<PAGE>

Exhibit 10(e)
-------------

                      AMERICAN COMMUNITY BANCSHARES, INC.
                       2001 INCENTIVE STOCK OPTION PLAN


          American Community Bancshares, Inc., a North Carolina corporation
(hereinafter referred to as the "Corporation"), does herein set forth the terms
of the American Community Bancshares, Inc. 2001 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") subject to
shareholder 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 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 to assist in the administration of this Plan. The Board may
authorize such
<PAGE>

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.

          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 eighty two thousand (82,000) 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 of the Corporation
which Options shall be granted based upon the past service and the continued
participation of those individuals in the operations of the Corporation. 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 schedule:

                                                        Percentage of
          Date When Such Options Become Vested       Such Options Vested
          ------------------------------------       -------------------

          Date of Grant                                        0%
          First Anniversary of Date of Grant                  20%
          Second Anniversary of Date of Grant                 40%
          Third Anniversary of Date of Grant                  60%
          Fourth Anniversary of Date of Grant                 80%
          Fifth Anniversary of Date of Grant                 100%

                                       2
<PAGE>

               (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
Corporation terminates for any reason, other than the Optionee's disability,
death, retirement, or following a "change in control" of the Corporation, 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
Corporation should terminate because of such Optionee's disability, death, or
retirement, or following 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 subparagraph 6(a) above, then,
notwithstanding the foregoing schedule 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 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 or merger of the Corporation with one or more other
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. 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 Corporation 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 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

                                       3
<PAGE>

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 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 be made in cash or in shares of Common Stock of the Corporation
having a fair market value at the time of exercise equal to the aggregate Option
Price.

          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.

                                       4
<PAGE>

          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 in
cash or in shares of the Common Stock of the Corporation 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 Corporation 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
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, 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

                                       5
<PAGE>

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, 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 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, 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 Corporation
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 Corporation 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 Corporation (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

                                       6
<PAGE>

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 Corporation or to a position as an
officer or an employee of the Corporation, nor shall it limit the right of the
Corporation 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 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 Subparagraph 13(d) hereof.

                                       7
<PAGE>

          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.

          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 the issued
and outstanding shares of Common Stock. 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

                                       8
<PAGE>

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.  This Plan shall not be
               ------------------------------------
effective until approved by the holders of a majority of the issued and
outstanding shares of Common Stock present or represented at an annual or
special meeting (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.

                                       9
<PAGE>

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 BANCSHARES, INC., a North Carolina 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 the American Community Bancshares, Inc.
2001 Incentive Stock Option Plan (hereinafter referred to as the "Plan") subject
to approval by the Corporation's shareholders; and

          WHEREAS, the shareholders of the Corporation at an annual meeting duly
called and held on April ____, 2001, 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 Corporation and its subsidiaries 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 subparagraphs 3(b) and 3(c)
                   ----------------
below, the Option shall vest and become exercisable in accordance with the
following schedule:
<PAGE>

        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 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 Corporation terminates for any reason, other than
the Optionee's death, disability, retirement, or following a change in control
of the Corporation, 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. 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,
                                       2
<PAGE>

merger, or consolidation of the Corporation with one or more other 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. 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 Corporation 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 Corporation, and in connection with which transaction the Corporation'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 Corporation
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 be paid in cash or in shares of
Common Stock of the Corporation 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 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.

          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 Corporation for a reason other than
retirement or disability or following 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. 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

                                       3
<PAGE>

the Board of Directors of the Corporation 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 Corporation 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 Corporation
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 Corporation 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, 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 Corporation
is terminated following 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, immediately in full and at any time within
three (3) months after the date of termination, but in

                                       4
<PAGE>

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 Corporation or
to a position as an officer or an employee of the Corporation, nor shall it
limit the right of the Corporation 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, 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.

                                       5
<PAGE>

               (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 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 Corporation 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 Corporation.

          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.

                                       6
<PAGE>

          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 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.

                                       7
<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.

                    AMERICAN COMMUNITY BANCSHARES, INC.


                    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 Bancshares, Inc.


The undersigned hereby elects to purchase ________ whole shares of Common Stock
of American Community Bancshares, 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 or in shares of the $1.00 par value Common Stock
of the Corporation.  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 _________________, ______, at _________________.


                         ______________________________________
                         ______________________________________


                         _______________________________________
                         (Social Security Number)

                                       9