Exhibit (10)(xvi)

Bank of Oak Ridge

Management Incentive Plan

Administrative Rules

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Bank of Oak Ridge

Management Incentive Plan

1. Purpose

The purpose of the Bank of Oak Ridge Management Incentive Plan (the “Plan”) is
to provide key employees of Bank of Oak Ridge (the “Bank”) with the opportunity
to receive payments of additional compensation distributed based upon the
earnings of the Bank, and on the achievement of a broad set of corporate and/or
individual objectives (the “Objectives”). The Plan provides an incentive to
employees to enhance the size and earnings of the Bank, within the constraints
of safe, sound banking practices.

At the same time it must be emphasized that the Plan in no way contravenes the
importance of either long-term goal achievement or the proper exercise of
appropriate management accountability. These goals and areas of accountability
include, but are not limited to, the following items:

 

  1. Collection, recovery, charge-off, and bankruptcy activity.

 

  2. Maintenance and increase in market share through salesmanship and customer
service.

 

  3. Continued salesmanship (call programs) and improved customer service.

 

  4. Employee management and development (staff supervision, tracking and
cross-training, employee turnover, etc.)

 

  5. Development of new and better ways of doing business.

 

  6. Appropriate audit and documentation procedures.

 

  7. Responsible management of fixed assets/resources.

 

  8. Adherence to all Bank policy and philosophy.

 

  9. Maintenance of the highest ethical standards.

It is anticipated that the limited amount of incentive potential available
through the Plan, as compared to the size of salaries and incentives paid for
performance of these long term management accountabilities, in conjunction with
the controls built into the performance measures in the Plan, will create the
appropriate focus. The Board of Directors, through the Corporate Governance
Compensation and Nominating Committee (the” Compensation Committee” or
“Committee”), and the Chief Executive Officer administers the plan.

At the Committee’s discretion funds may be used to pay discretionary bonuses. As
an example an employee with outstanding overall performance could receive a
discretionary bonus in recognition of performance unaccounted for through the
plan. It is understood that discretionary bonuses will be an exception as
opposed to the rule.

2. Effective Date and Plan Period

The Effective Date of the Plan shall be January 1, 2009. The Plan Period shall
be divided into two segments; (i) January through June and (ii) July through
December of each calendar year.

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3. Eligibility

An individual shall be eligible to become a Participant in the Plan who
satisfied the following requirements:

 

  a. The individual is an employee of the Bank. For this purpose, an individual
shall be considered to be an “employee” if there exists between the individual
and the Bank the legal and bona fide relationship of employer and employee. An
individual shall be considered an employee if he/she is regularly scheduled to
work at least 20 hours per week.

 

  b. The individual employees’ position is considered by the Committee to be
“key” and to have a direct impact on the size and earnings of the Bank.

 

  c. The individual is approved by the Compensation Committee as a Participant
in the Plan.

4. Participation

Prior to the beginning of each Plan Period, the Chief Executive Officer shall
recommend to the Compensation Committee each individual or position eligible to
become a Participant in the Plan (a “Participant”) with respect to such Plan
Period. The Compensation Committee in its discretion shall approve participants.
In the event of the promotion of an employee or the hiring of a new employee
during the Plan Period, the Compensation Committee, upon the recommendation of
the Chief Executive Officer, may approve the entry of a Participant into the
Plan Period. However, if the position has been previously approved, no such
approval shall be required. In such case, the Incentive Award determined under
Section 5 with respect to such Participant shall be the percentage as determined
by the Compensation Committee for the position multiplied by the individual’s
job salary grade range mid-point during the period of time he or she was
eligible to participate. However, in no event shall an employee be a Participant
for less than the full final three months of the Plan Period. Participation in
the Plan shall be subject to the provisions of the Plan and such other terms and
conditions, as the Compensation Committee shall provide.

5. Incentive Award

5.1 Subject to Section 5.2, each Participant for a Plan Period shall receive an
Incentive Award determined by multiplying the percentage achieved of each of the
individual’s objectives (“key drivers”) by a weighting factor (positive or
negative). A Potential Award is then multiplied by the sum of the weights
derived. When no individual objectives related to a Plan Period have been
determined for a Participant, then the Participant’s objectives for the purpose
of this Plan shall be the Corporate Objectives approved by the Committee at the
beginning of such Plan Period.

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For purposes of this section 5, the following definitions shall apply:

“Potential Award” means with respect to each Participant for the Plan Period a
dollar amount determined by multiplying the individual’s salary by a percentage
designed by the Compensation Committee. The Potential Award represents the
Incentive Award payable to the Participant in the event that Corporate and
Participant’s personal objectives are achieved for the Plan Period. In the event
that no personal objectives are established for a Plan Period, the Potential
Award represents the Incentive Award payable to the Participant in the event
that all of the Corporate Objectives established at the beginning of the Plan
Period are fully achieved for the Plan Period.

“Adjusted Potential Award” is the pro-rata share of a pool established by the
sum of all participants’ Potential awards in the Plan Period. The pool is
accrued based upon the achievements of net income (pre-incentive, pretax)
objectives established by the CEO and approved by the Compensation Committee.

“Incentive Award” means by multiplying the actual cash value paid to the
participant at the end of the Plan Period, determined by multiplying the
percentage of each of the individual’s objectives (established by the Chief
Executive Officer), by weighting factor (positive or negative) established by
the Chief Executive Officer, and multiplying that by the adjusted potential
Award pro-rata as to salary.

5.2 Notwithstanding any other provision of this Plan, the Compensation Committee
shall review and approve the payment of the Incentive Award as determined under
Section 5.1 and, in its discretion, may adjust the amount of the payment as it
deems necessary to meet the purpose of this Plan and the best interest of the
Bank. In no event shall an Incentive Award be paid to a Participant who in the
sole determination of the Compensation Committee has violated established
policies and practices of the Bank as reflected in the minutes of the Board.
Where interpretations of achievement of objectives are inconsistent, the
judgment of the Compensation Committee will prevail.

Individual objectives are not to be achieved at the expense of the overall Bank
objectives or long-term objectives of any individual. For example, if an
employee achieves individual objectives, but in so doing clearly creates
unnecessary strife among peers or subordinates, violates policy, avoids
behaviors that develop business in the long term, or in any way ignores the best
interest of the Bank, then no Incentive Award will be paid.

6. Termination of Employment during Plan Period

The Participant shall not receive an Incentive Award with respect to a Plan
Period if, for reasons other than a Termination Event as defined in this
Section 6, the employment of the Participant by the Bank, or a Subsidiary, is
terminated during the Plan Period or the duties of the position of the
Participant are changed during the Plan Period so that he/she is no longer in a
position as described in Section 3. The following shall each constitute a
“Termination Event”:

 

  a. Death of the Participant while employed by the Bank.

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  b. Retirement of the Participant from the Bank with the approval of the Board.

 

  c. Disability of the Participant while employed by the Bank. For this purpose,
the term “disability” shall mean the inability of a Participant, by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or to be of long continued or of indefinite duration, to
perform his duties for the Bank. The determination of disability shall be made
by the Compensation Committee based on medical evidence from an independent
physician selected by the Participant with the approval of the Compensation
Committee; and, shall date from the original cessation of work.

In the event of a Termination Event, the Participant or his Beneficiary shall
receive an Incentive Award with respect to such Plan Period equal to the amount
determined under Section 5 multiplied by a fraction, the numerator of which is
the number of full calendar months during the Plan Period in which he was a
Participant prior to the Termination Event and the denominator of which is
twelve. Participants in multiple selected positions, each determined to be a
participant position shall receive an amount reflecting the time-weighted
service in each position. Participants departing a Participant position for a
non-Participant position, provided that such departure is not pursuant to poor
performance, shall receive an award reflecting the period of the year in which
they served.

7. Leaves of Absence

In general, the determination of award for an individual who has taken a leave
of absence during the Plan Period shall mirror the pro-rata payout provisions of
termination. However, the Compensation Committee, acting on behalf of the Board
of Directors, shall in its sole discretion determine the amount of award in each
case so as to preserve the intent of the Plan.

8. Payment of Incentive Awards

Unless otherwise determined by the Compensation Committee, the Incentive Award
for a Plan Period shall be paid by the Bank in cash to the Participant or his
Beneficiary by the later of (i) ninety days following the end of the Plan
Period, or (ii) thirty days following the determination of the actual financial
results for the Plan Period and the final achievement of the Participant’s
individual objectives (if applicable). A Participant must be an employee on the
day of payment in order to be eligible.

9. Nonassignability of Incentive Awards

The right to receive payment of the Incentive Award shall not be assignable or
transferable (including by pledge or hypothecation) other than by will or the
laws of intestate succession.

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10. No Trust Fund: Unsecured Interest

A Participant shall have no interest in any fund or specified asset of the Bank.
No trust fund shall be created in connection with the Plan or any Incentive
Award, and there shall be no required funding of amounts, which may become
payable under this Plan. Any amounts which are or may be set aside under the
provisions of this Plan shall continue for all purposes to be a part of the
general assets of the Bank, and no person other than the Bank shall, by virtue
of the provisions of this Plan, have any interest in such assets. No right to
receive payment from the Bank pursuant to the Plan shall be greater than the
right of any unsecured creditor of the Bank.

11. No Right or Obligation of Continued Employment

Nothing contained in the Plan shall require the Bank to continue to employ the
Participant, nor shall the Participant be required to remain in the employment
of the Bank.

12. Withholding

There shall be deducted from the payment of the Incentive Award the amount of
any tax or other amount required by any governmental authority to be withheld
and paid over by the Bank to such authority for the account of the person
entitled to such payment.

13. Retirement Plans

In no event shall any amounts accrued or payable under this Plan be treated as
compensation for the purpose of determining the amount of contributions or
benefits to which a Participant shall be entitled under any retirement plan to
which the Bank may be a party. Actual payments (as opposed to accruals) will be
treated as compensation for accruing benefits under all retirement/pension
plans, if such plans include bonuses or incentives in their definition of
compensation.

14. Dilution or Other Adjustments

If there is any change in the Bank because of a merger, consolidation or
reorganization involving the Bank, the Compensation Committee shall make such
adjustments to any provisions of this Plan, as the Compensation Committee deems
desirable to prevent the dilution or enlargement of rights granted hereunder.

15. Administration of the Plan

The Chief Executive Officer of the Bank with the consent and approval of the
Board shall administer the Plan; provided, that the Compensation Committee shall
determine all matters pertaining to the Incentive Award of the Chief Executive
Officer. Subject to the provisions of the Plan, the Compensation Committee shall
have plenary authority in its discretion, among other things, to designate the
Participants to receive Incentive Awards, to determine the Potential Award of
each Participant, to interpret the Plan and to prescribe, amend and rescind
rules and regulations relating to the Plan, provided that no member of the Board
shall take part in any action with respect to the decisions to pay an Incentive
Award to such member, or with respect to the terms or conditions of any
Incentive Award awarded to such member.

 

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16. Amendments and Termination of the Plans

The Plan may be amended or terminated at any time by the Board.

17. Binding on Successors

The obligations of the Bank under the Plan shall be binding upon any
organization, which shall succeed, to all or substantially all of the assets of
the Bank, and the term “Bank,” whenever used in the Plan, shall mean and include
any such organization after the succession.

18. Applicable Law

The Plan shall be governed by and construed in accordance with the laws of the
State of North Carolina.