Exhibit 10.2


 


 


registration
RIGHTS AGREEMENT


 


This REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made as of __________, 2015, by and among Cornerstone Bancshares, Inc., a Tennessee
corporation (the “Company”), and each of the investors who has executed a joinder hereto (each of which is referred
to in this Agreement as an “Investor,” and, together, collectively, the “Investors”).


 


RECITALS


 


 


WHEREAS, the Company
and each Investor have executed a Subscription Agreement (each, a “Purchase Agreement,” and together, collectively,
the “Purchase Agreements”) whereby each Investor has agreed to purchase Common Stock (as defined below) of the
Company in connection with the Private Placement (as defined below).


 


WHEREAS, the Investors
desire to enter into this Agreement in order to provide for certain registration rights with respect to the Company.


 


NOW, THEREFORE, in
consideration of the mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:


 


		1.	Definitions.



 


For purposes of this
Agreement:


 


“Affiliate”
means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, is controlled by,
or is under common control with such specified Person, including without limitation any general partner, limited partner, officer,
director, or manager of such Person.


 


“Common Stock”
means shares of the Company’s common stock, $1.00 par value per share, sold pursuant to the Purchase Agreements.


 


“Damages”
means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the
Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises
out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement
of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;
(ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make
the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents
or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act, or any state securities law.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Holder”
means any holder of Registrable Securities who is a party to this Agreement.


 


“Immediate
Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, domestic partner, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships,
of a natural person referred to herein.


 




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“Person”
means any individual, corporation, partnership, trust, limited liability company, association or other entity.


 


“Private Placement”
means the sale of up to $15,000,000 of Common Stock pursuant to the Purchase Agreements entered into between each Investor and
the Company.


 


“Purchase
Agreement” has the meaning set forth in the recitals hereto.


 


“Registrable
Securities” means any Common Stock, excluding in all cases, however, any Registrable Securities which have been
previously registered or which have been, or could be, sold to the public either pursuant to a registration statement or Rule 144.


 


“Restricted
Securities” means the securities of the Company required to bear the legend set forth in Section 2.8(b) hereof.


 


“SEC”
means the U.S. Securities and Exchange Commission.


 


“SEC Rule
144” means Rule 144 promulgated by the SEC under the Securities Act.


 


“SEC Rule
145” means Rule 145 promulgated by the SEC under the Securities Act.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


		2.	Registration Rights.



 


The Company covenants
and agrees as follows:


 


		2.1.	Registration.



 


(a)          Subject
to the limitations of Section 2.1(b) below, as soon as practicable, the Company agrees to use its best efforts to prepare
and file a registration statement with respect to the Registrable Securities, and use its best efforts to cause such registration
statement to become effective under the Securities Act within ninety (90) days after the date of this Agreement and, thereafter,
keep such registration statement effective until the earlier of (i) six (6) months following the date of this Agreement or (ii)
all Registrable Securities are resold pursuant to such registration statement. Following the earlier of (x) six (6) months following
the date of this Agreement, or (y) all of the Registrable Securities are resold pursuant to such registration statement, the Company
may, in its sole discretion, elect to deregister all Registrable Securities covered by such registration statement.


 


(b)          Notwithstanding
the foregoing obligations, if the Company furnishes to the Holders a certificate signed by the Company’s chief executive
officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to
the Company and its stockholders for such registration statement to either become effective or remain effective for as long as
such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere
with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature
disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render
the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right
to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall
be tolled correspondingly, for a period of not more than ninety (90) days; provided, however, that the Company may
not invoke this right more than once in any six (6) month period; and provided further that the Company shall not
register any securities for its own account or that of any other stockholder during such ninety (90) day period other than pursuant
to a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock
purchase, or similar plan; a registration on any form that does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable Securities; or a registration relating to an SEC
Rule 145 transaction.


 




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		2.2.	Obligations of the Company.



 


Whenever required under
this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:


 


(a)          prepare
and file with the SEC a registration statement with respect to the Registrable Securities and use its best efforts to cause such
registration statement to become effective and, thereafter, keep such registration statement effective until the earlier of (i)
six (6) months following the date of this Agreement or (ii) all Registrable Securities are resold pursuant to such registration
statement;


 


(b)          prepare
and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with
such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities
covered by such registration statement;


 


(c)          furnish
to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and
such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;


 


(d)          use
its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other
securities or blue-sky laws of such jurisdictions as shall be reasonably required; provided that the Company shall not be
required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless
the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;


 


(e)          use
its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed
on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities
issued by the Company are then listed;


 


(f)          provide
a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number
for all such Registrable Securities, in each case not later than the effective date of such registration;


 


(g)          notify
each Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared
effective or a supplement to any prospectus forming a part of such registration statement has been filed; and


 


(h)          after
such registration statement becomes effective, notify each Holder of any request by the SEC that the Company amend or supplement
such registration statement or prospectus.


 




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		2.3.	Furnish Information.



 


It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable
Securities of any Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such
Holder’s Registrable Securities.


 


		2.4.	Expenses of Registration.



 


All expenses incurred
in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing,
and qualification fees, printers’ and accounting fees, and fees and disbursements of counsel for the Company shall be borne
and paid by the Company.


 


		2.5.	Delay of Registration.



 


No Holder shall have
any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the
result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.


 


		2.6.	Indemnification.



 


If any Registrable
Securities are included in a registration statement under this Section 2:


 


(a)          To
the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers,
directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; and each Person, if any, who
controls such Holder within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay
to each such Holder, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby
in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred;
provided, however, that the indemnity agreement contained in this Section 2.6(a) shall not apply to amounts
paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are
based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any
such Holder, controlling Person, or other aforementioned Person expressly for use in connection with such registration.


 


(b)          To
the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and
each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company
within the meaning of the Securities Act, legal counsel and accountants for the Company, any other Holder selling securities in
such registration statement, and any controlling Person of any such other Holder, against any Damages, in each case only to the
extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written
information furnished by or on behalf of such Holder expressly for use in connection with such registration; and each such Holder
will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection
with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided,
however, that the indemnity agreement contained in this Section 2.6(b) shall not apply to amounts paid in settlement
of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably
withheld.


 




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(c)          Promptly
after receipt by an indemnified party under this Section 2.6 of notice of the commencement of any action (including
any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim
in respect thereof is to be made against any indemnifying party under this Section 2.6, give the indemnifying party notice
of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying
party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together
with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying
party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.6, to the extent that such failure materially prejudices the indemnifying party’s
ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 2.6.


 


(d)          Notwithstanding
anything else herein to the contrary, the foregoing indemnity agreements of the Company and the Holders are subject to the condition
that, insofar as they relate to any Damages arising from any untrue statement or alleged untrue statement of a material fact contained
in, or omission or alleged omission of a material fact from, a preliminary prospectus (or necessary to make the statements therein
not misleading) that has been corrected in the form of prospectus included in the registration statement at the time it becomes
effective, or any amendment or supplement thereto filed with the SEC pursuant to Rule 424(b) under the Securities Act (the “Final
Prospectus”), such indemnity agreement shall not inure to the benefit of any Person if a copy of the Final Prospectus
was furnished to the indemnified party and such indemnified party failed to deliver, at or before the confirmation of the sale
of the shares registered in such offering, a copy of the Final Prospectus to the Person asserting the loss, liability, claim, or
damage in any case in which such delivery was required by the Securities Act.


 


(e)          To
provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party
otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.6 but it is
judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding
the fact that this Section 2.6 provides for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is provided under this Section 2.6, then,
and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which
they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each
of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted
in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the
untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information
supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.


 




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(f)          The
obligations of the Company and Holders under this Section 2.6 shall survive the completion of any offering of Registrable
Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.


 


		2.7.	Reports Under Exchange
Act.



 


With a view to making
available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration, the Company shall:


 


(a)          make
and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times
after the effective date of the registration statement filed by the Company in connection with this Agreement;


 


(b)          use
commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements);
and


 


(c)          furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written
statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days
after the effective date of the registration statement filed by the Company in connection with this Agreement), the Securities
Act, and the Exchange Act; (ii) a copy of or reference to the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration.


 


		2.8.	Restrictions on Transfer.



 


(a)          The
Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize any such sale,
pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the
Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions
specified in this Agreement; provided, however, the transferor shall, within sixty (60) days after such transfer
or assignment, furnish to the Company written notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned. Notwithstanding the foregoing and anything to the contrary set
forth herein, it is understood by the parties hereto that each Investor and any of its affiliated investment funds may, in its
sole discretion, transfer all or any portion of the securities owned or held beneficially by it to any other affiliated investment
fund or grant an affiliated investment fund participation rights therein, and any of the foregoing persons may distribute any such
securities to any direct or indirect shareholder, member or partner of such person; provided that (i) the transferor shall,
within thirty (30) days after such transfer or assignment, furnish to the Company written notice of the name and address of such
transferee or assignee and the securities with respect to which such registration rights are being assigned, and (ii) such transferee
agrees to be bound by the relevant terms and conditions of this Agreement.


 




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(b)          Each
certificate or instrument representing (i) the Registrable Securities, and (ii) any other securities issued in respect
of the securities referenced in clause (i), upon any stock split, stock dividend, recapitalization, merger, consolidation,
or similar event, shall (unless otherwise permitted by the provisions of Section 2.8(c)) be stamped or otherwise imprinted
with a legend substantially in the following form:


 


“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS
OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER
APPLICABLE LAWS.”


 


 


The Holders consent to
the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order
to implement the restrictions on transfer set forth in this Section 2.8.


 


(c)          The
holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the
provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there
is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give
notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe
the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the
Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and
whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed
transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the
SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result
in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably
satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may
be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled
to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company.
The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with
SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder
for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.8.
Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer
is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.8(b), except that
such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend
is not required in order to establish compliance with any provisions of the Securities Act.


 




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		3.	Miscellaneous.



 


		3.1.	Successors and Assigns.



 


The rights under this
Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i)
is an Affiliate, partner, member, limited partner, retired partner, retired member, or stockholder of a Holder; or (ii) is a Holder’s
Immediate Family Member or trust (or other estate-planning entity) for the benefit of an individual Holder or one or more of such
Holder’s Immediate Family Members; provided, however, that (x) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect
to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company
to be bound by and subject to the terms and conditions of this Agreement. The terms and conditions of this Agreement inure to the
benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees
any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.


 


		3.2.	Governing Law.



 


This Agreement shall
be governed by, and construed in accordance with, the laws of the State of Tennessee, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.


 


		3.3.	Counterparts; Facsimile.



 


This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute
one and the same document. This Agreement may be executed by facsimile signatures each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.


 


		3.4.	Titles and Subtitles.



 


The titles and subtitles
used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.


 


		3.5.	Notices.



 


All notices, requests,
consents and other communications under this Agreement shall be in writing and shall be deemed delivered (a) three business
days after being sent by registered or certified mail, return receipt requested, postage prepaid or (b) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, in each case to the intended
recipient as set forth below:


 


If to the Company,
at Cornerstone Bancshares, Inc., 835 Georgia Avenue, Chattanooga, TN 37402, Attention: CEO, or at such other address as may have
been furnished in writing by the Company to the other parties hereto, with a copy (which shall not constitute notice) to Miller
& Martin, PLLC, 832 Georgia Avenue, Suite 1200, Chattanooga, TN 37402, Attention: Roddy Bailey; or


 




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If to an Investor,
at its address (and to any counsel for such Investor specified in writing to the Company) set forth in the Company’s records
from time to time.


 


Any party may give
any notice, request, consent or other communication under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic mail), but no such notice, request, consent or other
communication shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended.
Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by
giving the other parties notice in the manner set forth in this Section.


 


		3.6.	Amendments and Waivers.



 


Any term of this Agreement
may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) only with the written consent of (i) the Company, and (ii) the holders of at least a majority
of the Registrable Securities; provided that the Company may in its sole discretion waive compliance with Section 2.8(c)
(and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation
of Section 2.8(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived
by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this
Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor
without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same
fashion. The Company shall give prompt notice of any amendment or termination hereof to any party hereto that did not consent in
writing to such amendment or termination. Any amendment, termination, or waiver effected in accordance with this Section 3.6
shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions
to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further
or continuing waiver of any such term, condition, or provision.


 


		3.7.	Severability.



 


In case any one or
more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal,
or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent
permitted by law.


 


		3.8.	Additional Investors.



 


Notwithstanding anything
to the contrary contained herein, if the Company issues additional shares of Common Stock after the date hereof in the Private
Placement, any purchaser of such shares of Common Stock in the Private Placement may become a party to this Agreement by executing
a joinder signature page to this Agreement and thereafter shall be deemed a Investor for all purposes hereunder. No action or consent
by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor
has agreed in writing to be bound by all of the obligations as a Investor hereunder.


 




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		3.9.	Entire Agreement.



 


This Agreement and
the Purchase Agreements entered into between each Investor and the Company constitute the full and entire understanding and agreement
between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties are expressly canceled.


 


		3.10.	Dispute Resolution.



 


With respect to any
suit, action or other proceeding arising out of or based upon this Agreement, the parties irrevocably submit to the jurisdiction
of the federal or state courts located in Hamilton County, Tennessee, which submission shall be exclusive. The parties hereby waive,
and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding
is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. The prevailing party shall
be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which such
party may be entitled.


 


3.11.         Waiver
of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING
OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.


  


		3.12.	Delays or Omissions.



 


No delay or omission
to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party
under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be
construed to be a waiver of or acquiescence to any such breach or default, or to 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 theretofore or thereafter
occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not
alternative.


 


[Signature Page Follows]


 




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IN WITNESS WHEREOF, the
parties have executed this Registration Rights Agreement as of the date first written above.


 


	 	COMPANY:
	 	 
	 	CORNERSTONE BANCSHARES, INC.
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 


 





Cornerstone
Bancshares, Inc.


Signature
Page to 


Registration
Rights Agreement







 




     


     


    

  


JOINDER TO REGISTRATION
RIGHTS AGREEMENT


 


This JOINDER (the “Joinder)
to the Registration Rights Agreement (the “Agreement”), dated as of __________, 2015, by and among Cornerstone
Bancshares, Inc., a Tennessee corporation (the “Company”), and certain equityholders of the Company, is made
as of __________, 2015 by and between the Company and ____________________ (“Investor”). Capitalized terms used
herein but not otherwise defined shall have the meanings set forth in the Agreement.


 


WHEREAS, on the date
hereof, Investor has acquired __________ shares of Common Stock of the Company pursuant to the Private Placement and the Investor
desires to become a party to the Agreement.


 


NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Joinder hereby agree as follows:


 


1.          Agreement
to be Bound. Investor hereby (i) acknowledges that it has received and reviewed a complete copy of the Agreement and (ii) agrees
that upon execution of this Joinder, it shall become a party to the Agreement and shall be fully bound by, and subject to, all
of the covenants, terms and conditions of the Agreement as though an original party thereto and shall be deemed an Investor for
all purposes thereof.


 


2.          Successors
and Assigns. Except as otherwise provided herein, this Joinder shall bind and inure to the benefit of and be enforceable by
the Company and its successors and assigns and Investor and any subsequent holders of Registrable Securities and the respective
successors and assigns of each of them, so long as they hold any Registrable Securities.


 


3.          Counterparts.
This Joinder may be executed in separate counterparts each of which shall be an original and all of which taken together shall
constitute one and the same agreement.


 


4.          Notices.
For purposes of Section 3.5 of the Agreement, all notices, demands or other communications to Investor shall be directed
to:


 


____________________


____________________


____________________


 


5.          Governing
Law. All questions concerning the construction, validity and interpretation of this Joinder shall be governed by and construed
in accordance with the domestic laws of the State of Tennessee, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Tennessee or any other Jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Tennessee.


 


	Cornerstone Bancshares, Inc.	 	 
	 	 	 
	By:	 	 	By:	 
	Name:	 	Name:
	Title:	 	Title: