Exhibit 10.1

AVENUE FINANCIAL HOLDINGS, INC.

ANNUAL EXECUTIVE INCENTIVE PLAN

 

1. Purpose.

The purposes of the Plan are to reinforce corporate, organizational and
business-development goals, to promote the achievement of year-to-year financial
and other business objectives and to reward the performance of selected
executive officers in fulfilling their professional responsibilities on an
annual basis. The Plan is intended to satisfy the exception for qualified
performance-based compensation under Treasury Regulation Section 1.162-27(e)
with regard to Code Section 162(m)(4)(C) and shall be administered and
interpreted so as to ensure such compliance with such exception. In addition,
the Plan is intended to be exempt from the requirements of Code Section 409A by
reason of the short-term deferral exception under Treasury Regulation
Section 1.409A-1(b)(4). The Plan is not intended to be (and shall not be
construed and administered as) an employee benefit plan within the meaning of
ERISA.

 

2. Definitions.

The following terms, as used herein, shall have the following meanings:

(a) “Affiliate” means a Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified. An entity shall be deemed an Affiliate of the Company for
purposes of this definition only for such periods as the requisite ownership or
control relationship is maintained.

(b) “Award” means an incentive compensation award, granted pursuant to the Plan
that is contingent upon the attainment of one or more Performance Goals with
respect to a Performance Period and subject to Sections 5(b) and 6(c).

(c) “Base Salary” means a Participant’s annual base salary as in effect on the
date on which the applicable Performance Goals are established with respect to a
Performance Period.

(d) “Board” means the Board of Directors of the Company.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means the Compensation Committee of the Board, which shall be
comprised solely of two or more outside directors meeting the requirements of
Code Section 162(m)(4)(C)(i) to the extent the Plan is intended to satisfy the
requirements of Code Section 162(m).

(g) “Company” means, Inc., a Tennessee corporation.

(h) “Covered Award” means an Award (i) that will be paid to a Covered Employee,
(ii) that the Committee expressly designates as performance-based compensation
and intends to be fully deductible under Code Section 162(m), and (iii) that
will be paid following the disclosure and shareholder approval required by Code
Section 162(m)(4)(C)(ii).

(i) “Covered Employee” means an individual who is a “covered employee” within
the meaning of Code Section 162(m)(3).

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(j) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(l) “Participant” means an employee of the Company or any Subsidiary who is,
pursuant to Section 4 of the Plan, selected to participate herein.

(m) “Performance Goals” means performance goals based on one or more of the
following criteria: (i) return on assets, return on tangible assets, cash return
on assets, or cash return on tangible assets; (ii) return on equity, return on
tangible equity, cash return on equity, or cash return on tangible equity;
(iii) levels of or changes in levels of net interest income, net interest
margin, efficiency ratio, cash efficiency ratio, provision, provision rate, net
charge-off, net charge-off ratio, fee income, total revenue, earnings per share,
pre-tax income, or net income; (iv) levels or trends in specified financial
statement line items or components thereof (may include, but is not limited to,
cost of deposits, asset growth, growth of deposits, cost of funds, loan growth,
loan yields, or interest earning asset yields); (v) levels of or trends in
non-performing assets (either including or excluding TDRs); (vi) earnings per
share (basic or diluted), or core earnings per share and growth (vii) book value
per share, tangible book value per share or growth thereof; (viii) absolute or
relative metrics of stock performance, dividends, and total capital returned to
shareholders; (ix) achieving or maintaining specified levels of performance
under GAAP and/or regulatory capital (x) strategic business criteria, consisting
of one or more objectives based on meeting specified market penetration,
geographic business expansion, customer satisfaction, employee satisfaction,
human resources management, supervision of litigation, regulatory matters,
information technology, and goals relating to acquisitions, divestitures, joint
ventures and similar transactions, and budget comparisons; (xi) personal
professional objectives, including any of the foregoing performance goals, the
implementation of policies and plans, the negotiation of transactions, the
development of long term business goals, formation of joint ventures, and the
completion of other corporate transactions; and (xii) any combination of, or a
specified increase in, any of the foregoing, and any of the foregoing goals may
be measured at enterprise level or at business line or geographic level.
Performance Goals not specified herein may be used to the extent that an Award
is not intended to comply with Code Section 162(m). Where applicable, the
Performance Goals may be expressed in terms of attaining a specified level of
the particular criteria or the attainment of a percentage increase or decrease
in the particular criteria, and may be applied to one or more of the Company or
Affiliate thereof, or a division or strategic business unit of the Company, or
may be applied to the performance of the Company relative to a market index, a
group of other companies or a combination thereof, all as determined by the
Committee. The Performance Goals may include a threshold level of performance
below which no payment shall be made (or no vesting shall occur), levels of
performance at which specified payments shall be made (or specified vesting
shall occur), and a maximum level of performance above which no additional
payment shall be made (or at which full vesting shall occur). Each of the
foregoing Performance Goals shall be determined in accordance with generally
accepted accounting principles, and the Committee shall have the authority to
make equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any Affiliate thereof or the
financial statements of the Company or any Affiliate thereof, in response to
changes in applicable laws or regulations, or to account for items of gain, loss
or expense determined to be extraordinary or unusual in nature or infrequent in
occurrence or related to the disposal of a segment of a business or related to a
change in accounting principles, provided that the Committee’s ability to make
equitable adjustments to the Performance Goals applicable to any Covered Awards
shall be governed by Section 6(d).

(n) “Performance Period” means, unless the Committee determines otherwise, means
a fiscal year of the Company or, for a Participant who is first hired as, or
first becomes eligible for this Plan as, a Participant after the first day of
the fiscal year and who becomes a Participant during the fiscal year, such
portion of the fiscal year as determined by the Committee.

(o) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any Subsidiary thereof, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any Subsidiary thereof, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of shares of the Company.

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(p) “Plan” means the Avenue Financial Holdings, Inc. Annual Incentive Plan, as
amended from time to time.

(q) “Subsidiary” means, with respect to any Person, as of any date of
determination, any other Person as to which such first Person owns or otherwise
controls, directly or indirectly, more than 50% of the voting shares or other
similar interests or a sole general partner interest or managing member or
similar interest of such other Person. An entity shall be deemed a Subsidiary of
the Company for purposes of this definition only for such periods as the
requisite ownership or control relationship is maintained.

 

3. Administration.

(a) Administrator. At the discretion of the Board, the Plan shall be
administered either (i) by the Board or (ii) by the Committee. In the event the
Board is the administrator of the Plan, references herein to the Committee shall
be deemed to include the Board. The Plan shall be administered in accordance
with the requirements of Code Section 162(m) to the extent necessary and
desirable to maintain qualification of Covered Awards under the Plan under Code
Section 162(m) and, to the extent applicable, Rule 16b-3 under the Exchange Act.

(b) Powers and Authorities. The Committee shall have the authority in its sole
discretion, subject to and not inconsistent with the express provisions of the
Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan, including, without limitation, the authority to:
(i) grant Awards; (ii) determine the persons to whom and the time or times at
which Awards shall be granted; (iii) determine all of the terms and conditions
(including but not limited to the Performance Goals) relating to any Award;
(iv) determine whether, to what extent, and under what circumstances an Award
may be settled, cancelled or forfeited; (v) make adjustments in the Performance
Goals; (vi) construe and interpret the Plan and any Award; (vii) prescribe,
amend and rescind rules and regulations relating to the Plan; and (viii) make
all other determinations deemed necessary or advisable for the administration of
the Plan.

(c) Binding Effect. All decisions made by the Committee pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants. No member of the Board or the
Committee, nor any officer or employee of the Company or any Subsidiary thereof
acting on behalf of the Board or the Committee, shall be personally liable for
any action, omission, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board or the Committee
and each and any officer or employee of the Company and of any Subsidiary
thereof acting on their behalf shall, to the maximum extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
omission, determination or interpretation.

 

4. Eligibility.

Awards may be granted to executive employees of the Company and its
Subsidiaries. In determining the persons to whom Awards shall be granted and the
Performance Goals relating to each Award, the Committee shall take into account
such factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.

 

5. Terms of Awards.

(a) Determination of Performance Goals; Notification. With respect to each
Performance Period, the Committee shall specify the Performance Goals applicable
to each Award no later than 90 days following the commencement of such
Performance Period. At such time the Committee shall also, if applicable,
specify the threshold, target and maximum levels of performance applicable to
the Performance Goals. Performance Goals need not be the same for each
Participant. Awards for any Performance Period may be expressed as a dollar
amount or as a percentage of the Participant’s Base Salary. Participants shall
be notified of their Awards with respect to each

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Performance Period. Such notification shall include the Performance Goals with
respect to the Award, the weight to be given to each such Performance Goal and,
if applicable, the threshold, target and maximum levels of performance
applicable to such Performance Goals.

(b) Determination of Achievement of Performance Goals. Following the end of the
Performance Period and prior to the payment of an amount under any Award, and in
any event not later than 60 days following the end of such Performance Period,
the Committee shall determine whether, and to what extent, the applicable
Performance Goals have been satisfied. Notwithstanding the foregoing and the
terms of Section 2(m), the Committee may, in its sole discretion, reduce an
amount of an Award otherwise determined pursuant to the Plan.

(c) Time and Form of Payment. All payments in respect of Awards granted under
the Plan shall be made in cash or, if approved by the Committee, shares of
common stock, with such vesting or other restrictions as may be set forth in the
Award, no later than 60 days following the last day of the Performance Period to
which an Award relates. Any shares of common stock to be issued as payment in
respect of Awards will be issued from the Company’s 2012 Long-Term Incentive
Plan. Notwithstanding the foregoing, payment of Awards intended to comply with
the “short-term deferral” exemption from Code Section 409A shall be made no
later than the 15th day of the third month following the later to occur of
(i) the end of the Company’s fiscal year in which the relevant Performance
Period ended and (ii) the end of the calendar year in which such Performance
Period ended.

(d) Deferral of Payment. The Committee shall have the authority to establish
such procedures and programs that it deems appropriate to provide Participants
with the ability to defer receipt of cash under Awards. If such a deferral
procedure or program is adopted, the terms of such procedure or program shall be
set forth in writing prior to its adoption and shall comply with Code
Section 409A.

 

6. Special Terms for Covered Awards.

Notwithstanding any other provision of this Plan to the contrary, the following
provisions shall control with respect to any Covered Award:

(a) Preestablished Performance Goals. The Performance Goals upon which a Covered
Award is based or subject shall be established by the Committee in writing not
later than 90 days after the commencement of the Performance Period, provided
that the outcome is substantially uncertain at the time the Committee actually
establishes such factors and the objectives upon which they are based (or at
such earlier time as may be required or such later time as may be permissible
under Code Section 162(m)). Any Awards granted by the Committee based on
Performance Goals not specifically provided under this Plan shall not be
considered Covered Awards if it determines that use of such Performance Goals
would cause a Covered Award to not be deductible under Code Section 162(m).

(b) Certification of Performance Goals. Prior to the payment of a Covered Award,
the Committee shall determine and certify in writing whether and to what extent
the Performance Goals referred to in Section 6(a) have been satisfied for an
applicable Performance Period.

(c) Discretionary Reduction of Covered Award. Notwithstanding anything in this
Plan to the contrary, the Committee may, in its sole discretion, reduce a
Covered Award otherwise determined pursuant to the Plan.

(d) Limited Adjustments of Selected Performance Goals. In the event of (i) any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares; (ii) any purchase, acquisition,
sale, disposition or write-down of a significant amount of assets or a
significant business; (iii) any change in accounting principles or practices,
tax laws or other such laws or provisions affecting reported results; (iv) any
uninsured catastrophic losses or extraordinary non-recurring items as described
in Accounting Principles Board Opinion No. 30 or in management’s discussion and
analysis of financial performance appearing in the Company’s annual report to
stockholders for the applicable year; or (v) any other similar change, in each
case with respect to the Company or any other entity whose performance is
relevant to the achievement of any Performance Goal included in a Covered Award,
the Committee (or, if the Company is not the surviving corporation

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in any such transaction, a committee of the board of directors of the surviving
corporation consisting solely of two or more “outside directors” within the
meaning of Code Section 162(m)(4)(C)(i)) may , without the consent of any
affected Participant, amend or modify the terms of any outstanding Covered Award
that includes any Performance Goals based in whole or in part on the financial
performance of the Company (or any Subsidiary or division thereof) or such other
entity so as equitably to reflect such event, such that the criteria for
evaluating such financial performance of the Company or such other entity (and
the achievement of the corresponding Performance Goals) shall be substantially
the same (as determined by the Committee or such committee of the board of
directors of the surviving corporation) following such event as prior to such
event; provided, however, that any such change to any outstanding Covered Award
pursuant to this Section 6(d) must be made in such a manner that it is
independently determinable by a hypothetical third party having knowledge of the
relevant facts, and the Committee shall take no action pursuant to this
Section 6(d) that would constitute an impermissible exercise of discretion
within the meaning of Code Section 162(m), or would otherwise cause the Covered
Award to not be deductible under Code Section 162(m).

(e) Maximum Amount. The maximum amount of any Covered Award to any Covered
Employee with respect to a Performance Period, determined as of the time the
Covered Award is paid, shall not exceed 50% of Base Salary.

 

7. Termination of Employment.

7.1 Termination Due to Death or Disability. Unless the Committee determines
otherwise in its sole discretion, in the event a Participant’s employment with
the Company and all Subsidiaries is terminated by reason of death or disability
during a Performance Period, the Participant (or the Participant’s estate)
(subject to the Committee’s discretion as allowed by Sections 5(b) and 6(c) of
the Plan) shall be paid a percentage of the amount earned according to the terms
of the Award equal to the portion of the Performance Period through the
Participant’s death or disability, as the case may be, as determined by the
Committee.

7.2 Termination for Reasons Other than Death or Disability. Unless the Committee
determines otherwise in its sole discretion, in the event a Participant’s
employment is terminated with the Company and all Subsidiaries prior to the end
of the Performance Period for any reason other than death or disability, or a
Participant is in the employ of a Subsidiary and the Subsidiary ceases to be a
Subsidiary of the Company (unless the Participant continues in the employ of the
Company or another Subsidiary), the Participant’s Award for such Performance
Period shall be immediately forfeited, and the Participant shall have no right
to any payment thereafter; provided, however, that under such circumstances the
Committee may pay the Participant after completion of the Performance Period, an
amount not to exceed a percentage of the amount earned according to the terms of
the Award equal to the portion of the Performance Period through the
Participant’s termination. Any Award payable in accordance with Section 5(b) in
respect of a completed Performance Period, but unpaid, shall be paid to such
Participant in accordance with Section 5(c) or, to the extent payment of the
Award has been deferred pursuant to Section 5(d), the Award shall be paid in
full at the earliest such time as is provided under such deferral arrangement.

 

8. General Provisions.

(a) Compliance with Legal Requirements. The Plan and the granting and payment of
Awards, and the other obligations of the Company under the Plan and any Award,
shall be subject to all applicable Federal and state laws, rules and regulations
(including 12 C.F.R. Part 359) and to required approvals by any regulatory or
governmental agency.

(b) Nontransferability. A Participant’s rights and interests in and to payment
of any Award under the Plan may not be assigned, transferred, encumbered or
pledged other than by will or the laws of descent and distribution and are not
subject to attachment, garnishment, execution or other creditor’s processes.

(c) Participant Rights. No employee of the Company or any Subsidiary or any
other person shall have any claim to be granted any Award under the Plan. There
is no obligation for uniformity of treatment among Participants. Nothing in the
Plan or in any Award granted pursuant hereto shall constitute a contract of
employment or confer upon any Participant the right to continue in the employ of
the Company in any position or at any level of compensation, to be entitled to
any remuneration or benefits not set forth in the Plan or under such Award, or
to interfere with or limit in any way the right of the Company to terminate such
Participant’s employment. The granting of one Award to an eligible employee
shall not entitle such individual to any additional grants of Awards thereafter.

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(d) Withholding Taxes. The Company or its Subsidiary shall have the right to
withhold the amount of any taxes that the Company or such Subsidiary may be
required to withhold before delivery of payment of an Award to the Participant
or other person entitled to such payment, or to make such other arrangements for
the withholding of taxes that the Company deems satisfactory.

(e) Compliance with Code Section 162(m). To the extent any provision of the Plan
or an Award or any action of the Committee or the Company as it relates to a
Covered Award may result in the application of Code Section 162(m)(1) to
compensation payable to a Participant, such provision or action shall be deemed
null and void to the extent permitted by law and deemed advisable to the
Committee.

(f) Compliance with Code Section 409A. The Plan is intended to comply with the
requirements of Code Section 409A, or an exception or exemption therefrom, and
accordingly, to the maximum extent permitted, the Plan shall be interpreted and
administered in accordance with such intention. Any payments described in the
Plan that are due within the “short-term deferral period” as defined in the
regulations under Code Section 409A shall not be treated as deferred
compensation unless applicable law requires otherwise. All payments to be made
upon a termination of employment under this Plan shall, to the extent required
to avoid an accelerated or additional tax under Code Section 409A, be made only
upon a “separation from service” within the meaning under Code Section 409A and
the regulations thereunder. In addition, to the extent required in order to
avoid an accelerated or additional tax under Code Section 409A with respect to a
specified employee as defined in Code Section 409A, amounts that would otherwise
be payable pursuant to this Plan during the six-month period immediately
following Participant’s separation from service shall instead be paid on the
first business day after the date that is six months following Participant’s
separation from service (or, if earlier, Participant’s death).

(g) Amendment and Termination of the Plan. The Plan may at any time be amended,
modified, or terminated, as the Committee in its discretion determines. Such
amendment, modification, or termination of the Plan shall not require the
consent, ratification, or approval of any party, including any Participant. The
Committee may amend the Performance Goals as well as any Award (including
increasing, decreasing or eliminating any or all Awards) prior to the payment
thereof to the extent it deems appropriate for any reason, including compliance
with applicable securities laws. Notwithstanding the foregoing, to the extent
the Committee has expressly designated an Award as a Covered Award, the
Committee shall not have any authority to amend or modify the terms of any
Covered Award in any manner that would impair its deductibility under Code
Section 162(m).

(h) Unfunded Status of Awards. A Participant’s only interest under the Plan
shall be the right to receive a payment of cash pursuant to the terms of an
applicable Award and the Plan. The Plan is intended to constitute an “unfunded”
plan for incentive compensation, and no portion of the amount payable to a
Participant under this Plan shall be held by the Company or any Subsidiary in
trust or escrow or any other form of asset segregation. With respect to any
payments not yet made to a Participant pursuant to an Award, to the extent that
a Participant acquires a right to receive a payment of cash under the Plan,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company, and no
trust in favor of any Participant shall be implied.

(i) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Tennessee without
giving effect to the conflict of laws principles thereof.

(j) Effective Date/ Term. The Plan shall take effect as of April 30, 2015. The
Plan shall have a term of three years unless renewed by the Board.

(k) Clawback. All Awards are subject to any Company’s clawback policy as may be
in effect from time to time and, in accordance with such policy, may be subject
to the requirement that the Awards be repaid to the Company after they have been
distributed to the Participant. The action permitted to be taken by the Board
under this Section 8(k) is in addition to, and not in lieu of, any and all other
rights of the Board and/or the Company under applicable law and shall apply
notwithstanding anything to the contrary in the Plan.