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                                                                    Exhibit 10.7

STATE OF NORTH CAROLINA
COUNTY OF HENDERSON
                                                 DIRECTOR STOCK OPTION AGREEMENT

     THIS DIRECTOR STOCK OPTION AGREEMENT (the "Agreement") is made as of this
______ day of _______________, 19_____ (the "Date of Grant"), by and between
MOUNTAINBANK, a North Carolina banking corporation (the "Bank"), and
___________________________________, a resident of ____________ County, North
Carolina (the "Optionee").

     WHEREAS, on December ___, 1997, the Bank's Board of Directors adopted the
1997 DIRECTOR STOCK OPTION PLAN (the "Plan"), subject to the approval of the
Bank's shareholders and the North Carolina Commissioner of Banks; and

     WHEREAS, the Plan provides that the Stock Option Committee (the
"Committee") of the Bank's Board of Directors from time to time may grant to
directors of the Bank and its subsidiaries the right or option to purchase
shares of the Bank's $5.00 par value common stock ("Common Stock") on the terms
and conditions set forth in the Plan; and

     WHEREAS, the Optionee currently is a director of the Bank;

     NOW, THEREFORE, in consideration of the premises and the agreements of the
parties set forth herein, the Bank and the Optionee hereby agree as follow:

     1.  Grant of Option.  Pursuant to the Plan and subject to the terms and
         ---------------
conditions contained in the Plan and this Agreement, the Bank hereby grants to
the Optionee the right and option (the "Option") to purchase from the Bank all
or any number of an aggregate of _______________________________________________
(__________) shares of Common Stock (the "Option Stock") which may be authorized
but unissued shares or shares acquired by the Bank on the open market or in
private transactions.

         The Option is granted under and pursuant to the Plan, a copy of which
is attached hereto and the terms and conditions of which are incorporated herein
by reference. Capitalized terms used in this Agreement which are defined in the
Plan shall have the same meanings herein as are assigned to them in the Plan. In
the event any provision of this Agreement conflicts or is inconsistent with a
term or condition of the Plan, then the Plan provision shall be controlling and
shall supersede the provision of this Agreement.

     2.  Approval by Shareholders and Commissioner.  This Agreement and the
         -----------------------------------------
Option described herein are expressly made subject to approval of the Plan by
the Bank's shareholders at the Bank's 1998 annual meeting of shareholders, and
to approval of the Plan by the North Carolina Commissioner of Banks upon
application
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by the Bank. Notwithstanding anything contained herein to the contrary, the
Option may not be exercised prior to receipt of both such approvals. In the
event either such approval is not obtained, then this Agreement and the Option
shall, without any action by the Bank or the Optionee, become void and
unenforceable and of no further force or effect.

     3.  Date of Grant of Option.  For purposes of the Plan and this Agreement,
         -----------------------
the Date of Grant of the Option shall be the date of this Agreement.

     4.  Exercise Price.  The Exercise Price to be paid by the Optionee for the
         --------------
purchase for the Option Stock upon exercise of the Option shall be
_________________________________________ Dollars ($____________) per share.

     5.  Exercise Schedule.  Subject to any further restrictions contained in
         -----------------
the Plan or this Agreement, the Optionee's right to exercise the Option, either
in whole or in part, shall be conditioned upon the Optionee's completion of
(check one):

         [_] six months
         [_] __________________________________________________

of service as a director of the Bank following the Date of Grant (the "Waiting
Period") and, following expiration of the Waiting Period, if any, the Option
will become exercisable on the following dates as to the indicated percentages
of the shares of the Option Stock:
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                                            Option Stock Available
              Date                               For Exercise
       --------------------                    ----------------
================================================================================
         June 30, 1998 ..........                  33 1/3%
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         June 30, 1999 ..........                  33 1/2%
--------------------------------------------------------------------------------
         June 30, 2000 ..........                  33 1/2%
================================================================================

     Notwithstanding anything contained herein to the contrary, the Option may
not be exercised at any time as to a fractional share and, in the event
application of the above percentages results in a fractional shares, the number
of shares as to which the Option may be exercised at any particular time shall
be rounded down to the next lower whole share.

     6.  Method of Exercise.  To exercise the Option in whole or in part, the
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Optionee must deliver written notice of such exercise (a "Notice of Exercise")
to the President or Secretary of the Bank.  Such written notice shall be
substantially in the form attached hereto as Exhibit A and shall specify the
number of shares of Option Stock to be purchased.  A Notice of Exercise shall
not be

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effective (and the Bank shall have no obligation to sell any Option Stock to the
Optionee pursuant to such Notice) unless it satisfies the terms and conditions
contained in the Plan and this Agreement and actually is received by the Bank
prior to the Expiration Date or any earlier termination of the Option.

          Notwithstanding anything contained herein to the contrary, the
Optionee may not exercise the Option to purchase less than one hundred (100)
shares, unless the Committee otherwise approves or unless the partial exercise
is for all remaining shares of Option Stock available under the Option.
Following receipt from the Optionee of a valid and effective Notice of Exercise
and full payment of the Exercise Price relating to a number the shares of Option
Stock being purchased, a stock certificate representing that number of shares
shall be issued and delivered by the Bank to the Optionee as soon as
practicable.

     7.  Payment.  The Exercise Price of Option Stock being purchased upon an
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exercise of the Option (in part or in whole) shall be paid by the Optionee in
full at the time of such exercise.  Such payment shall be made in the manner
described in the Plan and shall accompany the Notice of Exercise.  The Option
shall not be considered to have been properly exercised as to any Option Stock,
and no Option Stock shall be issued or delivered, until full payment of the
Exercise Price therefor has been made.

     8.  Expiration or Termination.
         -------------------------

         (a)  Expiration Date.  Notwithstanding anything contained herein to the
contrary, to the extent the Option shall not previously have been exercised in
the manner required by or otherwise terminated as provided in the Plan or this
Agreement, it shall expire and terminate at 5:00 P.M. on the "Expiration Date"
which, for purposes of this Agreement, shall be (check one):

         [_] the date ten years following the Date of Grant
         [_] _____________________, 19______

         (b)  Other Termination. The Option otherwise shall terminate prior to
the Expiration Date in the events and upon the occurrences described in the
Plan.

         (c)  Effect of Termination or Expiration of Option. Upon the expiration
or termination of all or any portion of the Option, it shall, without any
further act by the Bank or the Optionee, no longer be exercisable or of any
force or effect and shall no longer confer any rights to any person to purchase
shares of Common Stock under the Plan or this Agreement.

     9.  Effect of Agreement on Service as a Director.  Neither the Plan, this
         --------------------------------------------
Agreement nor the grant of the Option is intended or shall be deemed or
interpreted to confer upon the

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Optionee any right to continued service as a director of the Bank or to
interfere with, restrict or otherwise limit in any way the right of the Bank or
its shareholders to decline to nominate any such person for reelection as a
direct, to reelect such person as a director, or to remove such person from
office in accordance with applicable law.

     10.  Rights as a Shareholder.  Neither the Optionee nor any other person
          -----------------------
shall have any rights as a stockholder with respect to any shares of Option
Stock until the Option has been validly exercised in the manner described in the
Plan and this Agreement, full payment of the Exercise Price has been made for
such shares, and a stock certificate representing the Option Stock purchased
upon such exercise has been registered on the Bank's stock records in the name
of and delivered to the Optionee or other person entitled thereto.  Except to
the extent of adjustments made as described in the Plan, no adjustment on behalf
of the Optionee shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property), distributions or other rights for which
the record date for determining the shareholders entitled to receive the same is
prior to the date of registration and delivery of the stock certificate(s)
representing the Option Stock.

     11.  Listing and Registration of Option Shares.  If in the opinion of legal
          -----------------------------------------
counsel for the Bank the issuance or sale of any shares of Option Stock upon the
exercise of the Option would not be lawful without registration under the
Securities Act of 1933 (the "1933 Act") or without some other action being taken
or for any other reason, or would require the Bank to obtain approval from any
governmental authority or regulatory body having jurisdiction deemed by such
counsel to be necessary to such issuance or sale, then the Bank shall not be
obligated to issue or sell any Option Stock to the Optionee or any other
authorized person unless a registration statement that complies with the
provisions of the 1933 Act in respect of such shares is in effect at the time
thereof, or all other required or appropriate action has been taken under and
pursuant to the terms and provisions of the 1933 Act or other applicable law, or
the Bank receives evidence satisfactory to such counsel that the issuance and
sale of such shares, in the absence of an effective registration statement or
other action, would not constitute a violation of the 1933 Act or other
applicable law, or unless any such required approval shall have been obtained.
The Bank is in no event obligated to register any such shares, to comply with
any exemption from registration requirements or to take any other action which
may be required in order to permit, or to remedy or remove any prohibition or
limitation on, the issuance or sale of such shares to the Optionee or other
authorized person.

          As a condition of the exercise of the Option, the Bank may require
that the Optionee execute one or more undertakings in such form as it shall
prescribe to the effect that such shares

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are being acquired for investment purposes only and not with a view to the
distribution or resale thereof.

          Notwithstanding anything contained herein to the contrary, it is
understood and agreed that the Bank (or any successor in interest to the Bank)
shall not be required to take any action under the Plan or this Agreement if:

          (a)  the Bank is declared by any Regulatory Authority to be insolvent,
in default or operating in an unsafe or unsound manner; or,

          (b)  in the opinion of counsel to the Bank, such payment or action:
(i) would be prohibited by or would violate any provision of state or federal
law applicable to the Bank or any of its subsidiaries, including without
limitation the Federal Deposit Insurance Act as now in effect or hereafter
amended; (ii) would be prohibited by or would violate any applicable rules,
regulations, orders or statements of policy, whether now existing or hereafter
promulgated, of any regulatory authority; or, (iii) otherwise would be
prohibited by any regulatory authority.

     12.  Payment of Taxes.  The Optionee shall be responsible for all federal,
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state, local or other taxes of any nature as shall be imposed pursuant to any
law or governmental regulation or ruling on the Option or the exercise thereof
or on any income which the Optionee is deemed to recognize in connection with
the Option.  If the Bank shall determine to its reasonable satisfaction that the
Bank is required to pay or withhold the whole or any part of any estate,
inheritance, income, or other tax with respect to or in connection with the
Option or the exercise thereof, then the Bank  shall have the full power and
authority to withhold and pay such tax out of any shares of Option Stock being
purchased by the Optionee or from the Optionee's salary or any other funds
otherwise payable to the Optionee, or, prior to and as a condition of exercising
such Option, the Bank may require that the Optionee pay to it in cash the amount
of any such tax which it, in good faith, deems itself required to withhold.

     13.  Nontransferability.  The Option shall not be assignable or
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transferable except by will or by the laws of descent and distribution, and,
during the lifetime of the Optionee, may be exercised only by him or her.  More
particularly, but without limiting the generality of the foregoing, the Option
may not be sold, assigned, transferred (except as noted herein), pledged or
hypothecated in any way and shall not be subject to execution, attachment or
similar process.

     14.  Notices.  Except as otherwise provided herein, any notice which the
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Bank or the Optionee may be required or permitted to give to the other under the
Plan or this Agreement shall be in writing and shall be deemed duly given when
delivered personally or

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deposited in the United States mail, first class postage prepaid, and properly
addressed. Notice, if to the Bank, shall be sent to its President at the address
of the Bank's then current corporate office. Any notice sent by mail by the Bank
to the Optionee shall be sent to the most current address of the Optionee as
reflected on the records of the Bank or its Subsidiaries as of the time said
notice is required. If the Optionee has died, any such notice shall be given to
the Optionee's personal representative if such representative has delivered to
the Bank evidence satisfactory to the Bank of such representative's status as
such and has informed the Bank of the address of such representative by notice
pursuant to this Paragraph 14.

          Notwithstanding anything contained herein to the contrary, a Notice of
Exercise shall be effective only upon actual receipt thereof by the Bank as
provided in Paragraph 5 above.

     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, in the event that any provision hereof shall be held to be
invalid or unenforceable, the remaining provisions shall continue to be in full
force and effect and this Agreement shall continue to be binding on the parties
hereto as if such invalid or unenforceable provision or part hereof had not been
included herein.

     16.  Modification of Agreement; Waiver.  Except as otherwise provided
          ---------------------------------
herein, this Agreement may be modified, amended, suspended, or terminated, and
any terms 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.  The validity, interpretation
          -------------------------------------
and administration of this Agreement, and the rights of any and all persons
having or claiming to have any interest hereunder, shall be determined
exclusively in accordance with the laws of the State of North Carolina.  Without
limiting the generality of the foregoing, the period within which any action in
connection with this Agreement must be commenced shall be governed by the laws
of the State of North Carolina, without regard to the place where the act or
omission complained of took place, the residence of any party to such action, or
the place where the

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action may be brought or maintained. The parties hereto agree that any suit or
action relating to this Agreement shall be instituted and prosecuted in the
courts of Henderson County, 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
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to the benefit of the Bank, 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 (which incorporates the terms and
          ----------------
conditions of the Plan) 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.

     IN WITNESS WHEREOF, the Bank, has caused this instrument to be executed in
its corporate name by its President, or one of its Vice Presidents, 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.

                                       MOUNTAINBANK


     [CORPORATE SEAL]                  By:  _______________________________

                                       Title: _________________________
ATTEST:


__________________________________
_____________, Secretary



                                            ____________________________________
                                            _____________________, Optionee
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                                   EXHIBIT A




                             NOTICE OF EXERCISE OF
                             DIRECTOR STOCK OPTION



To:  The Stock Option Committee of
     the Board of Directors of MountainBank


     The undersigned hereby elects to purchase shares of Common Stock of
MountainBank (the "Bank") pursuant to the Option granted to the undersigned
pursuant to the 1997 Director Stock Option Plan (the "Plan") and that certain
Stock Option Agreement between the Bank and the undersigned dated
________________, 19____.

     The undersigned elects to purchase ___________ whole shares of Common Stock
having an aggregate Exercise Price of $_____________ which is tendered herewith:

     [_] in cash in the amount of $____________;

     [_] by bank check or money order in the amount of $_______;

     [_] ________________________________________________________.

         This the _________ day of ___________, 199.



                                                 _______________________________
                                                            Optionee