation of the
Corporation with one or more other banks or entities in which the Corporation is
not the surviving entity, or the transfer of all or substantially all of the
assets or shares of the Corporation to another person or entity.

     7. Option Price

        (a) The price per share of each Option granted under this Plan
(hereinafter called the "Option Price") shall be determined by the Committee as
of the effective date of grant of such Option, but in no event shall the Option
Price be less than 100% of the fair market value of Common Stock on the date of
grant. If an Optionee at the time that an Option is granted owns stock
possessing more than ten (10%) percent of the total combined voting power of all
classes of stock of the Corporation, then the Option Price per share of each
Option granted under this Plan shall be no less than 110% of the fair market
value of Common Stock on the date of grant and such Option shall not be
exercisable more than five (5) years from the date of grant. An Option shall be
considered as granted on the date that the Committee acts to grant such Option
or such later date as the Committee shall specify in an Option Agreement.

        (b) The fair market value of a share of Common Stock shall be determined
as follows: (i) if on the date as of which such determination is being made,
Common Stock being valued is admitted to trading on a securities exchange or
exchanges for which actual sale prices are regularly reported, or actual sale
prices are otherwise regularly published, the fair market value of a share of
Common Stock shall be deemed to be equal to the mean of the closing sale price
as reported on each of the five (5) trading days immediately preceding the date
as of which such determination is made; provided, however, that, if a closing
sale price is not reported for each of the five (5) trading days immediately
preceding the date as of which such determination is made, then the fair market
value shall be equal to the mean of the closing sale prices on those trading
days for which such price is available, or (ii) if on the date as of which such
determination is made, no such closing sale prices are reported, but quotations
for Common Stock being valued are regularly listed on the National Association
of Securities Dealers Automated Quotation System or another comparable system,
the fair market value of a share of Common Stock shall be deemed to be equal to
the mean of the average of the closing bid and asked prices for such Common
Stock quoted on such system on each of the five (5) trading days preceding the
date as of which such determination is made, but if a closing bid and asked
price is not available for each of the five (5) trading days, then the fair
market value shall be equal to the mean of the average of the closing bid and
asked prices on those trading days during the five-day period for which such
prices are available, or (iii) if no such quotations are available, the fair
market value of a share of Common Stock shall be deemed to be the average of the
closing bid and asked prices furnished by a professional securities dealer
making a market in such shares, as selected by the Committee, for the trading
date first preceding the date as of which such determination is made. If the
Committee determines that the price as determined above does not

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represent the fair market value of a share of Common Stock, the Committee may
then consider such other factors as it deems appropriate and then fix the fair
market value for the purposes of this Plan.

     8.  Payment of Option Price. Payment for shares subject to an Option may be
made either in cash or, with the approval of the Committee, in other stock of
the Corporation owned by the person to whom such Option was granted or such
other person as may be entitled to exercise such Option. Any shares of the
Corporation's stock that are delivered in payment of the aggregate Option Price
shall be valued at their fair market value, as determined by the Committee, on
the date of the exercise of such Option.

     9.  Terms and Conditions of Grant of Options. Each Option granted pursuant
to this Plan shall be evidenced by a written Incentive Stock Option Agreement
(hereinafter referred to as "Option Agreement") with each Eligible Employee (the
"Optionee") to whom an Option is granted; such agreement shall be substantially
in the form attached hereto as "Exhibit A," unless the Committee shall adopt a
different form and, in each case, may contain such other, different, or
additional terms and conditions as the Committee may determine.

     10. Option Period. Each Option Agreement shall set forth a period during
which such Option may be exercised (hereinafter referred to as the "Option
Period"); provided, however, that the Option Period shall not exceed ten (10)
years after the date of grant of such Option as specified in an Option
Agreement.

     11. Limitation on Grant of Incentive Stock Options. Notwithstanding any
other provision of this Plan, no person shall be granted an Option under this
Plan which would cause such person's "annual vesting amount" to exceed
$100,000.00. With respect to any calendar year, a person's "annual vesting
amount" is the aggregate fair market value of stock subject to incentive stock
options with respect to which such options are first exercisable during such
calendar year. For purposes of the foregoing, the aggregate fair market value of
stock with respect to which incentive stock options are first exercisable during
any calendar year shall be determined by taking into account all such options
granted to such person under all incentive stock option plans of the Corporation
or of any of its parent or subsidiary banks.

     12. Exercise of Incentive Stock Options. An Option shall be exercised by
written notice to the Committee signed by an Optionee or by such other person as
may be entitled to exercise such Option. In the exercise of an Option, the
aggregate Option Price for the shares being purchased may be paid either in cash
or, with the approval of the Committee, in shares of the Corporation's stock
(valued as determined by the Committee as of the date of exercise) or any
combination thereof and the notice of exercise shall specify how payment will be
made. The written notice shall state the number of shares with respect to which
an Option is being exercised and, shall either be accompanied by the payment of
the aggregate Option Price for such shares or shall fix a date (not more than
ten (10) business days from the date of such notice) by which the payment of the
aggregate Option Price will be made. An Optionee shall not exercise an Option to
purchase less than 100 shares, unless the Committee otherwise approves or unless
the partial exercise is for the remaining shares available under such Option. A
certificate or certificates for

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the shares of Common Stock purchased by the exercise of an Option shall be
issued in the regular course of business subsequent to the exercise of such
Option and the payment therefor. During the Option Period, no person entitled to
exercise any Option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any shares of Common Stock issuable
upon exercise of such Option, until certificates representing such shares shall
have been issued and delivered and the individual's name entered as a
shareholder of record on the books of the Corporation for such shares.

     13. Effect of Termination of Employment.

         (a) In the event of the termination of employment of an Optionee either
by reason of (i) being discharged for cause or (ii) voluntary separation on the
part of such Optionee for a reason other than the Optionee's death, retirement,
or disability, or after a "change in control" of the Corporation (as defined in
Paragraph 6(d)), any Option or Options granted to the Optionee under this Plan,
to the extent not previously exercised or expired, shall immediately terminate.
The phrase "discharged for cause" shall include termination at the sole
discretion of the Board because of such Optionee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses), a
final cease and desist order, or material breach of any provision of any
employment agreement that such Optionee may have with the Corporation.

         (b) In the event of the termination of employment of an Optionee as a
result of such Optionee's retirement, such Optionee shall have the right to
exercise any Option or Options granted to the Optionee under this Plan, to the
extent that they have not previously been exercised or expired, for a period of
three (3) months after the date of retirement, but in no event may any Option be
exercised later than the end of the Option Period provided in such Option
Agreement in accordance with Paragraph 10 hereof. For purposes of this Plan, the
term "retirement" shall mean (i) termination of an Optionee's employment under
conditions which would constitute retirement under any tax qualified retirement
plan maintained by the Corporation or any of its subsidiaries or (ii) attaining
age 65.

         (c) In the event of the termination of employment of an Optionee by
reason of such Optionee's disability, such Optionee shall have the right to
exercise any Option or Options held by the Optionee, to the extent that they
previously have not been exercised or expired, at any time within twelve (12)
months after the last date on which such Optionee provides services as an
officer or an employee of the Corporation or its subsidiaries before being
disabled, but in no event may any Option be exercised later than the end of the
Option Period provided in such Option Agreement in accordance with Paragraph 10
hereof. For purposes of this Plan, the term "disability" shall be defined in the
same manner as such term is defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended.

         (d) In the event that an Optionee should die while employed by the
Corporation or any of its subsidiaries, within three (3) months after retirement
or after termination of the Optionee's employment after a change in control, or
within twelve (12)

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months after termination of the Optionee's employment by reason of the
Optionee's disability, any Option or Options granted to the Optionee under this
Plan and not previously exercised or expired shall vest and shall be
exercisable, according to their respective terms, by the personal representative
of such Optionee or by any person or persons who acquired such Options by
bequest or inheritance from such Optionee, notwithstanding any limitations
placed on the exercise of such Options by this Plan or an Option Agreement,
immediately in full and at any time within twelve (12) months after the date of
death of such Optionee, but in no event may any Option be exercised later than
the end of the Option Period provided in such Option Agreement in accordance
with Paragraph 10 hereof. Any references herein to an Optionee shall be deemed
to include any person entitled to exercise an Option under the terms of this
Plan after the death of such Optionee under the terms of this Plan.

         (e) In the event of the termination of employment of an Optionee after
a "change in control" of the Corporation (as defined in Paragraph 6(d)), all
Options granted such Optionee under this Plan shall be exercisable at any time
within, to the extent they have not previously been exercised or expired, a
period of three (3) months after the date of termination, but in no event may
any Option be exercised later than the end of the Option Period provided in such
Option Agreement in accordance with Paragraph 10 hereof.

     14. Effect of Plan on Employment Status. The fact that the Committee has
granted an Option to an Optionee under this Plan shall not confer on such
Optionee any right to employment with the Corporation or its subsidiaries or to
a position as an officer or an employee of the Corporation or its subsidiaries,
nor shall it limit the right of the Corporation or its subsidiaries to remove
such Optionee from any position held by the Optionee or to terminate the
Optionee's employment at any time.

     15. Adjustment Upon Changes in Capitalization; Dissolution or Liquidation.

         (a) In the event of a change in the number of shares of Common Stock
outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment,
prior to the termination of an Optionee's rights under this Plan, equitable
proportionate adjustments shall be made by the Committee in (i) the number and
kind of shares which remain available under this Plan and (ii) the number, kind,
and the Option Price of shares subject to unexercised Options under this Plan.
The adjustments to be made shall be determined by the Committee and shall be
consistent with such change or changes in the Corporation's total number of
outstanding shares; provided, however, that no adjustment shall change the
aggregate Option Price for the exercise of Options granted under this Plan.

         (b) The grant of Options under this Plan shall not affect in any way
the right or power of the Corporation or its shareholders to make or authorize
any adjustment, recapitalization, reorganization, or other change in the
Corporation's capital structure or its business, or any merger or consolidation
of the Corporation, or to issue bonds, debentures, preferred or other preference
stock ahead of or affecting Common Stock or the rights thereof, or

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the dissolution or liquidation of the Corporation, or any sale or transfer of
all or any part of the Corporation's assets or business.

         (c) Except upon a "change in control" as defined in Paragraph 6(d)
hereof, upon the effective date of the dissolution or liquidation of the
Corporation, this Plan and any Options granted hereunder, shall terminate.

     16. Non-Transferability. Any Option granted under this Plan shall not be
assignable or transferable except, in the case of the death of an Optionee, by
will or by the laws of descent and distribution. In the event of the death of an
Optionee, the personal representative, the executor or the administrator of such
Optionee's estate, or the person or persons who acquired by bequest or
inheritance the rights to exercise such Option, may exercise any Option or
portion thereof to the extent not previously exercised by an Optionee or
expired, in accordance with its terms and prior to the expiration of the
exercise period as specified in Paragraph 13(d) hereof.

     17. Tax Withholding. The employer of a person granted an Option under this
Plan shall have the right to deduct or otherwise effect a withholding of any
amount required by federal or state laws to be withheld with respect to the
grant, exercise or the sale of stock acquired upon the exercise of an Option in
order for the employer to obtain a tax deduction otherwise available as a
consequence of such grant, exercise or sale, as the case may be.

     18. Listing and Registration of Option Shares. Any Option granted under the
Plan shall be subject to the requirement that if at any time the Committee shall
determine, in its discretion, that the listing, registration, or qualification
of the shares covered thereby upon any securities exchange or under any state or
federal law or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issuance or purchase of shares thereunder, such Option may
not be exercised in whole or in part unless and until such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.

     19. Exculpation and Indemnification. In connection with this Plan, no
member of the Committee shall be personally liable for any act or omission to
act in such person's capacity as a member of the Committee, nor for any mistake
in judgment made in good faith, unless arising out of, or resulting from, such
person's own bad faith, gross negligence, willful misconduct, or criminal acts.
To the extent permitted by applicable law and regulation, the Corporation shall
indemnify and hold harmless the members of the Committee, and each other officer
or employee of the Corporation or of any subsidiary thereof to whom any duty or
power relating to the administration or interpretation of this Plan may be
assigned or delegated, from and against any and all liabilities (including any
amount paid in settlement of a claim with the approval of the Board) and any
costs or expenses (including counsel fees) incurred by such persons arising out
of, or as a result of, any act or omission to act in connection with the
performance of such person's duties, responsibilities, and obligations under
this Plan, other than such liabilities, costs, and expenses as may arise out of,
or result from, the bad faith, gross negligence, willful misconduct, or criminal
acts of such persons.

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     20. Amendment and Modification of the Plan. The Board may at any time and
from time to time amend or modify this Plan (including the form of Option
Agreement) in any respect consistent with applicable regulations; provided,
however, that no amendment or modification shall be made that increases the
total number of shares of Common Stock covered by this Plan or effects any
change in the categories of persons who may receive Options under this Plan or
materially increases the benefits accruing to Optionees under this Plan unless
such change is approved by the holders of a majority of shares of Common Stock
present or represented at a shareholders' meeting at which a quorum is present.
Any amendment or modification of this Plan shall not materially reduce the
benefits under any Option theretofore granted to an Optionee under this Plan
without the consent of such Optionee or the transferee thereof in the event of
the death of such Optionee.

     21. Termination and Expiration of the Plan. This Plan may be abandoned,
suspended, or terminated at any time by the Board; provided, however, that
abandonment, suspension, or termination of this Plan shall not affect any
Options then outstanding under this Plan. No Option shall be granted pursuant to
this Plan after ten (10) years from the effective date of this Plan as provided
in Paragraph 22 hereof.

     22. Effective Date. This Plan has been effective since April 20, 1999 (the
"Effective Date").

     23. Captions and Headings; Gender and Number. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Plan. As used herein, the
masculine gender shall include the feminine and neuter, the singular number the
plural, and vice versa, whenever such meanings are appropriate.

     24. Expenses of Administration of Plan. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Corporation
or one or more of its subsidiaries.

     25. Governing Law. Without regard to the principles of conflicts of laws,
the laws of the State of North Carolina shall govern and control the validity,
interpretation, performance, and enforcement of this Plan.

     26. Inspection of Plan. A copy of this Plan, and any amendments thereto or
modification thereof, shall be maintained by the Secretary of the Corporation
and shall be shown to any proper person making inquiry about it.

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STATE OF NORTH CAROLINA                                                EXHIBIT A
COUNTY OF ALAMANCE

                        INCENTIVE STOCK OPTION AGREEMENT

     THIS INCENTIVE STOCK OPTION AGREEMENT (hereinafter referred to as this
"Agreement") is made and entered into as of this ___ day of __________, ____,
between UNITED FINANCIAL, INC., a corporation (hereinafter referred to as the
"Corporation"), and _____________ a resident of __________ County, North
Carolina (hereinafter referred to as the "Optionee").

     WHEREAS, the Board of Directors of the Corporation (hereinafter referred to
as the "Board") has adopted United Financial, Inc. 1999 Incentive Stock Option
Plan (hereinafter referred to as the "Plan"); and

     WHEREAS, the Plan has been effective since April 20, 1999; and

     WHEREAS, the Plan provides that the Compensation Committee (hereinafter
referred to as the "Committee") of the Board will make available to certain
officers and employees of the Corporation and its subsidiaries (the "Employer")
the right to purchase shares of the Corporation's common stock (hereinafter
referred to as "Common Stock"); and

     WHEREAS, the Committee has determined that the Optionee should be granted
an option to purchase shares of Common Stock under the Plan;

     NOW, THEREFORE, the Corporation and the Optionee agree as follows:

     1. Date of Grant of Option. The date of grant of the option granted under
this Agreement is the ____ day of ____________________, ______________.

     2. Grant of Option. Pursuant to the Plan, the Corporation grants to the
Optionee the right (hereinafter referred to as the "Option") to purchase from
the Corporation all or any part of an aggregate of ___________________________
(______) shares of Common Stock (hereinafter referred to as the "Option Shares")
which shall be authorized but unissued shares.

     3. Vesting of Options.

        (a) Periodic Vesting. Subject to paragraphs 3(b) and 3(c) below, the
Option shall vest and become exercisable in accordance with the following
schedules as applicable:

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            (i) With respect to any Options which are granted under the Plan as
of Effective Date:

Effective Date of the Plan:                                          20% vested
First anniversary of the Effective Date of the Plan:                 40% vested
Second anniversary of the Effective Date of the Plan:                60% vested
Third anniversary of the Effective Date of the Plan:                 80% vested
Fourth anniversary of the Effective Date of the Plan:               100% vested

            (ii) With respect to any Options which may be granted after the
Effective Date:

Date of Grant:                                                       20% vested
First anniversary of the date of grant:                              40% vested
Second anniversary of the date of grant:                             60% vested
Third anniversary of the date of grant:                              80% vested
Fourth anniversary of the date of the grant:                        100% vested

        (b) Fractional Option Shares. In determining the number of Option Shares
vested under the above vesting schedule, an Optionee shall not be entitled to
exercise an Option for a fractional number of Option Shares. If the product
resulting from multiplying the vested percentage times the allocated Option
results in a fractional number of Option Shares, then the Optionee's vested
right shall be to the whole number of Option Shares, disregarding any fractional
number.

        (c) Accelerated Vesting. Notwithstanding paragraph 3(a) above, all
Options previously not vested and subject to forfeiture shall become 100% vested
and the right of the Optionee to exercise such Options shall become
nonforfeitable upon the termination of the employment of the Optionee with the
Employer as a result of the Optionee's death, disability, or retirement (as
defined in paragraph 8(b) below), or after a "change in control" of the
Corporation. For purposes of this Agreement, the term "disability" shall be
defined in the same manner as such term is defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").

        (d) Other Terminations of Employment. In the event any Optionee's
employment with the Employer terminates for any reason, other than the
Optionee's death, retirement, disability, or after a change in control of the
Corporation, and such Optionee does not have a 100% vested interest in the
Option, then any Options that are not vested, based upon the applicable schedule
in paragraph 3(a) above, shall be forfeited and shall be available again for
grant to other officers and employees as may be determined by the Committee.

     4. Option Price. The price to be paid for the Option Shares shall be
_______ and __/100 Dollars ($_____) per share (hereinafter referred to as the
"Option Price") which is the fair market value of the Option Shares as
determined by the Committee as of the date of grant of this Option.

                                       -11-

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     5. When and Extent to which Options may be Exercised. Subject to any
further restrictions in this Agreement, at such time as the Option shall become
exercisable in accordance with this Agreement, the Optionee, in his discretion,
may exercise all or any portion of the Option, subject to paragraphs 3 and 7
hereof. The Option shall terminate as provided in paragraph 8 hereof.

     6. Change in Control. When used herein, the phrase "change in control"
refers to (i) the acquisition by any person, group of persons or entity of the
beneficial ownership or power to vote more than twenty-five (25%) percent of the
Corporation's outstanding stock, (ii) during any period of two (2) consecutive
years, a change in the majority of the Board unless the election of each new
Director was approved by at least two-thirds of the Directors then still in
office who were Directors at the beginning of such two (2) year period or (iii)
a reorganization, merger, or consolidation of the Corporation with one or more
other banks or entities in which the Corporation is not the surviving entity, or
the transfer of all or substantially all of the assets or shares of the
Corporation to another person or entity.

     7. Method of Exercise. The Option shall be exercised by written notice to
the Committee signed by the Optionee or by such other person as may be entitled
to exercise the Option. In the exercise of the Option, the aggregate Option
Price for the shares being purchased may be paid either in cash or, with the
approval of the Committee, in shares of the Corporation's stock (valued as
determined by the Committee as of the date of exercise) or any combination
thereof and the notice of exercise shall specify how payment will be made. The
written notice shall state the number of shares with respect to which the Option
is being exercised and, shall either be accompanied by the payment of the
aggregate Option Price for such shares or shall fix a date (not more than ten
(10) business days from the date of such notice) by which the payment of the
aggregate Option Price will be made. An example of such form of written notice
is attached hereto as Exhibit A. The Optionee shall not exercise the Option to
purchase less than one hundred (100) shares, unless the Committee otherwise
approves or unless the partial exercise is for the remaining shares available
under the Option. A certificate or certificates for the shares of Common Stock
purchased by the exercise of the Option shall be issued in the regular course of
business subsequent to the exercise of the Option and the payment therefor.
During the Option Period, no person entitled to exercise the Option granted
under this Agreement shall have any of the rights or privileges of a shareholder
with respect to any shares of Common Stock issuable upon exercise of the Option,
until certificates representing such shares shall have been issued and delivered
and the individual's name entered as a shareholder of record on the books of the
Corporation for such shares.

                                       -12-

<PAGE>

     8. Termination of Option. The Option shall terminate as follows:

        (a) Except as provided in subparagraphs (b), (c), (d) and (e) below, the
Option granted under this Agreement, to the extent that it has not been
exercised or expired, shall terminate on the earlier of (i) the date that the
Optionee is discharged for cause, (ii) the date the Optionee gives notice that
the Optionee terminates his or her employment with the Employer for a reason
other than retirement, death or disability or after a "change in control" of the
Corporation or (iii) the date which is ten (10) years from the date of grant of
the Option set forth in paragraph 1 hereof. The phrase "discharged for cause"
shall include termination at the sole discretion of the Board of Directors of
the Employer of the Optionee because of the Optionee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or a
final cease and desist order, or material breach of any provision of any
employment agreement that the Optionee may have with the Employer.

        (b) In the event the Optionee retires prior to the date which is ten
(10) years after the date of grant of the Option, the Optionee shall have the
right to exercise the Option, to the extent that it has not been exercised by
the Optionee or expired, at any time within three (3) months after the date of
retirement, but in no event may the Option be exercised later than ten (10)
years after the date of grant of the Option set forth in paragraph 1 hereof. For
purposes of this Agreement, the term "retirement" shall mean (i) termination of
the Optionee's employment under conditions which would constitute retirement
under any tax qualified retirement plan maintained by the Employer or (ii)
attaining age 65.

        (c) In the event the Optionee becomes disabled prior to the date which
is ten (10) years after the date of grant of the Option, the Optionee shall have
the right to exercise the Option, to the extent that it has not been exercised
by the Optionee or expired, notwithstanding any limitation placed on the
exercise of the Option by the Plan or by this Agreement, immediately in full and
at any time within twelve (12) months after the last date on which the Optionee
provided services as an officer or an employee of the Employer before being
disabled, but in no event may the Option be exercised later than ten (10) years
after the date of grant of the Option set forth in paragraph 1 hereof. For
purposes of this Agreement, the term "disability" shall be defined in the same
manner as such term is defined in Section 22(e)(3) of the Code.

        (d) In the event the Optionee should die while employed by the Employer,
or within three (3) months after retirement or after termination of the
Optionee's employment after a change in control, or within twelve (12) months
after termination of the Optionee's employment by reason of the Optionee's
disability, but prior to the date which is ten (10) years after the date of
grant of the Option, the Option, to the extent it has not been exercised by the
Optionee or expired, shall be exercisable, according to its terms, by the
personal representative, the executor or administrator of the Optionee's estate,
or any person or persons who acquired the Option by bequest or inheritance from
the Optionee, notwithstanding any limitation placed on the exercise of the
Option by the Plan or by this Agreement, immediately in

                                       -13-

<PAGE>

full and at any time within twelve (12) months after the date of death of the
Optionee, but in no event may the Option be exercised later than ten (10) years
from the date of grant of the Option as set forth in paragraph 1 hereof.

         (e) In the event the Optionee's employment with the Employer is
terminated after a "change in control" of the Corporation, the Optionee shall
have the right to exercise the Option to the extent that it has not been
exercised by the Optionee or expired, any time within three (3) months after the
date of termination, but in no event may the Option be exercised later than ten
(10) years after the date of grant of the Options set forth in paragraph 1
hereof.

     9.  Effect of Agreement on Employment Status of Optionee. The fact that the
Committee has granted the Option to the Optionee under this Agreement shall not
confer on the Optionee any right to employment with the Employer or to a
position as an officer or an employee of the Employer, nor shall it limit the
right of the Employer to remove the Optionee from any position held by the
Optionee or to terminate his or her employment at any time.

     10. Listing and Registration of Option Shares.

         (a) The Corporation's obligation to issue shares of Common Stock upon
exercise of the Option is expressly conditioned upon (i) the completion by the
Corporation of any registration or other qualification of such shares under any
state or federal law or regulations or rulings of any government regulatory body
or (ii) the making of such investment representations or other representations
and agreements by the Optionee or any person entitled to exercise the Option in
order to comply with the requirements of any exemption from any such
registration or other qualification of the Option Shares which the Committee
shall, in its sole discretion, deem necessary or advisable. Notwithstanding the
foregoing, the Corporation shall be under no obligation to register or qualify
the Option Shares under any state or federal law. The required representations
and agreements referenced above may include representations and agreements that
the Optionee, or any other person entitled to exercise the Option, (i) is
purchasing such shares on his or her own behalf as an investment and not with a
present intention of distribution or re-sale and (ii) agrees to have placed upon
any certificates representing the Option Shares a legend setting forth any
representations and agreements which have been given to the Committee or a
reference thereto and stating that such shares may not be transferred except in
accordance with all applicable state and federal securities laws and
regulations, and further representing that, prior to making any sale or other
disposition of the Option Shares, the Optionee, or any other person entitled to
exercise the Option, will give the Corporation notice of the intention to sell
or dispose of such shares not less than five (5) days prior to such sale or
disposition.

     11. Adjustment Upon Change in Capitalization; Dissolution or Liquidation.

         (a) In the event of a change in the number of shares of Common Stock
outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger,

                                       -14-

<PAGE>

exchange of shares, or other similar capital adjustment, prior to the
termination of the Optionee's rights under this Agreement, equitable
proportionate adjustments shall be made by the Committee in the number, kind,
and the Option Price of shares subject to the unexercised portion of the Option
granted under this Agreement. The adjustments to be made shall be determined by
the Committee and shall be consistent with such change or changes in the
Corporation's total number of outstanding shares; provided, however, that no
adjustment shall change the aggregate Option Price for the exercise of the
Option granted under this Agreement.

         (b) The grant of the Option under this Agreement shall not affect in
any way the right or power of the Corporation or its shareholders to make or
authorize any adjustment, recapitalization, reorganization, or other change in
the Corporation's capital structure or its business, or any merger or
consolidation of the Corporation, or to issue bonds, debentures, preferred or
other preference stock ahead of or affecting Common Stock or the rights thereof,
or the dissolution or liquidation of the Corporation, or any sale or transfer of
all or any part of the Corporation's assets or business.

         (c) Except upon a change in control as set forth in paragraph 6 hereof,
upon the effective date of the dissolution or liquidation of the Corporation,
the Option granted under this Agreement shall terminate.

     12. Nontransferability. The Option granted under this Agreement shall not
be assignable or transferable except, in the event of the death of the Optionee,
by will or by the laws of descent and distribution. In the event of the death of
the Optionee, the personal representative, the executor or the administrator of
the Optionee's estate, or the person or persons who acquired by bequest or
inheritance the right to exercise the Option may exercise the unexercised Option
or a portion thereof, in accordance with the terms hereof, prior to the date
which is ten (10) years after the date of grant of Option as set forth in
paragraph 1 hereof.

     13. Notices. Any notice or other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
sufficiently given when delivered personally or when deposited in the United
States mail as Certified Mail, return receipt requested, properly addressed with
postage prepaid, if to the Corporation, at its principal office at 1128 South
Main Street, Graham, North Carolina 27253, and if to the Optionee, to his or her
last address appearing on the books of the Employer. The Employer and the
Optionee may change their address or addresses by giving written notice of such
change as provided herein. Any notice or other communication hereunder shall be
deemed to have been given on the date actually delivered or as of the third
(3rd) business day following the date mailed, as the case may be.

     14. Construction Controlled by Plan. This Agreement shall be construed so
as to be consistent with the Plan and the provisions of the Plan shall be deemed
to be controlling in the event that any provision hereof should appear to be
inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of
the Plan from the Corporation.

                                       -15-

<PAGE>

     15. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be valid and enforceable under applicable
law, but if any provision of this Agreement is determined to be unenforceable,
invalid or illegal, the validity of any other provisions or part thereof, shall
not be affected thereby and this Agreement shall continue to be binding on the
parties hereto as if such unenforceable, invalid or illegal provision or part
thereof had not been included herein.

     16. Modification of Agreement; Waiver. This Agreement may be modified,
amended, suspended, or terminated, and any terms, representations or conditions
may be waived, but only by written instrument signed by each of the parties
hereto. No waiver hereunder shall constitute a waiver with respect to any
subsequent occurrence or other transaction hereunder or of any other provision
hereof.

     17. Captions and Headings; Gender and Number. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Agreement. As used herein,
the masculine gender shall include the feminine and neuter, the singular number
the plural, and vice versa, whenever such meanings are appropriate.

     18. Governing Law; Venue and Jurisdiction. Without regard to the principles
of conflicts of laws, the laws of the State of North Carolina shall govern and
control the validity, interpretation, performance, and enforcement of this
Agreement. The parties hereto agree that any suit or action relating to this
Agreement shall be instituted and prosecuted in the courts of Alamance County in
the State of North Carolina, and each party hereby does waive any right or
defense relating to such jurisdiction and venue.

     19. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the Corporation, its successors and assigns, and shall be binding
upon and inure to the benefit of the Optionee, his heirs, legatees, personal
representatives, executors, and administrators.

     20. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties hereto and, except as otherwise
provided hereunder, there are no other agreements or understandings, written or
oral, in effect between the parties hereto relating to the matters addressed
herein.

     21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

                                       -16-

<PAGE>

     IN WITNESS WHEREOF, the Corporation, has caused this instrument to be
executed in its corporate name by its Chairman and attested by its Secretary or
one of its Assistant Secretaries, and its corporate seal to be hereto affixed,
all by authority of its Board of Directors first duly given, and the Optionee
has hereunto set his or her hand and adopted as his or her seal the typewritten
word "SEAL" appearing beside his or her name, all done this the day and year
first above written.

                                    UNITED FINANCIAL, INC.


                                    By: _____________________________________
                                        William M. Griffith, Jr.

ATTEST:

_____________________________________
____________, Corporate Secretary

                                        _________________________________(SEAL)
                                        ____________________, Optionee

                                       -17-

<PAGE>

[CORPORATE SEAL]

                                                          EXHIBIT A


                              NOTICE OF EXERCISE OF
                             INCENTIVE STOCK OPTION

     To:  The Compensation Committee of the Board of Directors of
          United Financial, Inc.

          The undersigned hereby elects to purchase ________ whole shares of
Common Stock of United Financial, Inc. (the "Corporation") pursuant to the
Incentive Stock Option granted to the undersigned in that certain Incentive
Stock Option Agreement between the Corporation and the undersigned dated the
____ day of _______, ____. The aggregate purchase price for such shares is
$____________, which amount is (i) being tendered herewith, (ii) will be
tendered on or before _________________, ____ (cross out provision which does
not apply) in cash and/or stock of the Corporation owned by me, and I request
that a value as of the date of exercise of this Option be placed on any stock
being tendered in payment of the purchase price. The effective date of this
election shall be ____________________, ____, or the date of receipt of this
Notice by the Corporation if later.

          Executed this _____ day of _______________, _______.


                                      _______________________________________
                                      By:  __________________________________

                                      _______________________________________
                                      (Social Security Number)

                                       -18-