Document:

CFO Employment Agreement dated Jan 2015

EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 1st day of January, 2015, by and among Curt A. Christianssen (the "Executive"), on the one hand, and Pacific Mercantile Bank, a California banking corporation (the "Bank"), on the other hand (Executive and the Bank collectively, the “Parties”).  
RECITALS 
WHEREAS, Pacific Mercantile Bancorp (“PMB”) is a bank holding company registered under the Bank Holding Company Act of 1956, as amended, subject to the primary supervision and regulation of the Board of Governors of the Federal Reserve System (“FRB”).
WHEREAS, the Bank is a California chartered commercial bank and wholly-owned subsidiary of PMB, subject to the primary supervision and regulation of the California Department of Business Oversight (“CDBO”) and the FRB by  virtue of its membership in the Federal Reserve Bank of San Francisco.
WHEREAS, it is the intention of the Parties to enter an employment agreement for the purposes of assuring the services of Executive as the Executive Vice President, Chief Financial Officer of the Bank and PMB on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, based on the foregoing premises and in consideration of the mutual covenants and representations contained herein, the Parties hereto agree as follows:
1.Term.  The Bank (the “Employer”) hereby employs Executive, and Executive hereby accepts employment with Employer, under the terms of this Agreement.  The term of this Agreement shall be for a period of three (3) years (the “Initial Term”), commencing as of January 1st, 2015 (the "Effective Date") subject to the termination provisions of paragraph 4.  The term of this Agreement, as in effect from time to time in accordance with the foregoing, shall be referred to herein as the "Term".  The period of time between the Effective Date and the termination of the Executive's employment hereunder shall be referred to herein as the “Employment Period.”
2.Employment.  
(a)Positions and Reporting. Executive shall be employed as the Executive Vice President, Chief Financial Officer of the Bank. During the Employment Period, Executive shall report directly to the Chief Executive Officer of the Bank. 
(b)Authority and Duties. Executive shall exercise such authority, perform such executive duties and functions and discharge such responsibilities as are reasonably associated with Executive's position as Executive Vice President, Chief Financial Officer, commensurate with the authority vested in Executive pursuant to this Agreement and consistent with the bylaws of the Bank and of PMB.  During the Employment Period, Executive shall devote his full business time, skill and efforts to the business of Employer and shall not during the Employment Period engage in any other business activities, duties, or pursuits whatsoever, or directly or indirectly render any services of a business, commercial, or professional nature to any other person or organization, whether for compensation or otherwise, without the prior written consent of the Board of Directors of Employer (the “Board”).  Notwithstanding the foregoing, Executive may (i) serve in any capacity with any civic, educational or charitable organization, or any trade association, without seeking or obtaining approval by the Board, provided such activities and service do not materially interfere or conflict with the performance of his duties hereunder and (ii) with the approval of the Board serve on the boards of directors of other corporations that are not involved in commercial banking or similar business activities; provided, however, Executive shall not directly or indirectly acquire, hold, or retain any beneficial interest in any business competing with or similar in nature to the business of Employer except passive shareholder investments in other financial institutions and their respective affiliates which no not exceed three percent (3%) of the outstanding voting securities in the aggregate in any single financial institution and its affiliates on a consolidated basis.
(c)Notwithstanding provisions of Section 2(b) to the contrary, following approval of this Agreement by the Compensation Committee of the Board of Directors, the Bank consents to the provision of services 

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by the Executive to Carpenter & Company and its subsidiaries and affiliates as described in and pursuant to the terms of that certain Reimbursement Agreement dated January 1, 2015 by and between the Bank and Carpenter & Company.
(d)Executive hereby represents and agrees that the services to be performed hereunder are of a special, unique, unusual, extraordinary, and intellectual character that gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.  Executive therefore expressly agrees that Employer, in addition to any other rights or remedies that Employer may possess, shall be entitled to injunctive and other equitable relief to prevent or remedy a breach of this Agreement by Executive.
3.Compensation and Benefits.
(a)Salary. During the Initial Term Executive shall receive an annual base salary of $300,000 payable in equal semimonthly payments (the "Base Salary"). Such Base Salary shall be subject to review in the eleventh (11th) month after the Effective Date, and at each anniversary of the Effective Date thereafter, or during Executive’s normal officer review period, for possible adjustment by the Chief Executive Officer in concurrence with the Compensation Committee of the Bank based on various factors including, but not limited to, market conditions, the consolidated results of operations of the Bank and PMB and the performance of Executive, but shall in no event be decreased from the level set forth above during the Initial Term.  All payments of Base Salary shall be subject to applicable adjustments for withholding taxes, pro-rations for any partial payment periods and such other applicable payroll procedures of the Bank.
(b)Salary Continuation During Disability.  If Executive for any reason (except as expressly provided below) becomes temporarily or permanently disabled so that he is unable to perform the duties under this Agreement, Executive shall be paid the Base Salary otherwise payable to Executive pursuant to subparagraph 3(a) of this Agreement, reduced by the amounts received by Executive from state disability insurance, or worker’s compensation or other similar insurance benefits through policies provided by Employer, for a period of six (6) months from the date of disability.  For purposes of this paragraph 3(b), “disability” shall be defined as provided in the Employer’s disability insurance program.
(c)Cash Incentive Payments.  Executive shall be eligible to participate in the Management Annual Incentive Plan.  Executive's bonus, if any, shall be paid in one lump sum to Executive at such time as other executive bonuses are paid.  The Chief Executive Officer retains the discretion to determine whether a pro-rata bonus is appropriate if the Executive is terminated or leaves the employ of the Bank prior to the annual determination of bonuses.  All cash incentive payments shall be subject to applicable adjustments for applicable withholding and payroll taxes.  Notwithstanding any provision of any incentive plan or arrangement, no right of continued employment or any modification of the “at will” nature of Executive’s employment with Employer shall be conferred upon Executive thereunder or result therefrom.
(d)Insurance Benefits.  During the Employment Period, Executive shall receive such group life, disability, and health (including medical, dental, vision and hospitalization), accident and disability insurance coverage and other benefits which Employer extends, as a matter of policy, to all of its executive employees, except as otherwise provided herein, and shall be entitled to participate in all benefit and other incentive plans of the Employer, on the same basis as other like employees of Employer. 
(e)Vacation.  Executive shall be entitled to four (4) weeks of annual vacation during the Employment Period at his then existing rate of Base Salary, which shall be scheduled in Executive's discretion, subject to and taking into account applicable banking laws and regulations and business needs.  Vacation will accrue in accordance with the Bank’s personnel policies.
(f)Business Expenses. During the Employment Period, Employer shall promptly reimburse the Executive for all documented ordinary and necessary business expenses incurred by Executive in the performance of his duties under this Agreement.  Executive shall also be reimbursed for reasonable expenses incurred in activities associated with promoting the business of Employer, including expenses for entertainment, travel, conventions, and educational programs.  All such expenses described above will be subject to compliance with applicable policies of Employer.  All such reimbursements shall be made upon presentation and approval of receipts, invoices or other appropriate evidence of such expense in accordance with the policies Employer in effect from time to time. 

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(g)Professional License Expenses.    During the Employment Period, Employer shall reimburse the Executive for all documented ordinary and necessary expenses incurred by Executive in maintaining professional business licenses and certifications that he possesses as of the date of this Agreement.  All such expenses described above will be subject to compliance with applicable policies of Employer.  All such reimbursements shall be made upon presentation and approval of receipts, invoices or other appropriate evidence of such expense in accordance with the policies Employer in effect from time to time.
(h)Car Allowance. The Bank shall provide the Executive with a monthly automobile allowance of $950.00 per month during the Employment Period.  Executive shall (A) obtain and maintain public liability insurance and property damage insurance policies with insurer(s) acceptable to Employer and with such coverage in such amounts as may be reasonably acceptable to Employer, and (B) provide copies of such policies, endorsements or other evidence of insurance acceptable to Employer. 
(i)Change in Control.  Employee shall be eligible to participate in the Pacific Mercantile Bancorp Change in Control Severance Plan pursuant to the terms and conditions contained therein. 
(j)Restricted Stock Grant.    PMB shall grant to Executive 15,000 shares of restricted PMB common stock vesting over the three year period commencing on the date of this Agreement and otherwise pursuant to PMB’s 2010 Equity Incentive Plan (the “Plan”).  Notwithstanding any provision of the Plan, the Restricted Stock Agreement or this Agreement or any other stock option or equity award agreement to the contrary, no right of continued employment or any modification of the “at will” nature of Executive’s employment with Employer shall be conferred upon Executive thereunder or result therefrom. 
(k)Sign-on Payment. Immediately following execution of this Agreement, PMB shall pay to Executive cash in the amount of $50,000 as a sign-on bonus payment.
4.Termination of Employment.  
(a)Termination for Cause. The Board of Bank may terminate Executive's employment hereunder for "Cause" or without "Cause." For purposes of this Agreement termination for “Cause” shall mean (i) conviction of a crime directly related to his employment hereunder, (ii) conviction of a crime involving moral turpitude, (iii) willful and gross mismanagement of the business and affairs of Employer, (iv) willful and intentional violation of any state or federal banking or securities laws, or of the bylaws, rules, policies or resolutions of Bank, or the rules or regulations of or any final order issued by the FRB, the CDBO, or the Federal Deposit Insurance Corporation (the “FDIC”), (v) any violation of the Employer’s policy against harassment, equal employment opportunity policy, drug and alcohol policy and/or the confidentiality agreement that shall Employee shall execute at the commencement of his employment and (vi) breach of any material provision of this Agreement.  For purposes of this Agreement, no act, or the failure to act, on Executive’s part shall be considered “willful” unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interests of Employer. Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a notice of termination.  In the event employment of Executive is terminated pursuant to this subparagraph 4(a), Employer shall have no further liability to Executive other than for compensation accrued and for reimbursement of business expenses incurred through the date of termination but not yet paid.
Termination under this subparagraph 4(a) shall not prejudice any remedy that the Employer may have at law, in equity, or under this Agreement.
(b)       Termination by Employer Without Cause or by Executive for Good Reason. Employer may terminate the employment of Executive without “Cause” (as defined in subparagraph 4(a)) at any time during the Employment Period by giving written notice to Executive specifying therein the effective date of termination.  Executive shall have the right at any time to terminate his employment with the Bank for any reason or for no reason.  For purposes of this Agreement, and subject to Employer’s opportunity to cure as provided in Section 4(c) hereof, Executive shall have "Good Reason" to terminate his employment hereunder if such termination shall be the result of:
(i)a material diminution during the Employment Period in the Executive's title, duties or responsibilities as set forth in Section 2 hereof without Executive’s consent;

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(ii)a material breach by Employer of the compensation and benefits provisions set forth in Section 3 hereof;
(iii)a material breach by Employer of any material terms of this Agreement; or
(iv)the relocation of Executive's principal place of employment to any location more than 50 miles from the Bank's headquarters at the Effective Date.
(c)     Notice and Opportunity to Cure.  Notwithstanding the foregoing, it shall be a condition precedent to Employer’s right to terminate this Agreement under subparagraph 4(a)(iv) and Executive's right to terminate his employment for "Good Reason" that (1) the party alleging a breach shall first have given the other party written notice stating with specificity the reason for the termination ("breach") and (2) if such breach is susceptible of cure or remedy, a period of 30 days from and after the giving of such notice to cure the breach.  If the breach cannot reasonably be cured or remedied within 30 days, the period for remedy or cure shall be extended for a reasonable time (not to exceed 30 days), provided the party against whom a breach is alleged has made and continues to make a diligent effort to effect such remedy or cure.
(d)    Termination Upon Death or Permanent Disability.  This Agreement shall terminate automatically upon: (i) the death of Executive, and (ii) the "permanent disability" of Executive as such term is defined in the disability insurance provided by Employer, or if such insurance is not provided by Employer, the term shall mean that Executive has been deemed by a medical care provider to indefinitely be unable to perform the essential functions of Executive’s position with or without accommodation.  If the Employment Period is terminated by reason of the permanent disability of the Executive, Employer shall give 30-days' advance written notice to that effect to the Executive or his representative.  Employer and Employee shall comply with any obligations they may respectively have, under state or federal law, to interact regarding reasonable accommodations. 
5.Consequences of Termination. The following are the benefits to which Executive is entitled upon termination of employment in all positions with Employer, and such payments and benefits shall be the exclusive payments and benefits to which Executive is entitled upon such termination.  Except in the case of termination of employment by Employer for Cause, or due to death, the post-termination payments (other than those required by law) and benefits shall only be provided if the Executive first enters into a form of general release agreement reasonably satisfactory to Employer releasing Employer from any and all claims, known and unknown, related to the Executive's employment with the Bank.
(a)Termination Without Cause or for Good Reason. In the event of termination of Executive's employment (i) by Employer without "Cause" (other than upon death or permanent disability), or (ii) by Executive for "Good Reason", Executive shall be entitled to the following severance pay:
(i)Severance Pay - a lump sum amount equal to twelve (12) months of the Executive's annual Base Salary.
(b)Termination Upon Disability.  In the event of termination of Executive's employment hereunder by Employer on account of permanent disability, Employer shall pay to Executive the accrued Base Salary and accrued and unused vacation earned through the date of disability.  Such payment shall be made no later than sixty (60) days after the date of disability.
(c)Termination Upon Death.  In the event of termination of Executive's employment hereunder on account of Executive's death, Employer shall pay to Executive’s beneficiary or beneficiaries or his estate, as the case may be, the accrued Base Salary and accrued and unused vacation earned through the date of death.  Such payment shall be made no later than sixty (60) days after the date of death.  In addition, Executive’s beneficiary(ies) or his estate shall be entitled to the payment of benefits pursuant to any life insurance policy of Executive, as provided for in Section 3(c) above.  Executive's beneficiary or estate shall not be required to remit to Employer any payments received pursuant to any life insurance policy purchased pursuant to Section 3(c) above.
(d)Termination for Cause or Due to End of the Term.  In the event the employment of Executive is terminated by Employer for Cause, no severance payment or benefit shall be provided.  In the event the employment 

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of Executive is terminated as a result of the expiration of the Term, Executive shall be entitled to no severance payment or benefit of any kind notwithstanding any provision to the contrary in the Employer’s employee manual or policies then in effect, except as to matters such as coverage under The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and unused vacation required by law without reference to such manual or policies.
(e)Accrued Rights.  Notwithstanding the foregoing provisions of this Section 5, in the event of termination of Executive's employment hereunder for any reason or for  no reason, Executive shall be entitled to payment of any unpaid portion of his Base Salary through the effective date of termination, payment of any unreimbursed expenses incurred pursuant to Sections 3(f) or 3(g) above, and payment of any accrued but unpaid benefits solely in accordance with the terms of any incentive bonus or employee benefit plan or program of Employer.
(f)Non-assignability.  Neither Executive nor any other person or entity acting on his behalf or as his representative shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise encumber in advance any of the rights or benefits of Executive under this Section 5, nor shall any of said rights or benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance, owed by Executive or any other person or entity, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.  The terms of this Section 5(f) shall not affect the interpretation of any other provision of this Agreement.
(g)Regulatory Restrictions.  Notwithstanding anything to the contrary contained in this Agreement:
(i)    If Executive is removed and/or permanently prohibited from participating in the conduct of Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of Employer under this Agreement shall terminate, as of the effective date of such order, except for the payment of Base Salary due and owing on the effective date of said order, reimbursement of business expenses incurred as of the effective date of termination and such matters required by law. 
(ii)    If Executive is suspended and/or temporarily prohibited from participating in the conduct of Employer’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of Employer under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, Employer shall (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. 
(iii)    If Bank is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but the vested rights of the parties shall not be affected. 
(iv)    All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the contract is necessary for the continued operation of Employer (i) by the director of the FDIC or his or her designee (the “Director”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of Employer under the authority contained in 13(c) of the FDIA; or (ii) by the Director, at the time the Director approves a supervisory merger to resolve problems related to operation of Employer when the Employer is determined by the Director to be in an unsafe and unsound condition.  Any rights of the Executive that have already vested, however, shall not be affected by such action.
(v)    No payments shall be made pursuant to this paragraph 5 or any other provision herein in violation of the requirements of Section 18(k) (12 U.S.C. §1828(k)).
(h)    IRC Section 280G.  In no event shall the payment(s) described in this paragraph 5 exceed the amount permitted by Section 280G of the Internal Revenue Code of 1986, as amended (“Section 280G”).  Therefore, if the aggregate present value (determined as of the date of the change of control in accordance with the provisions of Section 280G) of both the severance payment and all other payments to Executive in the nature of compensation which are contingent on a change in ownership or effective control of Bank or PMB or in the ownership of a substantial portion of the assets of the Bank (the “Aggregate Severance”) would result in a “parachute payment,” as defined under 

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Section 280G, then the Aggregate Severance shall not be greater than an amount equal to 2.99 multiplied by Executive’s “base amount” for the “base period,” as those terms are defined under Section 280G.  In the event the Aggregate Severance is required to be reduced pursuant to this subparagraph 5(h), the last payments in time shall be reduced first.
(i)    Conditions to Severance Benefits. The Bank shall have the right to seek repayment of the severance payments and benefits or to terminate payments or benefits provided by this paragraph 5 in the event that the Executive fails to honor, in accordance with their terms, the provisions of paragraphs 6 or 9 hereof.  
6.Confidentiality. Executive agrees that he will not at any time during the Employment Period or at any time thereafter for any reason, in any fashion, form or manner, except as required by law to comply with legal process, either directly or indirectly, divulge, disclose or communicate to any person, firm, corporation or other business entity, in any manner whatsoever, any financial information or trade or business secrets, including, without limiting the generality of the foregoing, the techniques, methods or systems of its operation or management, any information regarding its financial matters, customer lists, computer software, or any other information concerning the business or operations of Employer, its subsidiaries, affiliates and any of its customers, governmental relations, customer contacts, underwriting methodology, loan program configuration and qualification strategies, marketing strategies and proposals, its manner of operation, its plans or other material data, or any other information concerning the business of the Employer, its subsidiaries or affiliates, and the Employer's goodwill (the "Business").  The provisions of this Section 6 shall not apply to (i) information disclosed in the performance of Executive's duties to Employer based on his good faith belief that such a disclosure is in the best interests of Employer; (ii) information that is, at the time of the disclosure, public knowledge; (iii) information disseminated by Employer to third parties in the ordinary course of business; (iv) information lawfully received by Executive from a third party who, based upon inquiry by Executive, is not bound by a confidential relationship to Employer or otherwise improperly received the information; or (v) information disclosed under a requirement of law or as directed by applicable legal authority having jurisdiction over  Executive.  In the event Executive is required by law to disclose such information described above, Executive will provide Employer and their counsel with immediate notice of such request so that they may consider seeking a protective order.  Notwithstanding the foregoing, Executive may disclose such information concerning the business or operations of Employer and its subsidiaries and affiliates as may be required by the FRB, CDBO, FDIC or other regulatory agency having jurisdiction over the operations of Employer in connection with an examination of Bank or PMB or other proceeding conducted by such regulatory agency.
Executive agrees that all written, printed or electronic material, notebooks and records including, without limitation, computer disks, used and/or developed by Executive for Employer during the Term of this Agreement, other than Executive’s personal address lists, telephone lists, notes and diaries, are solely the property of Employer, and that Executive has no right, title or interest therein.  Upon termination of Executive’s employment, Executive or Executive’s representative shall promptly deliver possession of all such materials (including any copies thereof) to the Bank.
7.    Key-man Life Insurance. Employer shall have the right to obtain and hold a "key-man" life insurance policy on the life of Executive with the Bank as beneficiary of the policy. Executive agrees to provide any information required for the issuance of such policy and submit himself to any physical examination required for such policy.
8.    Unsecured General Creditor.  Neither Executive nor any other person or entity shall have any legal right or equitable rights interests or claims in or to any property or assets of Employer under the provisions of this Agreement.  No assets of Employer shall be held under any trust for the benefit of Executive or any other person or entity or held in any way as security for the fulfilling of the obligations of Employer under this Agreement.  All of Employer's assets shall be and remain the general, unpledged, unrestricted assets of Employer. Employer's obligations under this Agreement are unfunded and unsecured promises, and to the extent such promises involve the payment of money, they are promises to pay money in the future.  Executive and any person or entity claiming through him shall be unsecured general creditors with respect to any rights or benefits hereunder.

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9.    Business Protection Covenants.  
(a)Covenant Not to Compete.  Executive agrees that he will not, during the Employment Period, voluntarily or involuntarily, directly or indirectly, (i) engage in any banking or financial products or service business, loan origination or deposit-taking business or any other business competitive with that of the Bank or its subsidiaries or affiliates ("Competitive Business") within Orange County, Los Angeles County, San Diego County and San Bernardino County (the "Market Area"), (ii) directly or indirectly own any interest in (other than less than three percent (3%) of any publicly traded company or mutual fund), manage, operate, control, be employed by, or provide management or consulting services in any capacity to any firm, corporation, or other entity (other than Employer or its subsidiaries or affiliates) engaged in any Competitive Business in the Market Area, or (iii) directly or indirectly solicit or otherwise intentionally cause any employee, officer, or member of the Board or any of its subsidiaries or affiliates to engage in any action prohibited under (i) or (ii) of this paragraph 9(a).
(b)Inducing Employees To Leave The Bank; Employment of Employees.  Any attempt on the part of the Executive to induce others to leave Employer’s employ, or the employ of any of its subsidiaries or affiliates, or any effort by Executive to interfere with Employer’s relationship with its other employees would be harmful and damaging to Employer.  Executive agrees that during the Employment Period and for a period of twelve (12) months thereafter, Executive will not in any way, directly or indirectly:  (i) induce or attempt to induce any employee of the Employer or any of its subsidiaries of affiliates to quit employment with Employer or the relevant subsidiary or affiliate; (ii) otherwise interfere with or disrupt the relationships between Employer and its subsidiaries and affiliates and their respective employees; (iii) solicit or recruit any employee of Employer or any subsidiary or affiliate or any former employee of Employer or any subsidiary or affiliate.
(c)Nonsolicitation of Business.  For a period of twelve (12) months from the date of termination of employment, Executive will not, using Employer’s trade secrets or confidential information, divert or attempt to divert from Employer or any of its subsidiaries or affiliates, any business Employer or a relevant subsidiary or affiliate had enjoyed or solicited from its customers, borrowers, depositors or investors during the twelve (12) months prior to termination of his employment.
(d)Bank’s Ownership of Inventions.  To the extent that Executive has intellectual property rights of any kind in any pre-existing works which are subsequently incorporated in any work or work product produced in rendering services to Bank, PMB or any their subsidiaries or affiliates, Executive hereby grants Bank a royalty-free, irrevocable, world-wide, perpetual non-exclusive license (with the right to sublicense), to make, have made, copy, modify, use, sell, license, disclose, publish or otherwise disseminate or transfer such subject matter.  Similarly, Executive agrees that all inventions, discoveries, improvements, trade secrets, original works of authorship, developments, formulae, techniques, processes, and know-how, whether or not patentable, and whether or not reduced to practice, that are conceived, developed or reduced to practice during Executive’s employment with Employer, either alone or jointly with others, if on Employer’s time, using Employer’s facilities, or relating to Employer shall be owned exclusively by the Bank, and Executive hereby assigns to the Bank all of Executive’s right, title and interest throughout the world in all such intellectual property.  Executive agrees that the Bank shall be the sole owner of all domestic and foreign patents or other rights pertaining thereto, and further agrees to execute all documents that the Bank reasonably determines to be necessary or convenient for use in applying for, prosecuting, perfecting, or enforcing patents or other intellectual property rights, including the execution of any assignments, patent applications, or other documents that the Bank may reasonably request.  This provision is intended to apply to the extent permitted by applicable law and is expressly limited by Section 2870 of the California Labor Code, which is set forth in its entirety in Exhibit A to this Agreement.  By signing this Agreement, Executive acknowledges that this Paragraph shall constitute written notice of the provisions of Section 2870.
(e)Bank’s Ownership of Copyrights.  Executive agrees that all original works of authorship not otherwise within the scope of paragraph 9(d) above that are conceived or developed during Executive’s employment with Employer, either alone or jointly with others, if on Employer’s time, using Employer facilities, or relating to Employer, or its subsidiaries or affiliates, are “works for hire” to the greatest extent permitted by law and shall be owned exclusively by the Bank, and Executive hereby assigns to the Bank all of Executive’s right, title, and interest in all such original works of authorship.  Executive agrees that the Bank shall be the sole owner of all rights pertaining 

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thereto, and further agrees to execute all documents that the Bank reasonably determines to be necessary or convenient for establishing in the Bank’s name the copyright to any such original works of authorship.
10.    Resignations. The Executive agrees that upon termination of employment, for any reason, he will submit his resignations from all offices with the Bank and PMB and all of their respective subsidiaries and affiliates.
11.    Other Agreements. The Parties further agree that to the extent of any inconsistency between this Agreement and any employee manual or policy of Employer, that the terms of this Agreement shall supersede the terms of such employee manual or policy.
12.    Notice.  For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be personally delivered or (unless otherwise specified) mailed by United States certified or registered mail, return receipt requested, postage prepaid, or sent by facsimile, provided that the facsimile cover sheet contains a notation of the date and time of transmission, and shall be deemed received: (i) if personally delivered, upon the date of delivery to the address of the person to receive such notice, (ii) if mailed in accordance with the provisions of this Section 12, two (2) business days after the date placed in the United States mail, (iii) if mailed other than in accordance with the provisions of this Section 12 or mailed from outside the United States, upon the date of delivery to the address of the person to receive such notice, or (iv) if given by facsimile, when sent.  Notices shall be addressed as follows: 
If to the Employer:
Pacific Mercantile Bank
949 South Coast Drive
Third Floor
Costa Mesa, California, 92626
Attn:  Chief Executive Officer 
If to the Executive, to:
Mr. Curt A. Christianssen
3 Williamsburg
Irvine, CA 92620
or to such other respective addresses as the Parties hereto shall designate to the other by like notice, provided that notice of a change of address shall be effective only upon receipt thereof.
13.    Arbitration.  Any dispute or controversy arising under or in connection with this Agreement, the inception or termination of the Executive's employment, or any alleged discrimination or tort claim related to such employment, including issues raised regarding the Agreement’s formation, interpretation or breach, shall be settled exclusively by binding arbitration. The only exception to the requirement of binding arbitration shall be for claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under the California Workers’ Compensation Act, Employment Development Department claims, or as may otherwise be required by state or federal law.  However, nothing herein shall prevent the Executive from filing and pursuing proceedings before the California Department of Fair Employment and Housing, or the United States Equal Employment Opportunity Commission (although if Executive chooses to pursue a claim following the exhaustion of such administrative remedies, that claim would be subject to the provisions of this Agreement).  In addition to any other requirements imposed by law, the arbitrator selected shall be a retired California Superior Court Judge, or an otherwise qualified individual to whom the parties mutually agree, and shall be subject to disqualification on the same grounds as would apply to a judge of such court.  All rules of pleading (including the right of demurrer), all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on the pleadings, and judgment under Code of Civil Procedure Section 631.8 shall apply and be observed.  The arbitrator shall have the immunity of a judicial officer from civil liability when acting in the capacity of an arbitrator, which immunity supplements any other existing immunity.  Likewise, all communications during or in connection with the arbitration proceedings are privileged in accordance with Cal. Civil Code Section 47(b).  As reasonably required to allow full use and benefit of this agreement’s modifications to the Act’s procedures, the arbitrator 

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shall extend the times set by the Act for the giving of notices and setting of hearings.  Awards shall include the arbitrator’s written reasoned opinion.  Resolution of all disputes shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke any basis (including but not limited to, notions of “just cause”) other than such controlling law.  By this binding arbitration provision, both Executive and Employer give up their respective right to trial by jury of any claim one may have against the other.  
14.    Waiver of Breach.  Any waiver of any breach of this Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach on the part either of the Executive or of Employer.  No delay or omission in the exercise of any power, remedy, or right herein provided or otherwise available to any party shall impair or affect the right of such party thereafter to exercise the same.  Any extension of time or other indulgence granted to a party hereunder shall not otherwise alter or affect any power, remedy or right of any other party, or the obligations of the party to whom such extension or indulgence is granted except as specifically waived.
15.    Non-Assignment; Successors. Neither party hereto may assign his or its rights or delegate his or its duties under this Agreement without the prior written consent of the other party; provided, however, that: (i) this Agreement shall inure to the benefit of and be binding upon the successors and assigns of Employer upon any sale of all or substantially all of Employer's assets, or upon any merger, consolidation or reorganization of Bank with or into any other corporation, all as though such successors and assigns of the Bank and their respective successors and assigns were the Bank; and (ii) this Agreement shall inure to the benefit of and be binding upon the heirs, assigns or designees of Executive to the extent of any payments due to them hereunder.  As used in this Agreement, the term "Bank" or “Employer” shall be deemed to refer to any such successor or assign of the Bank or Employer referred to in the preceding sentence.
16.    Withholding of Taxes. All payments required to be made by Employer to the Executive under this Agreement shall be subject to the withholding and deduction of such amounts, if any, relating to tax, and other payroll deductions as Employer may reasonably determine it should withhold and/or deduct pursuant to any applicable law or regulation (including, but not limited to, Executive's portion of social security payments and income tax withholding) now in effect or which may become effective any time during the term of this Agreement.
17.    Section 409A.  If Executive determines, in good faith, that any compensation or benefits provided by this Agreement may result in the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), Executive shall provide written notice thereof (describing in reasonable detail the basis therefor) to Employer, and Employer shall, in consultation with Executive, modify this Agreement in the least restrictive manner necessary in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A of the Code or in order to comply with the provisions of Section 409A of the Code, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and without any diminution in the value of the payments to Executive.  Any payments that, under the terms of this Agreement, qualify for the “short-term” deferral exception under Treasury Regulations Section 1.409A-1(b)(4), the “separation pay” exception under Treasury Regulations Section 1.409A-1(b)(9)(iii) or another exception under Section 409A of the Code will be paid under the applicable exceptions to the greatest extent possible.  Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code.  Anything in this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service within the meaning of Section 409A of the Code, Executive is considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if any payment that Executive becomes entitled to under this Agreement is considered deferred compensations subject to interest, penalties and additional tax imposed pursuant to Section 409A of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earlier of (i) six months and one day Executive’s separation from service or (ii) Executive’s death.  In no event shall the date of termination of Executive’s employment be deemed to occur until Executive experiences a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the Date of Termination.  All reimbursements provided under this Agreement shall be provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (A) the amount of expenses eligible for reimbursement during one calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year; (B) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the calendar year in which the expense is incurred; and (C) the right to any reimbursement will not be 

9

subject to liquidation or exchange for another benefit.  Notwithstanding the foregoing, Employer makes no representation or covenant to ensure that the payments and benefits under this Agreement are exempt from, or compliant with, Section 409A of the Code.
18.    Indemnification.  To the fullest extent permitted by law, regulation, and the Articles of Incorporation and Bylaws of Bank and PMB, the Bank and/or PMB as appropriate shall pay as and when incurred all expenses, including legal and attorney costs, incurred by, or shall satisfy as and when entered or levied a judgment or fine rendered or levied against, Executive in an action brought by a third party against Executive (whether or not the Bank is joined as a party defendant) to impose a liability or penalty on Executive for an act alleged to have been committed by Executive while an officer of the Bank and/or PMB; provided, however, that Executive was acting in good faith, within what Executive reasonably believed to be the scope of Executive's employment or authority and for a purpose which the Executive reasonably believed to be in the best interests of the Bank or the Bank's shareholders and the best interests of PMB or PMB’s shareholders, and in the case of a criminal proceeding, that the Executive had no reasonable cause to believe that Executive's conduct was unlawful.  Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action.  All rights hereunder are limited by any applicable state or Federal laws.  
19.    Severability.  To the extent any provision of this Agreement or portion thereof shall be invalid or unenforceable, it shall be considered deleted therefrom (but only for so long as such provision or portion thereof shall be invalid or unenforceable) and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect to the fullest extent permitted by law if enforcement would not frustrate the overall intent of the Parties (as such intent is manifested by all provisions of the Agreement including such invalid, void, or otherwise unenforceable portion).
20.    Payment.  All amounts payable by the Bank to Executive under this Agreement shall be paid promptly on the dates required for such payment in this Agreement without notice or demand.  Any salary, benefits or other amounts paid or to be paid to Executive or provided to or in respect of the Executive pursuant to this Agreement shall not be reduced by amounts owing from Executive to Bank.
21.    Expenses.  Each party shall pay his or its own fees and expenses incurred by him or it in the drafting, review and negotiation of this Agreement.
22.    Authority.  Each of the Parties hereto hereby represents that each has taken all actions necessary in order to execute and deliver this Agreement.
23.    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
24.    Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of California, without giving effect to the choice of law principles thereof.
25.    Entire Agreement; Amendments.  This Agreement and written agreements, if any, entered into concurrently herewith constitute the entire agreement by Employer, on the one hand, and Executive on the other hand with respect to the subject matter hereof and merges and supersedes any and all prior discussions, negotiations, agreements or understandings between Executive and Employer with respect to the subject matter hereof, whether written or oral.  This Agreement may be amended or modified only by a written instrument executed by Executive and Employer. With regard to such amendments, alterations, or modifications, facsimile signatures shall be effective as original signatures.  Any amendment, alteration, or modification requiring the signature of more than one party may be signed in counterparts.  
26.    Further Actions.  Each party agrees to perform any further acts and execute and deliver any further documents reasonably necessary to carry out the provisions of this Agreement.
27.    Time of Essence.  Time is of the essence of each and every term, condition, obligation and provision hereof.

10

28.    No Third Party Beneficiaries.  This Agreement and each and every provision hereof is for the exclusive benefit of the Parties and not for the benefit of any third party.
29.    Headings.  The headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit, or extend or interpret the scope of this Agreement or of any particular provision hereof.
30.    Regulatory Approval of this Agreement.  The Parties acknowledge and agree that entry into this Agreement is and payment of severance under paragraph 5 may be subject to receipt of approval from the FRB pursuant to Section 1828(k) and Part 359 of the FDIC Rules and Regulations, the FDIC and the CDBO.  If such approval is required but not obtained or if such approval is conditioned upon modifications specified by the FRB, the FDIC or the CDBO the Parties agree to negotiate in good faith to amend this Agreement to provide for substantially equivalent terms consistent with regulatory requirements.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above.

PACIFIC MERCANTILE BANK	
			
	By:
	/s/ Steven K. Buster

	 
	Name:
	Steven K. Buster

	 
	Title:
	President and Chief Executive Officer

   
EXECUTIVE:	
	
	/s/ Curt A. Christianssen

	Curt A. Christianssen

      

11

EXHIBIT A
California Labor Code § 2870
Employment agreements; assignment of rights
(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

12EX-4.5

 Exhibit 4.5 

January 16, 2015 
 Patriot Financial Partners II, L.P. 

Cira Centre 
 2929 Arch Street, 27th Floor 

Philadelphia, PA 19104 
 Re: Corporate Governance
Agreement 
 Ladies and Gentlemen: 
 This Corporate Governance
Agreement (this “Agreement”) will confirm the agreement among Avenue Financial Holdings, Inc. (the “Company”) and Avenue Bank, (the “Bank”), on the one hand, and Patriot Financial Partners II, L.P.
(“Investor”), on the other hand, subject to the terms herein. In this Agreement, the boards of directors of the Company and the Bank are sometimes referred to individually as a “Board” and collectively as “Boards.” 

1. Board Seats for Investor Nominees 

(a) The Company and the Bank shall each agree to: 

(i) immediately upon Investor’s request, (A) cause each Board to fill an existing vacancy on its Board and (B) appoint a
person nominated by Investor, who shall initially be James F. Deutsch, (the “Investor Nominee”) as provided in this Section 1 to serve as a Class II director on its Board, subject to any required regulatory approvals, compliance with
any regulatory requirements and to the approval of the Company’s Corporate Governance and Nominating Committee (the “Nominating Committee”) in its discretion; and 

(ii) at each meeting of stockholders for election of directors at which the position to be occupied under this Agreement by an Investor
Nominee on any Board is to be determined by stockholder election, subject to the considerations described in clause (i): (A) cause an Investor Nominee to be recommended by the Nominating Committee for consideration by the Board and to be
nominated by the Board for election as a director; (B) recommend to its stockholders the election of the Investor Nominee, and use its reasonable best efforts to cause the election of the Investor Nominee to the Board, including soliciting
proxies for the election of the Investor Nominee to the same extent as it does, consistent with past practice, for any other Board nominee for election as a director; and (C) request each then-current member of such Board to vote as a
stockholder for approval of the Investor Nominee. 
 (b) Should for any reason a Board fail to nominate the Investor Nominee, without
limiting any other rights or remedies of Investor, the right of Investor to nominate an Investor Nominee shall remain in effect and Investor shall have the right to repropose one or more Investor Nominee to which this Agreement shall then apply.

 (c) In the event of the death, disability, resignation or removal of the Investor Nominee, the Company and the Bank shall cause the
prompt election to the Boards of a replacement 

  
 1 

 
director designated by Investor, subject to the fulfillment of its fiduciary duties and the requirements set forth in this Section 1, to fill the resulting vacancy, and such individual shall
then be deemed an Investor Nominee for all purposes under this Agreement and provided that each Investor Nominee executes a joinder agreement agreeing to the terms of this Agreement. 

(d) Any Investor Nominee shall be entitled to the same compensation and participation in Company and Bank equity plans and same
indemnification in connection with his or her role as a director as the other members of the Boards, and each Investor Nominee shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the
Boards or any committees thereof. With respect to indemnification of any Investor Nominee, the Company and the Bank, respectively, agree (i) that it is the indemnitor of first resort (i.e., its obligations to any Investor Nominee are primary
and any obligation of Investor or its Affiliates (other than, for the avoidance of doubt, the Company or the Bank) to advance expenses or to provide indemnification for the same expenses of liabilities incurred by such person are secondary) with
respect to any actions, costs (including reasonable attorneys’ fees), charges, losses, damages, expenses or other liabilities incurred or sustained arising in connection with or related to the execution by such person of his or her duties as a
director of the Company or the Bank, as the case may be, and (ii) that it irrevocably waives, relinquishes and releases Investor and its Affiliates from any and all claims for contribution, subrogation or any other recovery of any kind in
respect thereof. 
 (e) The Company or the Bank, as the case may be, shall notify each Investor Nominee of all regular and special meetings
of the Boards and shall notify each Investor Nominee of all regular and special meetings of any committee of the Boards of which the Investor Nominee is a member in accordance with the Company’s or the Bank’s bylaws as then in effect. 

(f) The Company or the Bank, as the case may be, shall provide each Investor Nominee with copies of all notices, minutes, consents and other
materials provided to the other members of the Boards or any committee thereof concurrently as such materials are provided to the other members. 

(g) Investor’s rights under this Section 1 and Section 2 shall terminate on the earlier of (x) 180 days after the date hereof if the
Company has not completed an initial public offering of its common stock on or prior to such date; (y) on the date the Company completes an initial public offering of its common stock if Investor fails to purchase at least 250,000 shares of the
common stock being offered by the Company in such initial public offering, provided that the underwriters make such amount of common stock available to Investor for purchase in the offering; and (z) if the Investor (together with its Affiliates) no
longer Beneficially Owns at least 75.0% of its Beneficial Ownership position in the Company’s shares of common stock acquired by Investor in the Company’s initial public offering plus any shares owned prior to such acquisition (a
“Termination Event”). Following a Termination Event, upon the written request of the Boards, Investor shall use its reasonable best efforts to cause the Investor Nominee to resign from the Boards within fifteen (15) calendar days
thereafter and Investor Nominee agrees to resign within such period. Investor shall promptly (and in no event later than five (5) business days) inform the Company if and when a Termination Event occurs. Notwithstanding the foregoing, assuming the
Investor and the Investor Nominee comply with the terms of this Agreement, any Investor Nominee then serving as a director shall continue to be entitled to the 

  
 2 

 
compensation, indemnification and expense reimbursement in connection with his or her service as a director described in Section 1(d), and upon such Investor Nominee’s resignation or
failure to stand for re-election, such Investor Nominee shall be entitled to the most favorable indemnification and expense reimbursement as other former directors of the Boards. 

(h) The Investor Nominee agrees to comply with all legal requirements imposed on a director of the Boards under applicable law or pursuant to
the Charter or bylaws of the Company and the Bank, and agrees to comply with all policies, procedures and restrictions imposed on members of the Boards by the Company or the Bank, including any codes of conduct, codes of ethics and other corporate
governance guidelines. So long as the Investor Nominee serves as a director on at least one of the Boards, the Investor Nominee shall be subject to and abide by the Company’s policies and procedures regarding trading in the Company’s
securities, including those involving blackout windows on trading, in each case, to the same extent as other directors. 
 2. Board Observers

 (a) Upon the written request of Investor and in lieu of Investor’s nomination of an Investor Nominee to serve on a Board,
Investor will be entitled to designate a representative (the “Observer”) to receive a standing invitation to attend each of the meetings of such Board, and the committees thereof, in the capacity of a nonvoting observer. The Observer shall
be reasonably acceptable to the applicable Board. The appointment by Investor of an Observer shall not prevent Investor from nominating an Investor Nominee in lieu of such Observer at a future time. 

(b) The foregoing rights are subject to the Company’s and the Bank’s respective rights to withhold information and to exclude such
Observer from any meeting, or portion thereof, but only to the extent (i) reasonably determined by the Chairman of the Board or a majority of the members of the Board necessary for purposes of competitive factors or attorney-client privilege,
(ii) directly related to Investor’s investment in the Company or (iii) the Board so determines in good faith after consultation with counsel. 

(c) Investor agrees to cause its Observer to hold in confidence and trust and to act in a fiduciary manner with respect to all information
provided to such Observer by the Company or the Bank. 
 3. Information Rights/ Confidentiality 

(a) The Company and the Bank will provide to the Investor Nominee or Observer all information distributed to the members of either of the
Boards or their respective committees, quarterly and annual audited and unaudited consolidated financial statements and copies of all reports required to be filed under applicable law or under the terms of any outstanding debt instrument. 

(b) As long as Investor is a stockholder of the Company and for twelve (12) months thereafter, Investor and Investor Nominee hereby agree
to keep confidential, and to cause their representatives and Affiliates to whom they have disclosed Company Proprietary Information (as defined below) to keep confidential, any and all information whether oral, graphic, written, electronic or in any
other medium concerning the Company or its subsidiaries furnished to Investor or Investor Nominee or on behalf of the Company, together with all notes, analyses, 

  
 3 

 
compilations, studies or other documents prepared by Investor, Investor Nominee or any of their representatives or Affiliates that contain, are based upon or otherwise reflect such information
(collectively, the “Company Proprietary Information”) that was disclosed by the Company on or prior to the date of this Agreement or that is disclosed on or after the date of this Agreement by the Company or any Investor Nominee or
Representative to Investor or Investor’s representatives or Affiliates; provided, however, that Company Proprietary Information may be disclosed (i) to Investor’s representatives and Affiliates in the normal course of the performance
of their duties, to any financial institution providing credit to such Investor, or to any investor or potential investor of such Investor or its Affiliates, provided that such Investor shall be responsible for any use or disclosure of such Company
Proprietary Information by such persons that would constitute a breach of this Section 2, (ii) to the extent required by applicable law, rule or regulation (including complying with any oral or written questions, interrogatories, request
for information or documents, subpoena, civil investigative demand or similar process to which Investor is subject, subject to Section 2(c) hereof), and/or (iii) to any regulatory authority or rating agency to which Investor, Investor
Nominee or any of their Affiliates is subject or with which they have regular dealings, as long as such authority or agency is advised of the confidential nature of such information; and provided further, however, that Company Proprietary
Information shall not include any information that (a) was or becomes generally available to the public other than as a result of a disclosure by Investor or Investor’s representatives or Affiliates, (b) was or becomes available to
Investor on a non-confidential basis from a source other than the Company or its advisers, provided that such source was not known by Investor, after reasonable inquiry, to be bound by any agreement with the Company to keep such information
confidential, or otherwise prohibited from transmitting the information to Investor by a contractual, legal or fiduciary obligation, (c) as shown by written records, was available to Investor on a non-confidential basis prior to its disclosure
to Investor or its representatives by the Company, or (d) is independently developed by Investor without violating any confidentiality agreement with, or other obligation of secrecy to, the Company. Nothing contained herein shall prevent the
use (subject, to the extent possible, to a protective order and to the requirement that such Investor seek to use the minimum amount reasonably necessary) of Company Proprietary Information in connection with the assertion or defense of any claim by
or against the Company or Investor or its Affiliates. Investor shall be responsible for any failure of its representatives to keep confidential the Company Proprietary Information and Investor shall, at its sole expense, take all reasonable measures
to restrain its representatives from prohibited or unauthorized disclosure or use of the Company Proprietary Information. 
 (b) In the
event that Investor or Investor Nominee is required by law to disclose any Company Proprietary Information, they will provide the Company with prompt written notice of such request or requirement so that it may seek an appropriate protective order.
If, failing the entry of a protective order, Investor or Investor Nominee is, in the opinion of its counsel, compelled to disclose Company Proprietary Information, they may disclose that portion of the Company Proprietary Information that their
counsel advises that they are compelled to disclose and will exercise reasonable efforts to obtain assurance that confidential treatment will be accorded to that portion of the Company Proprietary Information that is being disclosed. In any event,
with respect to the Company’s obtaining an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Company Proprietary Information, Investor will use reasonable efforts to cooperate with the
Company, at the Company’s expense, and will not unreasonably oppose those actions by the Company. 

  
 4 

 4. Governance Provisions Other than with the written consent of the Company, each of the Investor
and its Affiliates shall not, directly or indirectly: (A) seek representation on the Board other than as provided in Section 1 above; (B) effect, offer or propose to effect, or announce any intention to effect or cause (I) any
tender or exchange offer, merger or other business combination involving the Company or its subsidiaries or assets constituting a significant portion of the consolidated assets of the Company and its subsidiaries, (II) any recapitalization,
restructuring, liquidation or dissolution with respect to the Company or any of its subsidiaries, or (III) any “solicitation” of “proxies” (as such terms are used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any Voting Securities of the Company or any of its subsidiaries; (C) form, join or in any way participate in a “group” (as defined under the Exchange Act) with respect to the Company or otherwise act in concert with
any Person in respect of any such securities; (D) take any action that would or would reasonably be expected to force the Company to make a public announcement regarding any of the types of matters set forth in (A), (B) or (C) above;
(E) submit any stockholder proposal pursuant to Rule 14a-8 under the Exchange Act or any successor thereto, or (F) enter into any discussions or arrangements with any third party with respect to any of the foregoing; provided, however,
that the foregoing shall not restrict the ability of the Investor Nominee from exercising his or her fiduciary duties. 
 5. General Provisions

 (a) Corporate Opportunities. Each of the parties hereto acknowledges that Investor and its Affiliates and their related
investment funds may review the business plans and related proprietary information of any enterprise, including enterprises that may have products or services which compete directly or indirectly with those of the Company and its Subsidiaries, and
may trade in the securities of such enterprise. Investor, its Affiliates and their related investment funds shall not be precluded or in any way restricted from investing or participating in any particular enterprise, or trading in the securities
thereof, whether or not such enterprise has products or services that compete with those of the Company or any of its Subsidiaries. Without limiting the generality of the foregoing sentence, except as set forth below, the parties expressly
acknowledge and agree that: (a) Investor and its Affiliates have the right to, and shall have no duty (contractual or otherwise) not to, directly or indirectly, engage in the same or similar business activities or lines of business as the
Company and its Subsidiaries; and (b) in the event that Investor or any of its Affiliates acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Company or any of its Subsidiaries, Investor or its
Affiliates shall have no duty (contractual or otherwise) to communicate or present such corporate opportunity to the Company or any of its Subsidiaries, and, notwithstanding any provision of this Agreement to the contrary, shall not be liable to the
Company or any of its Subsidiaries or any other stockholders of the Company for breach of any duty (contractual or otherwise) by reason of the fact that Investor, any of its Affiliates or any of their related investment funds, directly or
indirectly, pursues or acquires such opportunity for itself, directs such opportunity to another Person or does not present such opportunity to the Company or its Subsidiaries. Notwithstanding the foregoing, an Investor Nominee shall be subject to,
and comply with, the Company’s code of ethics applicable to directors, including the provisions therein relating to conflicts of interest and confidential information. If an Investor Nominee or an Observer acquires knowledge of a potential
transaction or matter that is a corporate opportunity for the 

  
 5 

 
Company or any of its Subsidiaries, such opportunity shall belong to the Company or the applicable Subsidiary, unless such corporate opportunity is first offered to such Investor Nominee or
Observer solely in his or her capacity as a representative of Investor or any of its Affiliates, in which case such corporate opportunity shall belong to Investor or such Affiliate, as the case may be. 

(b) Compliance with Securities Laws and Insider Trading Policy. The Investor, the Investor Nominee and any Observer shall comply with
all federal securities laws in connection with its exercise of its rights under this Agreement and its purchases and sales of the Company’s securities, and agrees to be bound by any “insider trading” policy of the Company otherwise
applicable to directors of the Company. 
 (c) Most Favorable Rights. The Company represents and warrants that the Company has not
entered into any side letter or letter agreement or any similar agreement with any other Persons that has the effect of establishing rights or otherwise benefiting any other Person in a manner more favorable in any material respect to such Person
than the rights and benefits established in favor of Investor under this Agreement. 
 (d) Costs and Expenses. Except as otherwise
provided in this Agreement, each of the parties will be responsible for all other costs and expenses incurred by it or on its behalf in connection with the transactions contemplated pursuant to this Agreement. 

(e) Assignment. The rights of Investor under this Agreement shall be personal to Investor and the transfer, assignment and/or
conveyance of said rights from Investor to any other Person (other than in connection with a transfer of securities to an Affiliate which assumes the obligations of Investor hereunder) is prohibited and shall be void and of no force or effect. 

(f) Equitable Performance. The Company and the Bank agree that Investor will not have an adequate remedy at law for a breach by the
Company of this Agreement, and upon any such breach Investor shall be entitled to enforce this Agreement by injunction or with other equitable remedies. 

(g) Rights Non-Exclusive. The rights granted to Investor hereunder are not in substitution for, and shall not be deemed to be in
limitation of, any rights otherwise available to Investor as a holder of securities of the Company or pursuant to any other agreement with the Company or the Bank. 

(h) Governing Law. This Agreement and all transactions contemplated by this Agreement shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of Tennessee without regard to principles of conflicts of laws. 
 (i) Jurisdiction
and Venue. Any legal proceeding arising out of or relating to this Agreement shall be brought in the courts of the State of Tennessee in Davidson County or the United States District Court, Middle District of Tennessee. Each party consents to
the jurisdiction of such courts in any such legal proceeding and waives any objection to the laying of venue of any such legal proceeding in such courts. Service of any court paper may be effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided under applicable laws, rules of procedure or local rules. 

  
 6 

 (j) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE
WAIVED, EACH PARTY HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION, OR SUIT (WHETHER IN CONTRACT,
TORT, OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF, OR BASED UPON, THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING. EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES THAT THIS SECTION CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH IT IS RELYING, AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. 

(k) Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, together with the other documents and instruments
referred to herein, embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersede and preempt any prior understandings, agreements, or representations by or among the parties,
written or oral, that may have related to the subject matter hereof in any way. 
 (l) Notices. Except as otherwise provided in this
Agreement, all notices, requests, consents and other communications hereunder shall be in writing and shall be delivered in person, by first-class registered or certified airmail (postage prepaid), by nationally recognized overnight express courier
or by facsimile, and shall be deemed given (i) if delivered in person, upon delivery, (ii) if delivered by first-class registered or certified airmail, three business days after so mailed, (iii) if delivered by a nationally recognized
overnight courier, one business day after so mailed, and (iv) if delivered by facsimile, upon electronic confirmation of receipt, and shall be delivered as addressed as follows (or at such other address as may be designated by a party in a
notice given in a like manner): 
  

	 	(i)	if to the Company or the Bank: 

 Avenue Financial Holdings, Inc. 

Attention: Ronald L. Samuels 

111 10th Avenue South 

Suite 400 
 Nashville, TN 37203

 Facsimile: (615) 744-2900 

  
 7 

	 	(ii)	if to Investor: 

 Patriot Financial Partners II, L.P. 

Attention: James F. Deutsch 

Cira Centre 
 2929 Arch Street,
27th Floor 
 Philadelphia, PA 19104 

Facsimile: (215) 399-4686 

(m) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement shall
impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of or acquiescence to any breach or default, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default. 
 (n) Amendments and Waivers. This Agreement may not be amended, except
by an agreement in writing, executed by each of the Company, the Bank and Investor, and, compliance with any term of this Agreement may not be waived, except by an agreement in writing executed on behalf of the party against whom the waiver is
intended to be effective. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of any such provision and shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. 
 (o) Counterparts. This Agreement may be executed in any number of
counterparts and signatures may be delivered by facsimile or in electronic format, each of which may be executed by less than all the parties, each of which shall be enforceable against the parties actually executing such counterparts and all of
which together shall constitute one instrument. 
 (p) Severability. If any provision of this Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable, or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement and the balance of this Agreement shall be
enforceable in accordance with its terms. 
 (q) Titles and Subtitles; Interpretation. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Each of the parties has participated in the drafting and negotiation of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if it is drafted by each of the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of
any of the provisions of this Agreement. 
 (r) Definitions. As used in this Agreement, the following terms shall have the respective
meanings set forth below: 
 (i) “Affiliate” of any particular Person means any other Person controlling, controlled by or under
common control with such particular Person. For the purposes of this Agreement, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of Voting
Securities, contract or otherwise. 

  
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 (ii) “Beneficial Ownership” by any Person of any security means ownership by such
Person who, together with Affiliates of such Person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (a) voting power that includes the power to vote, or to direct the voting
of, such security, (b) investment power that includes the power to dispose of, or to direct the disposition of, such security, or (c) a right to acquire any of the powers set forth in (a) and (b) above within 60 days (of any date
of determination of “Beneficial Ownership”) in respect of such security. The terms “Beneficially Own,” “Beneficially Owned,” “Beneficially Owning” and “Beneficial Owner” shall have a correlative
meaning. 
 (iii) “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Securities and Exchange Commission promulgated thereunder, all as the same may be amended and shall be in effect from time to time. 

(iv) “Person” means an individual, corporation, partnership, limited liability company, association, trust, or other entity or
organization, including any governmental authority. 
 (vi) “Voting Securities” shall mean at any time shares of any class of
capital stock of the Company which are then entitled to vote generally in the election of directors. 
 [SIGNATURE PAGE FOLLOWS] 

  
 9 

 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties set forth below
as of the date written above. 
  

			
	AVENUE FINANCIAL HOLDINGS, INC.
		
	By:	 	

		 	  

		 	Ronald L. Samuels
		 	Chairman and Chief Executive Officer
	
	AVENUE BANK
		
	By:	 	

		 	  

		 	Ronald L. Samuels
		 	Chairman and Chief Executive Officer
	
	PATRIOT FINANCIAL PARTNERS II, L.P.
		
	By:	 	

		 	  

	Name:	 	 James F. Deutsch

	Title:	 	 Partner

 

	
	

	  

	James F. Deutsch, Investor Nominee

  
 10

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