Exhibit 10.4


 


EMPLOYMENT
AGREEMENT


 


THIS EMPLOYMENT AGREEMENT
is made and entered into as of December 5, 2014, by and among Cornerstone Bancshares, Inc., a Tennessee corporation and registered
bank holding company (the “Company”); Cornerstone Community Bank, a banking corporation organized under the
laws of the State of Tennessee (the “Bank,” and together with the Company, collectively, the “Employer”);
and John H. Coxwell, Sr., a resident of the State of Tennessee (the “Employee”). The Company, the Bank, and
the Employee are sometimes referred to herein collectively as the “Parties,” and each is sometimes referred
to herein individually as a “Party.”


 


RECITALS


 


A.                
The Employer desires to employ the Employee as the Senior Executive Officer of the Company and of the Bank, and the Employee
desires to accept such employment.


 


B.                
The Parties desire to set forth in this Agreement the terms and conditions upon which the Employee will be so employed.


 


AGREEMENT


 


In consideration of the
premises set forth above, the mutual agreements hereinafter set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:


 


1.                 
Definitions. When used in this Agreement, the following terms and their variant forms shall
have the meanings set forth below:


 


(a)               
“Affiliate” shall mean any person that controls, is controlled by, or is under common control with another
person. For this purpose, “control” means ownership of more than 50% of the ordinary voting power of the outstanding
equity securities of a person. For the avoidance of doubt, it is expressly acknowledged that, following the SmartFinancial Merger,
the Bank and SmartBank, a banking corporation organized under the laws of the State of Tennessee (“SmartBank”),
will be Affiliates for purposes of this Agreement.


 


(b)              
“Agreement” shall mean this Employment Agreement and any appendices incorporated herein together with
any amendments hereto made in the manner described in this Agreement.


 


(c)               
“Area” shall mean, during the period of the Employee’s employment, a radius of 75 miles from each
banking office (whether a main office, branch office, or loan or deposit production office) maintained by the Bank and/or any Affiliate
of the Bank from time to time during such period of employment, and, following the period of the Employee’s employment, a
radius of 75 miles from each banking office (whether a main office, branch office, or loan or deposit production office) maintained
by the Bank and/or any Affiliate of the Bank as of the last day of the Employee’s employment.


 


(d)              
“Board of Directors” shall mean the board of directors of the Bank or the Company, as indicated herein,
and, where appropriate, any committee or designee thereof.


 


(e)               
“Business of the Employer” shall mean the business conducted by the Company and/or the Bank and/or any
Affiliate of the Company or the Bank, which as to the Bank and the Company shall include the business of commercial and consumer
banking.


 


(f)               
“Cause” shall mean:


 






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(i)                
In the context of the termination of this Agreement by the Employer:


 


(1)              
a breach of the terms of this Agreement by the Employee not cured by the Employee within 15 business days after the Employee’s
receipt of the Employer’s written notice thereof, including without limitation failure by the Employee to perform the Employee’s
duties and responsibilities in the manner and to the extent required under this Agreement;


 


(2)              
any act by the Employee of fraud against, misappropriation from, or dishonesty to the Company or the Bank or any Affiliate
of the Company or the Bank;


 


(3)              
the conviction of the Employee of any crime;


 


(4)              
conduct by the Employee that amounts to willful misconduct, gross neglect, or a material failure to perform the Employee’s
duties and responsibilities hereunder, including prolonged absences without the written consent of the Chairman of the Board of
Directors or the President and Chief Executive Officer of the Company; provided that the nature of such conduct shall be
set forth with reasonable particularity in a written notice to the Employee who shall have 15 business days following delivery
of such notice to cure such alleged conduct, provided that such conduct is, in the reasonable discretion of the Chairman
of the Board of Directors or the President and Chief Executive Officer of the Company, susceptible to a cure;


 


(5)              
the exhibition by the Employee of a standard of behavior within the scope of or related to the Employee’s employment
that is in violation of: (i) any written policy, which violation results in or is likely to result in a material loss or regulatory
criticism, (ii) any board committee charter, or (iii) any code of ethics or business conduct of the Company or any Affiliate of
the Company; provided in each case that the nature of such behavior shall be set forth with reasonable particularity in
a written notice to the Employee who shall have 15 business days following delivery of such notice to cure such alleged behavior,
provided that such behavior is, in the reasonable discretion of the Chairman of the Board of Directors or the President
and Chief Executive Officer of the Company, susceptible to a cure;


 


(6)              
conduct or behavior by the Employee that, in the reasonable opinion of the Chairman of the Board of Directors of the Company
or the President and Chief Executive Officer of the Company, has harmed or could be expected to harm the business or reputation
of the Company, the Bank, or any Affiliate of the Company or the Bank, including without limitation conduct or behavior that is
unethical or involves moral turpitude;


 


(7)              
receipt of any form of written notice that any regulatory agency or authority having jurisdiction over the Company, the
Bank, or any Affiliate of the Company or the Bank has instituted any form of regulatory action against the Employee; or


 


(8)              
the Employee’s removal from office or permanent prohibition from participating in the conduct of the affairs of the
Company, the Bank, or any Affiliate of the Company or the Bank by an order issued under Section 8(e) or Section 8(g)
of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e) and (g)).


 


(ii)              
In the context of the termination of this Agreement by the Employee:


 


(1)              
a material reduction, when considered in the aggregate, in the scope of the Employee’s duties and responsibilities,
which (A) is not consented to by the Employee in writing, or (B) does not occur within the 12 months following either the SmartFinancial
Merger or the merger of the Bank and SmartBank;


 






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(2)              
a material reduction, when considered in the aggregate, in the salary and other compensation and benefits provided for in
Section 4 hereof from the level in effect immediately prior to such reduction, which is not consented to by the Employee
in writing; or


 


(3)              
a change in the location of the Employee’s primary office such that the Employee is required to report regularly to
an office located outside of a 75-mile radius from the location of the Employee’s primary office as of the date of such change
in location, which change is not consented to by the Employee in writing.


 


(g)               
“Change of Control” shall mean:


 


(i)                
the acquisition by any person or persons acting in concert (other than any officer(s), director(s), and/or shareholder(s)
of the Company or any Affiliate of the Company), in a single transaction or series of related transactions, of 50% or more of the
outstanding voting securities of the Company entitled to vote in the election of Company directors;


 


(ii)              
a reorganization, merger, or consolidation to which the Company is a party with respect to which persons who were shareholders
of the Company immediately prior to such reorganization, merger, or consolidation do not immediately thereafter own more than 50%
of the combined voting power of the reorganized, merged, or consolidated company’s then outstanding voting securities entitled
to vote in the election of directors; or


 


(iii)            
the sale, transfer, or assignment by the Company of all or substantially all of the assets of the Company and its subsidiaries
to any third party (excluding, however, any pledge by the Company of the capital stock of any subsidiary of the Company to secure
indebtedness of the Company or for other general corporate or commercial purposes).


 


Notwithstanding the foregoing, the Parties
expressly acknowledge and agree that neither the SmartFinancial Merger nor any merger of the Bank and SmartBank (irrespective of
the surviving bank of such merger) shall constitute or give rise to a Change of Control for purposes of this Agreement.


 


(h)              
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder.


 


(i)                
“Competing Business” shall mean any person (other than an Affiliate of the Company or the Bank) that
is conducting any business that is the same or substantially the same as the Business of the Bank.


 


(j)                
“Confidential Information” means data and information relating to the business of the Company or the
Bank or any Affiliate of the Company or the Bank (which does not rise to the status of a Trade Secret) which is or has been disclosed
to the Employee or of which the Employee became aware as a consequence of or through the Employee’s relationship with the
Company or the Bank or any Affiliate of the Company or the Bank and which has value to Company or the Bank or any Affiliate of
the Company or the Bank and is not generally known to its or their competitors. Confidential Information shall not include any
data or information that has been voluntarily disclosed to the public by the Company or the Bank or any Affiliate of the Company
or the Bank (provided that no such public disclosure shall be deemed to be voluntary when made without authorization by
the Employee or any other employee of Company or the Bank or any Affiliate of the Company or the Bank) or that has been independently
developed and disclosed by others or that otherwise enters the public domain through lawful means.


 






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(k)              
“Disability” shall mean the inability of the Employee to perform each of the Employee’s duties
and responsibilities under this Agreement for a period of more than 90 consecutive days; provided that the Parties agree
that, to the extent necessary to comply with Section 409A of the Code, the definition of “Disability” shall be amended
to the definition of disability required by Section 409A of the Code.


 


(l)                
“Employer Information” shall mean, collectively, Confidential Information and Trade Secrets.


 


(m)            
“SmartFinancial Merger” shall mean the merger of SmartFinancial, Inc., a Tennessee corporation, with
and into the Company, as contemplated by that certain Agreement and Plan of Merger, by and among the Company, the Bank, SmartFinancial,
Inc., and SmartBank, dated December 5, 2014.


 


(n)              
“Post-Termination Period” shall mean a period of 12 months following the effective date of the termination
of the Employee’s employment.


 


(o)              
“Severance Benefit” shall mean any post-termination benefit(s) to be paid by the Employer pursuant to
Section 5(a)(ii), Section 5(b)(i), or Section 6 hereof.


 


(p)              
“Trade Secrets” shall mean information of the Company of the Bank or any Affiliate of the Company or
the Bank, including without limitation technical and nontechnical data, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product plans, and lists of actual or potential customers, prospects,
or suppliers, which:


 


(i)                
derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or use; and


 


(ii)              
is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.


 


2.                 
Employee Duties.


 


(a)               
Position(s). The Employee will be employed as Senior Executive Officer of the Company and the Bank and shall perform
and discharge faithfully the duties and responsibilities which may be assigned to the Employee from time to time in connection
with the conduct of the Employer’s business. The duties and responsibilities of the Employee shall be commensurate with those
of individuals holding similar positions at other banks similarly situated. The Employee will report directly to the Chairman of
the Board of Directors or such other officer as the Board of Directors may determine.


 


(b)              
Full-Time Status. In addition to the duties and responsibilities specifically assigned to the Employee pursuant to
Section 2(a) hereof, the Employee shall:


 


(i)                
subject to Section 2(c) hereof, during regular business hours devote substantially all of the Employee’s
time, energy, attention, and skill to the performance of the duties and responsibilities of the Employee’s employment (reasonable
vacations, approved leaves of absence, and reasonable absences due to illness excepted) and faithfully and industriously perform
such duties and responsibilities;


 






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(ii)              
diligently follow and implement all reasonable and lawful policies and decisions communicated to the Employee; and


 


(iii)            
timely prepare and forward to the requesting party or parties all reports and accountings as may be reasonably requested
of the Employee.


 


(c)               
Permitted Activities. The Employee shall devote substantially all of the Employee’s entire business time, attention,
and energies to the Business of the Employer and shall not during the Term be engaged (whether or not during normal business hours)
in any other significant business or professional activity, whether or not such activity is pursued for gain, profit, or other
pecuniary advantage, but as long as the following activities do not interfere with the Employee’s obligations to the Employer,
this shall not be construed as preventing the Employee from:


 


(i)                
investing the Employee’s personal assets in any manner which will not require any services on the part of the Employee
in the operations or affairs of the subject person and in which the Employee’s participation is solely that of an investor;
provided that such investment activity following the Effective Date shall not result in the Employee owning, beneficially
or of record, at any time 2% or more of the equity securities of any Competing Business; or


 


(ii)              
participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books,
or teaching, so long as any such activities do not interfere with the ability of the Employee to effectively discharge the Employee’s
duties and responsibilities hereunder; provided that the Board of Directors may direct the Employee in writing to resign
from any such organization and/or cease any such activities in the event the Board of Directors reasonably determines that continued
membership and/or activities of the type identified would not be in the best interests of the Employer.


 


3.                  Term
of Employment. The initial
term of this Agreement (the “Initial Term”), and the Parties’ employment relationship,
shall commence on and as of the Effective Date and, unless this Agreement is sooner terminated in accordance with its terms,
shall end on the date which is the second anniversary of the Effective Date. At the end of the Initial Term (and at the end
of any one-year renewal term), this Agreement will automatically renew for an additional, successive term of one year, unless
the Employer or the Employee gives the other written notice of its intent to terminate this Agreement as of the end of the
Initial Term (or as of the end of the then-current renewal term) at least 60 days prior to the end of the Initial Term (or
then-current renewal term). The Initial Term and any and all renewal terms, if any, are referred to together herein as the
“Term.” 


 


4.                 
Compensation. The Employer shall compensate the Employee as follows during the Employee’s
period of employment hereunder, except as otherwise provided below:


 


(a)               
Annual Base Salary. The Employee shall be compensated at an annual base rate of $145,000.00 per year (the “Annual
Base Salary”). The Employee’s Annual Base Salary will be reviewed by the compensation committee of the Board of
Directors at least annually (in accordance with the committee’s charter and any procedures adopted by the committee) for
adjustments based on an evaluation of the Employee’s performance. The Employee’s Annual Base Salary shall be payable
in accordance with the Employer’s normal payroll practices.


 


(b)              
Annual Incentive Compensation.


 


(i)                
The Employee shall be eligible to receive annual bonus compensation as determined by, and based on performance measures
established by, the Board of Directors (upon recommendation by the compensation committee) consistent with the strategic plan(s)
of the Employer pursuant to any incentive compensation program that may be adopted from time to time by the Board of Directors
(an “Annual Bonus”).


 






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(ii)              
Any Annual Bonus earned shall be payable in cash in the first calendar quarter of the year following the year in which the
Annual Bonus is earned in accordance with the Employer’s normal practices for the payment of short-term incentives. The payment
of any Annual Bonus shall be subject to any approvals or non-objections required by any regulator of the Company or the Bank or
any Affiliate of the Company or the Bank, and it is understood by the Parties that the Employee may not be eligible to receive
any such Annual Bonus or other short-term incentive compensation if the Company or the Bank or any Affiliate of the Company or
the Bank is subject to restrictions imposed on the Company or the Bank or any such Affiliate by the United States Department of
the Treasury, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, the Tennessee Department
of Financial Institutions, or any other bank or bank holding company regulatory authority, or if the Employer is otherwise restricted
from making payment of such compensation under applicable law.


 


(c)               
Reimbursement of Business Expenses. Subject to the reimbursement policies from time to time adopted by the Board
of Directors, and consistent with the annual budget approved for the period during which an expense is incurred, the Employer will
reimburse the Employee for reasonable and necessary business expenses incurred by the Employee in the performance of the Employee’s
duties and responsibilities hereunder; provided, however, that, as a condition to any such reimbursement, the Employee
shall submit verification of the nature and amount of such expenses in accordance with said reimbursement policies. Examples of
appropriate categories of reimbursable expenses include memberships in professional and civic organizations, professional development,
and customer entertainment. The Employee acknowledges that the Employer makes no representation with respect to the taxability
or non-taxability of the benefits provided under this Section 4(c).


 


(d)              
Cellular Telephone. The Employer will provide the Employee with an Employer-owned cellular telephone for use by the
Employee in the course of the Employee’s employment for Employer-related business 


 


(e)               
Paid Leave. On a non-cumulative basis, the Employee shall be entitled to 26 days of paid leave per calendar year,
prorated for any partial calendar year of service. The provisions of this Section 4(e) shall apply notwithstanding
any less generous paid leave policy then maintained by the Employer, but the use of Employee’s paid leave shall otherwise
be in accordance with and subject to the Employer’s paid leave policy as in effect from time to time.


 


(f)               
Other Benefits. In addition to the benefits specifically described in this Agreement, the Employee shall be entitled
to such benefits as may be available from time to time to similarly situated employees of the Employer, including, by way of example
only, retirement plan and health, dental, life, and disability insurance benefits. All such benefits shall be awarded and administered
in accordance with the written terms of any applicable benefit plan or, if no written terms exist, the Employer’s standard
policies and practices relating to such benefits.


 


(g)               
Reimbursement of Expenses; In-Kind Benefits. All expenses eligible for reimbursement described in this Agreement
must be incurred by the Employee during the Term of this Agreement to be eligible for reimbursement. Any in-kind benefits provided
by the Employer must be provided during the Term of this Agreement. The amount of reimbursable expenses incurred, and the amount
of any in-kind benefits provided, in one taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits
provided, in any other taxable year. Each category of reimbursement shall be paid as soon as administratively practicable, but
in no event shall any such reimbursement be paid after the last day of the calendar year following the calendar year in which the
expense was incurred. Neither rights to reimbursement nor in-kind benefits shall be subject to liquidation or exchange for other
benefits.


 






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(h)              
Clawback of Compensation. The Employee agrees to return or repay any compensation previously paid or otherwise made
available to the Employee that is subject to recovery under any applicable law, rule, or regulation (including any rule of any
exchange or service on or through which the securities of the Company or any Affiliate of the Company are traded) where such compensation
was in excess of what should have been paid or made available because the determination of the amount due was based, in whole or
in part, on materially inaccurate financial information of the Employer. The Employee agrees to return or repay promptly any such
compensation identified by the Employer. If the Employee fails to return or repay such compensation promptly, the Employee agrees
that the amount of such compensation may be deducted from any and all other compensation owed to the Employee. The Employee acknowledges
that the Employer may take appropriate disciplinary action (up to and including termination of employment) if the Employee fails
to return or repay such compensation. The provisions of this Section 4(h) shall be modified to the extent, and remain
in effect for the period, required by applicable law, rule, or regulation.


 


5.                 
Termination of Employment.


 


(a)               
Termination by Employer. During the Term, the Employee’s employment, and this Agreement, may be terminated
by the Employer:


 


(i)                
for Cause, upon written notice to the Employee approved by two-thirds of the members of the Board of Directors, in which
event the Employee shall not be entitled to any post-termination compensation or benefits;


 


(ii)              
at any time without Cause (provided that the Bank shall give the Employee at least 30 days prior written notice of
the Employer’s intent to terminate), in which event the Employer shall (1) be required to pay to the Employee a severance
benefit equal to one times the Employee’s Annual Base Salary as of the date of termination, said benefit to be payable over
the course of the 12-month period following termination in accordance with the Employer’s normal payroll practices, and (2)
reimburse the Employee for the reasonable cost of premium payments paid by the Employee to continue the Employee’s then-existing
health insurance for himself as provided by the Employer for the lesser of (A) 12 months following termination and (B) until such
time as the Employee obtains other employment providing health insurance coverage, provided that the Employer may discontinue
reimbursing the Employee for such premium payments for the applicable time period and instead provide a cash payment to the Employee
(for the Employee to use as the Employee deems appropriate) equal to the amount of the remainder of such reimbursable premium payments
in the event that the Employer determines that continued reimbursement of premium payments would cause a violation of applicable
nondiscrimination rules (for the avoidance of doubt, the termination of the Employee’s employment by the Employer upon the
disability of the Employee under Section 5(a)(iii) below shall not be considered or deemed termination of the Employee’s
employment without Cause under this Section 5(a)(ii)); or


 


(iii)            
at any time upon the Disability of the Employee (provided that the Employer shall give the Employee at least 30 days
prior written notice of the Employer’s intent to terminate), in which event the Employee will be entitled to such benefits
(if any) as may be available to the Employee under the Employer’s disability insurance policy or policies (if any) then in
effect.


 


(b)              
Termination by Employee. During the Term, the Employee’s employment, and this Agreement, may be terminated
by the Employee:


 






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(i)                
for Cause, in which event the Employer shall (1) be required to pay to the Employee a severance benefit equal to (A) if
termination is for Cause as defined in Section 1(f)(ii)(1) or Section 1(f)(ii)(3), one times the Employee’s
Annual Base Salary as of the date of termination, said benefit to be payable over the course of the 12-month period following termination
in accordance with the Employer’s normal payroll practices, or (B) if termination is for Cause as defined in Section 1(f)(ii)(2),
one times the Employee’s Annual Base Salary immediately before the reduction in salary and other compensation and benefits
giving rise to termination, said benefit to be payable over the course of the 12-month period following termination in accordance
with the Employer’s normal payroll practices, and (2) reimburse the Employee for the reasonable cost of premium payments
paid by the Employee to continue the Employee’s then-existing health insurance for himself as provided by the Employer for
the lesser of (A) 12 months following termination and (B) until such time as the Employee obtains other employment providing health
insurance coverage, provided that the Employer may discontinue reimbursing the Employee for such premium payments for the
applicable time period and instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate)
equal to the amount of the remainder of such reimbursable premium payments in the event that the Employer determines that continued
reimbursement of premium payments would cause a violation of applicable nondiscrimination rules; or


 


(ii)              
at any time without Cause or upon the Disability of the Employee (provided that the Employee shall give the Employer
at least 60 days prior written notice of the Employee’s intent to terminate), in which event the Employee shall not be entitled
to any post-termination compensation or benefits other than such benefits (if any) as may be available to the Employee under the
Employer’s disability insurance policy or policies (if any) then in effect.


 


(c)               
Termination by Mutual Agreement. During the Term, the Employee’s employment, and this Agreement, may be terminated
at any time by mutual, written agreement of the Parties.


 


(d)              
Termination Upon Death. The Employee’s employment, and this Agreement, shall terminate automatically upon the
death of the Employee.


 


(e)               
Effect of Termination; Resignation. Upon the termination of the Employee’s employment hereunder, the Employer
shall have no further obligations to the Employee or the Employee’s estate, heirs, beneficiaries, executors, administrators,
or legal or personal representatives with respect to this Agreement, except for the payment of any amounts earned and owing under
Sections 4(a)-4(c) hereof as of the effective date of the termination of the Employee’s employment and
any payment(s) required by Section 5(a)(ii), Section 5(b)(i), or Section 6 of this Agreement.
Further, upon the termination of the Employee’s employment, if the Employee is a member of the Board of Directors or the
board of directors of any Affiliate of the Employer, the Employee shall at the request of the Employer resign from his position(s)
on such board(s), with any and all such resignations to be effective not later than the date on which the Employee’s employment
is terminated.


 


6.                 
Change of Control(a).



 


(a)               
If within 12 months following a Change of Control the Employer (or any successor of or to the Employer) terminates the Employee’s
employment without Cause, the Employee (or in the event of the Employee’s subsequent death the Employee’s estate or
designated beneficiary or beneficiaries, as the case may be) shall receive, as liquidated damages, in lieu of all other claims,
a severance payment equal to two times the Employee’s Annual Base Salary as of the date of termination, such amount to be
paid in full in one lump sum payment on the last day of the month following the date of termination of the Employee’s employment.
Additionally, the Employee will continue to receive the health insurance plan benefits then in effect for employees of the Employer
for the lesser of (i) 12 months following termination and (ii) until such time as the Employee obtains other employment providing
health insurance plan benefits, to include payment of any Bank-funded portion of the plan; provided, however, that
the Employer may discontinue paying insurer(s) COBRA premiums for health insurance coverage for the applicable time period and
instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate) equal to the amount
of the remainder of such COBRA premiums in the event that the Employee determines that continued provision of a COBRA subsidy would
cause a violation of applicable nondiscrimination rules.


 






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(b)              
If within 12 months following a Change of Control the Employee terminates the Employee’s employment with the Employer
(or any successor of or to the Company or the Bank) for Cause, the Employee (or in the event of the Employee’s subsequent
death the Employee’s estate or designated beneficiary or beneficiaries, as the case may be) shall receive, as liquidated
damages, in lieu of all other claims, a severance payment equal to (i) if termination is for Cause as defined in Section 1(f)(ii)(1)
or Section 1(f)(ii)(3), two times the Employee’s Annual Base Salary as of the date of termination, such amount
to be paid in full in one lump sum payment on the last day of the month following the date of termination of the Employee’s
employment, or (ii) if termination is for Cause as defined in Section 1(f)(ii)(2), two times the Employee’s Annual
Base Salary immediately before the reduction in salary and other compensation and benefits giving rise to termination, such amount
to be paid in full in one lump sum payment on the last day of the month following the date of termination of the Employee’s
employment. Additionally, the Employee will continue to receive the health insurance plan benefits then in effect for employees
of the Employer for the lesser of (i) 12 months following termination and (ii) until such time as the Employee obtains other employment
providing health insurance plan benefits, to include payment of any Bank-funded portion of the plan; provided, however,
that the Employer may discontinue paying insurer(s) COBRA premiums for health insurance coverage for the applicable time period
and instead provide a cash payment to the Employee (for the Employee to use as the Employee deems appropriate) equal to the amount
of the remainder of such COBRA premiums in the event that the Employer determines that continued provision of a COBRA subsidy would
cause a violation of applicable nondiscrimination rules.


 


7.                 
Employer Information.


 


(a)               
Ownership of Employer Information. All Employer Information received or developed by the Employee or by the Company
or the Bank or any Affiliate of the Company or the Bank while the Employee is employed by the Employer shall be and will remain
the sole and exclusive property of the Company or the Bank or such Affiliate, as the case may be.


 


(b)              
Obligations of the Employee. The Employee agrees:


 


(i)                
to hold all Employer Information in strictest confidence;


 


(ii)              
to not use, duplicate, reproduce, distribute, disclose, or otherwise disseminate Employer Information or any physical embodiments
of Employer Information to any unauthorized recipient; and


 


(iii)            
in any event, to not take any action causing any Employer Information to lose its character or cease to qualify as, and
to not fail to take any action necessary in order to prevent any Employer Information from losing its character or ceasing to qualify
as, Confidential Information or a Trade Secret; provided, however, that none of the foregoing obligations shall preclude
the Employee from making any disclosures of Employer Information which the Employee has been advised in writing by independent
legal counsel are required by applicable law, rule, or regulation. This Section 7 shall survive for a period of two
years following the termination of this Agreement for any reason with respect to Confidential Information, and shall survive the
termination of this Agreement for any reason for so long as is permitted by applicable law with respect to Trade Secrets.


 






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(c)               
Delivery Upon Request or Termination. Upon the request of the Employer, and in any event upon the termination of
the Employee’s employment with the Employer, the Employee will promptly deliver to the Employer all property belonging to
the Employer, including without limitation all Employer Information then in the Employee’s possession or control.


 


8.                 
Non-Competition; Non-Solicitation; Non-Disparagement.


 


(a)               
Non-Competition. The Employee agrees that during the period of the Employee’s employment by the Employer hereunder
and, in the event of the termination of the Employee’s employment, for the period of time in which the Employee is entitled
to receive any Severance Benefit, the Employee will not (except on behalf of or with the prior written consent of the Employer):


 


(i)                
within the Area, either directly or indirectly, on the Employee’s own behalf or in the service of or on behalf of
others, engage in any business, activity, enterprise, or venture competitive with the Business of the Employer;


 


(ii)              
within the Area, either directly or indirectly, perform for any Competing Business any services that are the same as, or
substantially the same as, the services the Employee provides or provided for the Employer;


 


(iii)            
within the Area, accept employment with or be employed by any person engaged in any business, activity, enterprise, or venture
competitive with the Business of the Employer; or


 


(iv)            
work for or with, consult for, or otherwise be affiliated with, in either a paid or unpaid capacity, or be employed by any
person or group of persons proposing to establish a new bank or other financial institution within the Area.


 


(b)              
Non-Solicitation of Customers. The Employee agrees that, during the period of the Employee’s employment by
the Employer hereunder and, in the event of the termination of the Employee’s employment for any reason, for the duration
of the Post-Termination Period, the Employee will not, directly or indirectly (except on behalf of or with the prior written consent
of the Employer), on the Employee’s own behalf or in the service of or on behalf of others, solicit, divert, or appropriate,
or attempt to solicit, divert, or appropriate, any business from any of the customer of the Company, the Bank, or any Affiliate
of the Company or the Bank, including prospective customers actively sought by the Company, the Bank, or any Affiliate of the Company
or the Bank, with whom the Employee has or had contact during the last two years of the Employee’s employment with the Employer,
for purposes of selling, offering, or providing products or services that are competitive with those sold, offered, or provided
by the Company, the Bank, or any Affiliate of the Company or the Bank.


 


(c)               
Non-Solicitation of Employees. The Employee agrees that, during the period of the Employee’s employment by
the Employer hereunder and, in the event of the termination of the Employee’s employment for any reason, for the duration
of the Post-Termination Period, the Employee will not, directly or indirectly (except on behalf of or with the prior written consent
of the Employer), on the Employee’s own behalf or in the service of or on behalf of others, solicit, recruit, or hire away,
or attempt to solicit, recruit, or hire away, any employee of the Company, the Bank, or any Affiliate of the Company or the Bank
with whom the Employee had contact during the last two years of the Employee’s employment with the Employer, regardless of
whether such employee is a full-time, part-time, or temporary employee of the Company, the Bank, such an Affiliate of the Company
or the Bank or such employee’s employment is pursuant to a written agreement, for a determined period, or at will.


 






    	 	10	 



     


    

  


(d)              
Non-Disparagement. The Employee agrees that, during the period of the Employee’s employment by the Employer
hereunder and for a period of two years thereafter, the Employee will not make any untruthful statement (written or oral) that
is or could reasonably be perceived as disparaging to the Company, the Bank, or any Affiliate of the Company or the Bank.


 


(e)               
Modification. The Parties agree that the provisions of this Agreement represent a reasonable balancing of their respective
interests and have attempted to limit the restrictions imposed on the Employee to those necessary to protect the Employer from
inevitable disclosure of Confidential Information and Trade Secrets and/or unfair competition. The Parties agree that, if the scope
or enforceability of this Agreement is in any way disputed at any time and an arbitrator, court, or other trier of fact determines
that the scope of the restrictions contained in this Agreement is overbroad, then such arbitrator, court, or other trier of fact
may modify the scope of the restrictions contained in this Agreement.


 


(f)               
Tolling. The Employee agrees that, in the event the Employee breaches this Section 8, the Post-Termination
Period shall be tolled during the period of such breach and shall be extended to 12 months after all breaches of this Agreement
have ceased.


 


(g)               
Remedies. The Employee agrees that the covenants contained in Section 7 and Section 8 of
this Agreement are of the essence of this Agreement; that each of such covenants is reasonable and necessary to protect the business,
interests, and properties of the Employer and its Affiliates; and that irreparable loss and damage will be suffered by the Employer
should the Employee breach any of such covenants. Therefore, the Employee agrees and consents that, in addition to any and all
other remedies provided by or available at law or in equity, the Employer shall be entitled to a temporary restraining order and
temporary and permanent injunctions to prevent a breach or threatened or contemplated breach of any of the covenants contained
in Section 7 or Section 8 of this Agreement, and that, in such event, the Employer shall not be required
to post a bond. The Employer and the Employee agree that all remedies available to the Employer shall be cumulative.


 


9.                 
Severability. The Parties agree that each of the provisions included in this Agreement is
separate, distinct, and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. Further,
if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict
between the provision and any applicable law, rule, regulation, or public policy, the provision shall be redrawn to make the provision
consistent with, and valid and enforceable under, such law, rule, regulation, or public policy.


 


10.             
No Set-Off by Employee. The existence of any claim, demand, action, or cause of action by
the Employee against the Company, the Bank, or any Affiliate of the Company or the Bank, whether predicated upon this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Employer of any of the Employer’s rights hereunder.


 


11.             
Notices. All notices, requests, waivers, and other communications required or permitted hereunder shall be in writing and
shall be either personally delivered; sent by national overnight courier service, postage prepaid, next-business-day delivery
guaranteed; or mailed by first class United States Mail, postage prepaid return receipt requested, to the recipient at the address
below indicated:


 





	If to the Employer:	Cornerstone
Bancshares, Inc.
	 	Cornerstone Community Bank
	 	Attention: Chairman, Board
of Directors
	 	835 Georgia Avenue
	 	Chattanooga, Tennessee 37402
	 	 
	If to the Employee:	John H. Coxwell, Sr.
	 	2804 Gold Point Circle South
	 	Hixson, Tennessee 37343



  






    	 	11	 



     


    

  


or to such other address or to the attention of such other person
as the recipient Party shall have specified by prior written notice to the sending Party. All such notices, requests, waivers,
and other communications shall be deemed to have been effectively given: (a) when personally delivered to the Party to be notified;
(b) two business days after deposit with a national overnight courier service, postage prepaid, addressed to the Party to be notified
as set forth above with next-business-day delivery guaranteed; or (c) four business days after deposit in the United States Mail,
first class, postage prepaid with return receipt requested, at any time other than during a general discontinuance of postal service
due to strike, lockout, or otherwise (in which case such notice, request, waiver, or other communication shall be effectively given
upon receipt), and addressed to the Party to be notified as set forth above. A Party may change such Party’s notice address
set forth above by giving the other Party 10 days written notice of the new address in the manner set forth above.


 


12.             
Assignment. The rights and obligations of the Company and the Bank under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of the Company and the Bank, including without limitation
a purchaser of all or substantially all of the assets of the Company or the Bank. If this Agreement is assigned pursuant to the
foregoing sentence, the assignment shall be by novation, and the assigning Party shall have no further liability hereunder, and
the successor or assign shall become the “Company” or the “Bank,” as applicable, hereunder, but the Employee
will not be deemed to have experienced a termination of employment by virtue of such assignment. Without limiting the generality
of the foregoing, the Parties expressly acknowledge and agree that, in the event of any merger of the Bank with and into SmartBank,
SmartBank as the surviving bank of such merger will, as successor by merger to the Bank, succeed to all rights and obligations
of the Bank hereunder, without any further action by the Parties, and that at and after the effective time of such merger, all
references in this Agreement to the “Bank” shall be references to SmartBank as successor by merger to the Bank. This
Agreement is a personal contract and the rights and interest of the Employee may not be assigned by the Employee. This Agreement
shall inure to the benefit of and be enforceable by the Employee and the Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.


 


13.             
Waiver. A waiver by one Party to this Agreement of any provision of this Agreement or of
any breach of this Agreement by any other Party to this Agreement shall not be effective unless in writing, and no waiver shall
operate or be construed as a waiver of the same or any other provision or breach on any other or subsequent occasion.


 


14.             
Mediation. Except with respect to Section 7, Section 8, and Section 22 hereof,
and except as provided in Section 15 hereof, in the event of any dispute arising out of or relating to this Agreement, or
a breach hereof, which dispute cannot be settled through direct discussions between the Parties, the Parties agree to first endeavor
to settle the dispute in an amicable manner by non-binding mediation in accordance with the rules of alternative dispute resolution
of the State of Tennessee for the judicial circuit containing Knox County, Tennessee (or other judicial circuit mutually agreed
to by the Parties) before resorting to any other process for resolving the dispute.


 






    	 	12	 



     


    

 


 15.             
Applicable Law and Choice of Forum. This Agreement shall be governed by and construed and
enforced under and in accordance with the laws of the State of Tennessee, without regard to or the application of principles of
conflicts of laws. The Parties agree that any legal action or proceeding arising under or relating to this Agreement shall be
brought in a state court of record located in Knox County, Tennessee (or other venue mutually agreed to by the Parties), or, in
the event (but only in the event) that no such state court has subject matter jurisdiction over such action or proceeding, in
the United States District Court for the Eastern District of Tennessee, which courts shall have exclusive jurisdiction over any
such action or proceeding. Each Party consents to, and waives any objection such Party may otherwise have to, the jurisdiction
and venue of such courts.


 


16.             
Interpretation. Words used herein importing any gender include all genders. Words used herein
importing the singular shall include the plural and vice versa. When used herein, the terms “herein,” “hereunder,”
“hereby,” “hereto,” and “hereof,” and any similar terms, refer to this Agreement. When used
herein, the term “person” shall include an individual, a corporation, a limited liability company, a partnership,
an association, a trust, and any other entity or organization, whether or not incorporated. Any captions, titles, or headings
preceding the text of any section or subsection of this Agreement are solely for convenience of reference and shall not constitute
part of this Agreement or affect its meaning, construction, or effect.


 


17.             
Entire Agreement. This Agreement embodies the entire, final, and integrated agreement of
the Parties on the subject matter stated in this Agreement. No amendment or supplement to or modification of this Agreement shall
be valid or binding upon the Employer or the Employee unless made in a writing signed by all of the Parties. All prior understandings
and agreements relating to the subject matter of this Agreement are hereby expressly terminated.


 


18.             
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed
an original but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered
by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.


 


19.             
Rights of Third Parties. Nothing herein expressed is intended to or shall be construed to
confer upon or give to any person, other than the Parties hereto and their successors and permitted assigns, any rights or remedies
under or by reason of this Agreement.


 


20.             
Legal Fees. In the event of any claim, action, suit, or proceeding arising out of or in any
way relating to this Agreement, the prevailing Party or Parties shall be entitled to recover from the non-prevailing Party or
Parties all reasonable fees, expenses, and disbursements, including without limitation reasonable attorneys’ fees and court
costs, incurred by such prevailing Party or Parties in connection with such claim, action, suit, or proceeding, in addition to
any other relief to which such prevailing Party or Parties may be entitled at law or in equity.


 


21.             
Survival. The obligations of the Parties pursuant to Sections 4(h), 7, 8,
14, 15, 20, 21, 23, 24, 25, 26, 27, and 28 shall survive
the expiration and/or termination of this Agreement and/or the termination of the Employee’s employment hereunder for the
periods expressly designated under such sections or, if no such period is designed, for the maximum period permissible under applicable
law.


 


22.             
Representation Regarding Restrictive Covenants. The Employee represents that the Employee
is not and will not become a party to any non-competition or non-solicitation agreement or any other agreement which would prohibit
the Employee from entering into this Agreement or providing the services for the Employer contemplated by this Agreement on or
after the Effective Date. In the event the Employee is subject to any such agreement, this Agreement shall be rendered null and
void and the Employer shall have no obligations to the Employee under this Agreement.


 






    	 	13	 



     


    

  


23.             
Right to Contact. The Employee acknowledges and agrees that the Employer shall retain and have the right to contact
any new employer or potential employer (or other business) and apprise such person of the Employee’s responsibilities and
obligations owed under this Agreement.


 


24.             
Section 409A. It is the intent of the Parties for any payment to which the Employee is entitled
under this Agreement to be exempt from Section 409A of the Code to the maximum extent permitted under Section 409A of the Code.
However, if any amounts payable are considered to be “nonqualified deferred compensation” subject to Section 409A
of the Code, such amounts shall be paid and provided in a manner that, and at such time and in such form as, complies with the
applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance.
Neither the Employee nor the Employer shall intentionally take any action to accelerate or delay the payment of any amounts in
any manner which would not be in compliance with Section 409A of the Code without the consent of the other Party. For purposes
of this Agreement, all rights to payments shall be treated as rights to receive a series of separate payments to the fullest extent
allowed by Section 409A of the Code. To the extent that some portion of the payments provided for under this Agreement may
be bifurcated and treated as exempt from Section 409A of the Code under the “short-term deferral” or “separation
pay” exemptions, then such amounts may be so treated as exempt from Section 409A of the Code.


 


25.             
Tax Matters.


 


(a)               
Withholding of Taxes. The Employer may deduct and withhold from any amounts payable under this Agreement all federal,
state, city, or other taxes the Employer is required to deduct or withhold pursuant to applicable law, rule, regulation, or ruling.


 


(b)              
Excise Taxes.


 


(i)                
In the event that any amounts payable under this Agreement or otherwise to the Employee would (1) constitute “parachute
payments” within the meaning of Section 280G of the Code or any comparable successor provision and (2) but for this Section 25(b),
be subject to the excise tax imposed by Section 4999 of the Code or any comparable successor provision (the “Excise Tax”),
then such amounts payable to the Employee shall be either (y) provided to the Employee in full or (z) provided to the Employee
to the maximum extent that would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing
amounts, when taking into account applicable federal, state, local, and foreign income and employment taxes, the Excise Tax, and
any other applicable taxes, results in the Employee’s receipt, on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Employer and the Employee
otherwise agree in writing, any determination required under this Section 25(b) shall be made in writing in good faith
by the Employer’s independent accounting firm (the “Independent Accountants”). In the event of a reduction
in benefits hereunder, the reduction of the total payments shall apply as follows, unless otherwise agreed in writing and such
agreement is in compliance with Section 409A of the Code: (1) any cash severance payments subject to Section 409A of the Code due
under this Agreement shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter
working from the next last payment; (2) any cash severance payments not subject to Section 409A of the Code due under this Agreement
shall be reduced, with the last such payment due first forfeited and reduced, and sequentially thereafter working from the next
last payment; (3) any acceleration of vesting of any equity subject to Section 409A of the Code shall remain as originally scheduled
to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest;
and (4) any acceleration of vesting of any equity not subject to Section 409A of the Code shall remain as originally scheduled
to vest, with the tranche that would vest last (without any such acceleration) first remaining as originally scheduled to vest.
For purposes of making the calculations required by this Section 25(b), the Independent Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning the
application of the Code and other applicable legal authority. The Employer and the Employee shall furnish to the Independent Accountants
such information and documents as the Independent Accountants may reasonably request in order to make a determination under this
Section 25(b). The Employer shall bear all costs that the Independent Accountants may reasonably incur in connection
with any calculations contemplated by this Section 25(b).


 






    	 	14	 



     


    

  


(ii)              
If notwithstanding any reductions described in this Section 25(b) the Internal Revenue Service (the “IRS”)
determines that the Employee is liable for the Excise Tax as a result of the receipt of amounts payable under this Agreement or
otherwise as described above, then the Employee shall be obligated to pay back to the Employer, within 30 days after a final IRS
determination or, in the event that the Employee challenges the final IRS determination, a final judicial determination, a portion
of such amounts equal to the Repayment Amount. The “Repayment Amount,” with respect to the payment of benefits,
shall be the smallest such amount, if any, that is required to be paid to the Employer so that the Employee’s net after-tax
proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable
taxes imposed on such payment) are maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment
Amount of more than zero would not result in the Employee’s net after-tax proceeds with respect to the payment of such benefits
being maximized. If the Excise Tax is not eliminated pursuant to this Section 25(b), the Employee shall pay the Excise
Tax.


 


(iii)            
Notwithstanding any other provision of this Section 25(b), if (1) there is a reduction in the payment of benefits
as described in this Section 25(b), (2) the IRS later determines that the Employee is liable for the Excise Tax, the
payment of which would result in the maximization of the Employee’s net after-tax proceeds (calculated as if the Employee’s
benefits had not previously been reduced), and (3) the Employee pays the Excise Tax, then the Employer shall pay to the Employee
those benefits which were reduced pursuant to this Section 25(b) as soon as administratively possible after the Employee
pays the Excise Tax, so that the Employee’s net after-tax proceeds with respect to the payment of benefits are maximized.


 


26.             
Regulatory Restrictions. The Parties expressly acknowledge and agree that (a) any and all
payments contemplated by this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k)
and 12 C.F.R. Part 359, as such laws and regulations may be amended from time to time, and (b) the obligations of the Parties
under this Agreement are generally subject to such conditions, restrictions, and limitations as may be imposed from time to time
by applicable state and/or federal banking laws, rules, and regulations.


 


27.             
Effect on Executive Change-in-Control Severance Agreement. The Parties and the Company intend for this Agreement
to supersede and replace that certain Executive Change-in-Control Severance Agreement dated December 16, 2013, by and among the
Company, the Employer, and the Employee (the “Severance Agreement”). Accordingly, on and as of the Effective
Date, and without any further action by the Parties or the Company, this Agreement shall supersede and replace the Severance Agreement
and the Severance Agreement shall automatically be cancelled and shall have no further force or effect with the parties thereto
having no further rights or obligations thereunder. By executing this Agreement, the Parties and the Company hereby waive the requirements
of Section 5.5 of the Severance Agreement, which if not waived would require the inclusion in the Merger Agreement of the “Payments
Upon Termination” (as such term is defined in the Severance Agreement) before final approval of the Merger Agreement by the
boards of directors of the Company and the Employer.


 


28.             
Nature of Employer Obligations.. The obligations of the Company and the Bank hereunder
shall be joint and several.


 


(Signature Page Follows)


 






    	 	15	 



     


    

  


IN WITNESS WHEREOF, the
Parties have executed and delivered this Agreement as of the date first written above.


 





	BANK:	CORNERSTONE COMMUNITY BANK
	 	 	 
	 	 	 
	 	By:	/s/ W. Miller Welborn
	 	 	W. Miller Welborn
	 	 	Chairman
	 	 	 
	 	 	 
	COMPANY:	CORNERSTONE BANCSHARES, INC.
	 	 	 
	 	 	 
	 	By:	/s/ W. Miller Welborn
	 	 	W. Miller Welborn
	 	 	Chairman
	 	 	 
	 	 	 
	EMPLOYEE:	 	/s/ John H. Coxwell,
Sr.
	 	 	John H. Coxwell, Sr.



 


 


 


 





 








 


 


 







(Signature Page to Coxwell Employment
Agreement)