EXHIBIT 10.3

                             AMERICAN COMMUNITY BANK
                        1999 INCENTIVE STOCK OPTION PLAN


         American Community Bank, a North Carolina banking corporation
(hereinafter referred to as the "Bank"), does herein set forth the terms of the
American Community Bank 1999 Incentive Stock Option Plan (hereinafter referred
to as this "Plan") which was adopted by the Bank's Board of Directors
(hereinafter referred to as the "Board") subject to shareholder and regulatory
approval as provided in Paragraph 22 hereof.

         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 Bank and its subsidiaries (hereinafter referred to as "Eligible Employees")
who wish to invest in the Bank's common stock (hereinafter referred to as
"Common Stock"). The Bank believes that participation in the ownership of the
Bank by Eligible Employees will be to the mutual benefit of the Bank and
Eligible Employees. The existence of this Plan will enhance the Bank'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 Bank
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 One Hundred Twenty-Four Thousand Three Hundred Thirty (124,330) 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 Bank.

         5. GRANT OF OPTIONS.

              (a) The Committee shall authorize that Options for shares of
Common Stock shall be granted to certain Eligible Employees of the Bank which
Options shall be granted based upon the past service and the continued
participation of those individuals in the operations of the Bank. 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 Subparagraph 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                                0%
         First Anniversary of Effective Date                  20%
         Second Anniversary of Effective Date                 20%
         Third Anniversary of Effective Date                  20%
         Fourth Anniversary of Effective Date                 20%
         Fifth 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                                           0%
         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%
         Fifth 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 that the employment of an Optionee at the Bank
terminates for any reason, other than the Optionee's disability, death,
retirement, or following a "change in control" of the Bank, the Optionee's
Options under this Plan 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 Bank
should terminate because of such Optionee's disability, death, or retirement, or
following a "change in control" of the Bank prior to the date when all Options
allocated to the Optionee would be 100% vested in accordance with the applicable
schedule in subparagraph 6(a) above, then, notwithstanding the foregoing
schedules in subparagraph 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 persons or entity of the beneficial
ownership or power to vote more than twenty-five (25%) percent of the Bank's
outstanding stock, (ii) during any period of two (2) consecutive years, a change
in the majority of

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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 Bank with one or more other entities in which the Bank is
not the surviving entity, or the transfer of all or substantially all of the
assets or shares of the Bank to another person or entity. Notwithstanding
anything else herein, for purposes of this Plan the term "change in control,"
shall not include a transaction approved by the Board which results in the Bank
merging with, transferring its assets to or becoming the subsidiary of a
corporation newly formed at the direction of the Board for the purpose of such
transaction or serving as a bank holding company for the Bank, and in connection
with which transaction the Bank's shareholders (other than those who exercise
statutory rights of dissent and appraisal) become the holders of substantially
all of the voting stock of such corporation. Further, notwithstanding anything
else herein, a transaction or event shall not be considered a change in control
if, prior to the consummation or occurrence of such transaction or event, the
Optionee and the Bank agree in writing that the same shall not be treated as a
change in control for purposes of this Plan.

         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 (as hereinafter defined) 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 Bank, 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
(as hereinafter defined).

              (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

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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 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
only be made in cash.

         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 (hereinafter referred to as "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. The Option shall terminate as provided in paragraph 13
hereof. In addition to any further conditions provided herein and in the Option
Agreement, the right of an Optionee to exercise the Option to purchase the
Option Shares, either in whole or in part, shall be conditioned upon the
completion by the Optionee of one (1) full year of service in the employment of
the Bank following the date of grant of the Option. Furthermore, Options granted
pursuant to this Plan shall be subject to the right of the North Carolina
Commissioner of Banks (the "Commissioner") and the Federal Deposit Insurance
Corporation ("FDIC") to direct the Bank to require an Optionee to exercise or
forfeit his or her stock rights if the Bank's capital falls below the minimum
requirements, as determined by the Commissioner or FDIC.

         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. No one Optionee
shall be granted more than 40% of the shares reserved for issuance under this
Plan pursuant to the provisions of Paragraph 3 hereof. Moreover, 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 Bank or of
any of its parent or subsidiary Banks.

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         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 only be paid in cash
and must be accompanied by a notice of exercise. 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 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 Bank for such shares.

         13. EFFECT OF TERMINATION OF EMPLOYMENT, RETIREMENT, DISABILITY OR
DEATH.

              (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, disability, or following a "change in control" of the Bank (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, and regardless of
any vesting pursuant to Paragraph 6 hereof 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 Bank.

              (b) In the event of the termination of employment of an Optionee
as a result of such Optionee's retirement, all Options granted such Optionee
shall vest and such Optionee shall have the right to exercise an Option granted
under this Plan, to the extent that it has 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, subject to Board
approval in each instance, (i) termination of an Optionee's employment under
conditions which would constitute retirement under any tax qualified retirement
plan maintained by the Bank or any of its subsidiaries or (ii) attaining age 65.

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<PAGE>

              (c) In the event of the termination of employment of an Optionee
by reason of such Optionee's disability, all Options granted such Optionee shall
vest and such Optionee shall have the right to exercise an Option granted under
this Plan, to the extent that it has not previously 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 Bank 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) Notwithstanding anything else herein, in the event that an
Optionee should die (i) while employed by the Bank or any of its subsidiaries,
(ii) within three (3) months after retirement, (iii) within three (3) months
after Optionee's termination following a change in control, or (iv) within
twelve (12) months after Optionee's termination by reason of 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
following a "change in control" of the Bank (as defined in Paragraph 6(d)), all
Options granted such Optionee shall vest and such Optionee shall have the right
to exercise any Option or Options granted to the Optionee under this Plan, to
the extent they have not previously been exercised or expired, for 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 Bank or to a position as an officer or
an employee of the Bank, nor shall it limit the right of the Bank to remove such
Optionee from any position held by the Optionee or to terminate the Optionee's
employment at any time.

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         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 Bank'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 Bank or its shareholders to make or authorize any
adjustment, recapitalization, reorganization, or other change in the Bank's
capital structure or its business, or any merger or consolidation of the Bank,
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 Bank, or any sale or transfer of all or any part of the Bank'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 Bank,
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 Subparagraph 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,

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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 Bank shall
indemnify and hold harmless the members of the Committee, and each other officer
or employee of the Bank 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.

         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 two-thirds (2/3) of the issued and
outstanding shares of Common Stock and the amended Plan is approved by the
Commissioner. 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; SHAREHOLDER APPROVAL; REGULATORY APPROVAL. This
Plan shall not be effective until approved by the holders of two-third of the
issued and outstanding shares of Common Stock present or represented at an
annual or special meeting (the "Effective Date") and the Plan is approved by the
North Carolina Commissioner of Banks.

         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.

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         24. EXPENSES OF ADMINISTRATION OF PLAN. All costs and expenses incurred
in the operation and administration of this Plan shall be borne by the Bank 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 Bank and
shall be shown to any proper person making inquiry about it.

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STATE OF NORTH CAROLINA                                               EXHIBIT A
COUNTY OF UNION

                        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 AMERICAN COMMUNITY BANK, a North Carolina Bank (hereinafter referred to
as the "Bank"), and _____________ a resident of __________ County, North
Carolina (hereinafter referred to as the "Optionee").

         WHEREAS, the Board of Directors of the Bank (hereinafter referred to as
the "Board") has adopted the American Community Bank 1999 Incentive Stock Option
Plan (hereinafter referred to as the "Plan") subject to approval by the Bank's
shareholders and the North Carolina Commissioner of Banks; and

         WHEREAS, the shareholders of the Bank at an annual meeting duly called
and held on March 18, 1999, approved the Plan (the "Effective Date"); 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 Bank and its subsidiaries (the "Employer") the
right to purchase shares of the Bank'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 Bank 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 Bank grants to the
Optionee the right (hereinafter referred to as the "Option") to purchase from
the Bank 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 subparagraphs 3(b) and 3(c)
below, the Option _________________ shall vest and become exercisable in
accordance with the following schedules as applicable:

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


<PAGE>

Effective Date of the Plan:                                            0% vested
First anniversary of the Effective Date of the Plan:                  20% vested
Second anniversary of the Effective Date of the Plan:                 40% vested
Third anniversary of the Effective Date of the Plan:                  60% vested
Fourth anniversary of the Effective Date of the Plan:                 80% vested
Fifth 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:                                                         0% vested
First anniversary of the date of grant:                               20% vested
Second anniversary of the date of grant:                              40% vested
Third anniversary of the date of grant:                               60% vested
Fourth anniversary of the date of the grant:                          80% vested
Fifth anniversary of the date of 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 death, disability or retirement of the Optionee, or upon
a "change in control" of the Bank. 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 Bank terminates for any reason, other than the Optionee's
death, disability, retirement, or following a change in control of the Bank,
then the Optionee's Options, to the extent unexercised, shall be forfeited and
shall be available again for grant to other officers and employees as may be
determined by the Committee. Such forfeiture shall apply whether or not any such
options have vested.

         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.

         5. WHEN AND EXTENT TO WHICH OPTIONS MAY BE EXERCISED. Subject to any
further restrictions in this Agreement, the right of the Optionee to exercise
the Option to purchase

                                        2
<PAGE>

the Option Shares, either in whole or in part, shall be conditioned upon the
completion by the Optionee of one (1) full year of service in the employment of
the Employer following the date of grant of the Option set forth in paragraph 1
hereof. 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. Furthermore and notwithstanding anything else
herein, Options granted pursuant to this Plan shall be subject to the right of
the North Carolina Commissioner of Banks (the "Commissioner") and the Federal
Deposit Insurance Corporation (the "FDIC") to direct the Bank to require an
Optionee to exercise or forfeit his or her stock rights if the Bank's capital
falls below the minimum requirements, as determined by the Commissioner or FDIC.

         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
Bank'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 Bank with one or more other
entities in which the Bank is not the surviving entity, or the transfer of all
or substantially all of the assets or shares of the Bank to another person or
entity. Notwithstanding anything else herein, for purposes of this Agreement the
term "change in control," shall not include a transaction approved by the Board
which results in the Bank merging with, transferring its assets to or becoming
the subsidiary of a corporation newly formed at the direction of the Board for
the purpose of such transaction or serving as a bank holding company for the
Bank, and in connection with which transaction the Bank's shareholders (other
than those who exercise statutory rights of dissent and appraisal) become the
holders of substantially all of the voting stock of such corporation. Further,
notwithstanding anything else herein, a transaction or event shall not be
considered a change in control if, prior to the consummation or occurrence of
such transaction or event, the Optionee and the Bank agree in writing that the
same shall not be treated as a change in control for purposes of this Agreement.

         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 only be paid in cash and must be
accompanied by a notice of exercise. 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. 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

                                        3
<PAGE>

shares shall have been issued and delivered and the individual's name entered as
a shareholder of record on the books of the Bank for such shares.

         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, and regardless of any vesting pursuant to paragraph 3
hereof, 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 or disability or following a "change in control" of the Bank or (iii)
the date which is ten (10) years from the date of grant of the Option set forth
in paragraph 1 hereof. Options which terminate within ten (10) years from the
date of grant set forth in paragraph 1 shall be available again for grant to
certain officers and employees as may be determined by the Committee. 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, immediately in full and 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, subject to Board approval in each instance, (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) Notwithstanding anything else herein, in the event that an
Optionee should die (i) while employed by the Bank or any of its subsidiaries,
(ii) within three (3) months after retirement, (iii) within three (3) months
after Optionee's termination following a change in control, or (iv) within
twelve (12) months after Optionee's termination by reason of Optionee's

                                        4
<PAGE>

disability, 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 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 following a "change in control" of the Bank, the Optionee shall have
the right to exercise the Option, to the extent that it has not been exercised
by the Optionee or expired, immediately in full and at 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 Bank's obligation to issue shares of Common Stock upon
exercise of the Option is expressly conditioned upon (i) the completion by the
Bank 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 Bank 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 Bank 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.

                                        5
<PAGE>

              (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 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 Bank'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 Bank or its shareholders to make or
authorize any adjustment, recapitalization, reorganization, or other change in
the Bank's capital structure or its business, or any merger or consolidation of
the Bank, 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 Bank, or any sale or transfer of all or any part of the
Bank'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 Bank,
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 of this
Agreement, 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 Bank at its principal office at 2593
West Roosevelt Boulevard, Monroe, North Carolina 28110; 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 Bank.

                                        6
<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 the County of
Union, 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 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 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 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

                                        7
<PAGE>

the typewritten word "SEAL" appearing beside his or her name, all done this the
day and year first above written.

                                    AMERICAN COMMUNITY BANK


                                    By: _____________________________________
                                        Kenneth W. Long, Chairman

ATTEST:

-------------------------------------
____________, Corporate Secretary


[Corporate Seal]


                                    OPTIONEE

                                    By:     ___________________________(SEAL)

                                            ---------------------------


                                       8
<PAGE>



                                                                       EXHIBIT A


                              NOTICE OF EXERCISE OF
                             INCENTIVE STOCK OPTION


         To:      The Compensation Committee of the Board of Directors of
                  American Community Bank


The undersigned hereby elects to purchase ________ whole shares of Common Stock
of American Community Bank (the "Bank") pursuant to the Incentive Stock Option
granted to the undersigned in that certain Incentive Stock Option Agreement
between the Bank 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. The
effective date of this election shall be ____________________, , or the date of
receipt of this Notice by the Bank if later.

Executed this __________ day of _______________, ______, at ___________________.


                                            ------------------------------------

                                            ------------------------------------


                                            ------------------------------------
                                            (Social Security Number)


                                       9