Exhibit 10.1


 


ASSIGNMENT AND ASSUMPTION AGREEMENT


 


THIS ASSIGNMENT
AND ASSUMPTION AGREEMENT (the “Assignment”) is made and entered into by and between smartfinancial,
inc., a Tennessee corporation (“Assignor”), and
cornerstone bancshares, inc., a Tennessee corporation (“Assignee”). This Assignment shall be deemed entered
into and effective at such time, if any, as the Merger (as defined below) becomes effective (the “Effective Time”).


 


RECITALS:


 


A.           The
United States Department of the Treasury (“Treasury”) and Assignor entered into that certain Small Business Lending
Fund Securities Purchase Agreement No. 0493, dated August 4, 2011 (the “SBLF Securities Purchase Agreement”), pursuant
to which Assignor issued to Treasury 12,000 shares of Non-Cumulative Perpetual Preferred Stock, Series A, with a liquidation preference
of $1,000 per share (the “SmartFinancial SBLF Stock”).


 


B.           Assignor
and Assignee are parties to that certain Agreement and Plan of Merger dated as of December 5, 2014, by and among Assignor, Assignee,
Cornerstone Community Bank, a Tennessee-chartered commercial bank and wholly-owned subsidiary of Assignee, and SmartBank, a Tennessee-charted
commercial bank and wholly-owned subsidiary of Assignor (the “Merger Agreement”), pursuant to which, subject to approval
by Assignor’s and Assignee’s shareholders and federal and state bank regulatory authorities, Assignor will merge with
and into Assignee, with the surviving corporation to operate under the name “SmartFinancial, Inc.” and to have its
headquarters in Knoxville, Tennessee (the “Merger”).


 


C.           Pursuant
to the Merger Agreement, the SmartFinancial SBLF Stock will be exchanged for Non-Cumulative Perpetual Preferred Stock, Series B,
with a liquidation preference of $1,000 per share and rights, preferences, privileges, and voting powers equivalent to the SmartFinancial
SBLF Stock, to be issued by Assignee (the “Cornerstone SBLF Stock”).


 


D.           Pursuant
to the Merger Agreement and in connection with the exchange of the SmartFinancial SBLF Stock for Cornerstone SBLF Stock, Assignee
has agreed to assume and perform all obligations of Assignor under the SBLF Securities Purchase Agreement.


 


AGREEMENT:


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:


 


1.          ASSIGNMENT.
Effective as of the Effective Time, Assignor hereby assigns, conveys, transfers, and sets over unto Assignee all of Assignor’s
right, title, and interest in, under and to the SBLF Securities Purchase Agreement, together with all rights, privileges, and claims
relating to the SBLF Securities Purchase Agreement.


 


2.          ASSUMPTION.
Effective as of the Effective Time, Assignee hereby accepts the assignment of the SBLF Securities Purchase Agreement from Assignor
and hereby assumes all of Assignor’s duties and obligations under the SBLF Securities Purchase Agreement.


 


3.          EFFECTIVENESS
OF MERGER. In the event that the Merger does not become effective, then this Assignment shall be null and void
and of no further force and effect.


 




     


     


    

 


4.          FURTHER
ASSURANCES. Each of Assignor and Assignee agrees to execute such other documents and take such other actions as may
be reasonably necessary or desirable to confirm or effectuate the assignment and assumption contemplated hereby.


 


5.          BINDING
EFFECT. This Assignment and the covenants and agreements herein contained shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.


 


6.          RATIFICATION.         Assignor
and Assignee ratify all other provisions of the SBLF Securities Purchase Agreement, except as set forth on Exhibit A to
this Assignment, which sets forth an updated disclosure schedule to the SBLF Securities Purchase Agreement prepared by Assignee
as of the Effective Time as if Assignee were a party to the SBLF Securities Purchase Agreement, which such updated disclosure schedule
shall replace and supersede the prior disclosure schedules contained in the SBLF Securities Purchase Agreement.


 


7.          NO
MODIFICATION OF MERGER AGREEMENT. This Assignment is delivered pursuant to the Merger Agreement and, as between Assignor
and Assignee, is subject in all respects to the provisions thereof and is not meant to alter, enlarge or otherwise modify the provisions
of the Merger Agreement.


 


8.          MODIFICATION.
This Assignment may be modified or supplemented only by written agreement of the parties hereto.


 


9.          COUNTERPARTS.
This Assignment may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.


 


10.        GOVERNING
LAW. This Assignment and any claim, controversy or dispute arising under or relating to this Assignment, the relationship of
the parties, and/or the interpretation and enforcement of the rights and duties of the parties shall be enforced, governed, and
construed in all respects (whether in contract or in tort) in accordance with the federal law of the United States if and to the
extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.


 


[SIGNATURE PAGE FOLLOWS]


 




    2 


     


    

 


IN WITNESS WHEREOF,
the parties have executed this Assignment as of the Effective Time set forth above.


 





	 	ASSIGNOR:
	 	 
	 	SMARTFINANCIAL, INC.
	 	 
	 	By:	/s/ William Y. Carroll, Jr.
	 	Name:  William Y. Carroll, Jr.
	 	Title:    President & CEO
	 	 
	 	ASSIGNEE:
	 	 
	 	CORNERSTONE BANCSHARES, INC.
	 	 
	 	By:	/s/ Nathaniel F. Hughes
	 	Name: Nathaniel F. Hughes
	 	Title:   President & CEO
	 	 
	 	ACKNOWLEDGED AND ACCEPTED:
	 	 
	 	THE SECRETARY OF THE TREASURY
	 	 
	 	By:	/s/ Jessica Milano
	 	Name:  Jessica Milano
	 	Title:    Deputy Assistant Directory




 


[Signature Page to Assignment and Assumption
Agreement]




 




     


     


    

 


EXHIBIT A


 


DISCLOSURE SCHEDULES


 


ANNEX D


DISCLOSURE SCHEDULE


 


	 





	Part 2.2	CAPITALIZATION


 


	Capital stock reserved for issuance in connection with securities or obligations giving the holder thereof the right to acquire such capital:	 	1,194,085
	 	 	 
	Shares issued since the Capitalization Date upon exercise of options or pursuant to equity-based awards, warrants or convertible securities:	 	0
	 	 	 
	All other shares issued since the Capitalization Date:	 	In order to provide the surviving corporation with sufficient capital, the parties have agreed to raise up to $15 million in capital through an offering of Cornerstone Bancshares, Inc. common stock for, which such offering is expected to close in July 2015.
	 	 	 
	
        Holders of 5% or more of any class of capital

        stock:
	 	Primary Address
	 	 	 
	The Banc Funds Company, LLC	 	
        20 North Wacker Drive

        Suite 3300

        Chicago, IL 60606

	 	 	 
	If the Company is a Bank Holding Company or Savings and Loan Holding Company, complete the following (leave blank otherwise):
	 	 	 
	Name of IDI Subsidiary	 	
        Percentage of IDI Subsidiary’s capital
        stock

        owned by the Company

	 	 	 
	Cornerstone Community Bank	 	100%


 




     


     


    

 


	Part 2.13	Compliance with Laws


 


List
any exceptions to the representation and warranty in the second sentence of Section 2.13 of the General Terms and Conditions. If
none, please so indicate by checking the box: x


 


List any exceptions to the representation
and warranty in the last sentence of Section 2.13 of the General Terms and Conditions. If none, please so indicate by checking
the box: x


 




     


     


    

 


	Part 2.19	Regulatory Agreements


 


List
any exceptions to the representation and warranty in Section 2.19 of the General Terms and Conditions. If none, please so indicate
by checking the box:  ̈


 


1.          Board
Resolution of Bancshares dated June 21, 2010 relating to remedial actions to be taken in connection with (i) Stipulation to the
Issuance of a Consent Order between the FDIC and Cornerstone Community Bank dated April 2, 2010 (the “Consent Order”)
and (ii) Agreement between TDFI and Cornerstone Community Bank dated April 5, 2010 (the “TDFI Agreement”).


 


2.          The
Consent Order. The Consent Order was lifted on August 17, 2012.


 


3.          The
TDFI Agreement. The TDFI Agreement was terminated on August 17, 2012.


 


4.          Memorandum
of Understanding dated August 7, 2012 between the FDIC, the TDFI and the Board of Directors of Cornerstone Community Bank.


 




     


     


    

 


	Part 2.25	Related Party Transactions


 


List
any exceptions to the representation and warranty in Section 2.25 of the General Terms and Conditions. If none, please so indicate
by checking the box: x