Document:

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                                                                    EXHIBIT 10.1

                          CORNERSTONE BANCSHARES, INC.

                    STATUTORY-NONSTATUTORY STOCK OPTION PLAN

         1. Purpose. The purpose of this Cornerstone Bancshares, Inc.
Statutory-Nonstatutory Stock Option Plan (the "Plan") is to motivate
Participants (as defined herein), thereby benefiting the stockholders
Cornerstone Bancshares, Inc., a Tennessee corporation ("Bancshares"). In
furtherance of this purpose, the Plan is to advance the interests of Bancshares
by stimulating the efforts of key employees, increasing their desire to continue
in their employment with Bancshares, assisting Bancshares in competing
effectively with other enterprises for the services of new employees and
directors necessary for the continued improvement of operations, and to attract
and retain the best possible personnel for service as employees, officers and
directors of Bancshares. Accordingly, the Plan is designed to promote the
interests of Bancshares and its stockholders, and, by facilitating stock
ownership on the part of such directors, officers and employees, to encourage
them to acquire a proprietary interest in Bancshares and to remain in its employ
and service.

         2. Definitions.

            "Board" means the Board of Directors of Bancshares or its
affiliate(s).

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Committee" means the Committee(s) chosen by the Board to administer
the Plan, as provided in Section 5(a) hereof.

            "Fair Market Value of Stock" shall be determined under the Plan as
follows:

            (a) If the Stock is principally traded on an exchange or market in
which prices are reported on a bid and asked basis, the average of the mean
between the bid and the asked price for the Stock at the close of trading for
the 10 consecutive trading days immediately preceding such given date;

            (b) If the Stock is principally listed on a national securities
exchange, the average of the closing prices of the Stock for the 10 consecutive
trading days immediately preceding such given date; and

            (c) If the Stock is neither traded on the over-the-counter market
nor listed on a national securities exchange, the book value at the close of
business in the preceding month shall determine the fair market value of Stock.

            "Incentive Stock Option" has the meaning ascribed in Section 422 of
the Code.

            "Non-Qualified Stock Option" means all Options which do not qualify
as Incentive Stock Options such as those granted to non-employee directors.

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            "Option" means an award of an Incentive Stock Option or
Non-Qualified Stock Option pursuant to this Plan.

            "Option Agreement" means the written instrument from the Committee
to Participant describing the terms of the Option.

            "Option Price" means the exercise price of an Option.

            "Option Stock" or "Stock" means the common stock of Bancshares.

            "Participant" means a person to whom an Option has been granted.

         3. Effective Date of Plan; Term. The Plan is effective October 15,
1997, the effective date on which the Board and stockholders of Bancshares
approved the Plan. No Options intended to be Incentive Stock Options may be
granted after January 25, 2006.

         4. Shares Subject to the Plan. The aggregate number of shares of Stock
available for grant under the Plan is 205,000, subject to adjustments as
provided in Section 9 herein. Of such shares, 55,000 are allocated to the
Options which are Incentive Stock Options and the remaining 150,000 shares of
Stock are allocated to Options which are Non-Qualified Stock Options. Stock
issued pursuant to the Plan may be either authorized but unissued shares or
shares held in the treasury of Bancshares. In the event that, prior to the end
of the period during which Options may be granted under the Plan, any Option
under the Plan expires unexercised or is terminated or surrendered without being
exercised, in whole or in part, the number of shares theretofore subject to such
Option or the unexercised or terminated portion thereof, shall be added to the
remaining number of shares of Stock available for grant as an Option under the
Plan, including a grant to a former holder of such Option, upon such terms and
conditions as the Committee shall determine, which terms may be more or less
favorable than those applicable to such former Option.

         5. Administration of the Plan by the Committee.

            (a) The Committee. The Plan shall be administered by the Committee,
whose members shall be appointed from time to time by, and shall serve at the
pleasure of, the Board. The members of the Committee need not be members of the
Board or employees of Bancshares. The Board, in its discretion, may appoint
separate committees to administer the Incentive Stock Options and the
Non-Qualified Stock Options. No member of the Committee shall be liable for any
action taken, or determination made, hereunder in good faith. Service on the
Committee shall be entitled to indemnification and reimbursement as directors of
Bancshares pursuant to its Charter and Bylaws. The Committee may take action
only upon the agreement of a majority of the entire Committee. Any action which
the Committee takes through a written instrument signed by a majority of its
members shall be as effective as though taken at a meeting duly called and held.

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              (b) Powers of the Committee. Subject to the express provisions of
the Plan, the Committee may interpret the Plan, prescribe, amend and rescind
rules and regulations relating to it and make all determinations it deems
necessary or advisable for the administration of the Plan. The powers of the
Committee shall include plenary authority to administer and interpret the Plan,
and subject to the provisions hereof, to determine the persons to whom Options
shall be granted, the number of shares subject to each Option, the terms and
provisions of each Option, and the date on which Options shall be granted. In
making such determinations, the Committee may take into account the nature of
the services rendered by such Participants, or classes of Participants, their
present and potential contributions to Bancshares' success and such other
factors as the Committee, in its discretion, shall deem relevant. Any
interpretation of Options intended to be Incentive Stock Options shall be made
in such a manner that they continue to be Incentive Stock Options. Accordingly,
the Committee shall determine, as soon as practicable after the effective date
of the Plan and at any time and from time to time thereafter, (i) the persons
who are eligible, (ii) the number of shares of Stock which an eligible person
may purchase pursuant to an Option, (iii) the price of each share of Stock
subject to the Option and (iv) the terms on which each share of Stock subject to
the Option may be purchased.

              (c) Conclusiveness of Determinations. Any action taken by the
Committee or by the Board with respect to the implementation, interpretation, or
administration of the Plan shall be final, conclusive and binding. The
Committee's determinations under the Plan, including, without limitation,
determinations as to the persons to receive awards, the terms and provisions of
such awards and the agreements evidencing the same, need not be uniform and may
be made by it selectively among persons who receive or are eligible to receive
awards under the Plan, whether of not such persons are similarly situated.

         6. Options.

            (a) Grant of Options. Incentive Stock Options and Non-Qualified
Stock Options may be granted under the Plan by the Committee for the purchase of
Stock. Options shall be subject to such terms and conditions, shall be
exercisable at such times, and shall be evidenced by such form of written option
agreement between Participant and Bancshares, as the Committee shall determine;
provided, that such determinations are no inconsistent with the other provisions
of the Plan. The Committee shall have authority to grant Options exercisable in
whole or in part at any time during their term. Option Agreements need not be
identical.

            (b) Restrictions on the Grant of Incentive Stock Options. No Option
intended to be an Incentive Stock Option shall be granted to any person owning,
within the meaning of Sections 422 and 424 of the Code, Stock of Bancshares
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of Bancshares unless the provisions of Section 7(a) and (b)
hereof are complied with. In any one calendar year, no individual shall receive
Options to purchase Stock under any plan of Bank intended to be Incentive Stock
Options to the extent that the Stock subject

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to such Options exercisable for the first time by an individual during any
calendar year has an aggregate Fair Market Value (determined at the time the
Options are granted) in excess of $100,000.

            (c) Persons Eligible to Receive Options. The persons who shall be
eligible to receive Options granted hereunder intended to be Incentive Stock
Options shall be those key employees and officers of Bancshares who are selected
by the Committee from time to time. Persons designated by the Committee who are
eligible to receive Non-Qualified Options hereunder need not be employees of
Bancshares, and generally will be non-employee directors or advisory directors
of Bancshares or its affiliate(s). A Participant may hold more than one Option.
The Committee shall determine the terms for payment by each Participant for his
shares of Option Stock. Such terms shall be set forth in the Option Agreement.
The terms for payment so set by the Committee may vary from one Participant to
another.

         7. Terms and Exercise of Options.

            (a) Option Price. The Option Price to be paid by Participant to
Bancshares upon exercise of the Option shall be determined by the Committee on
the date of the grant of the Option and shall be set forth in the Option
Agreement. No Option shall have an Option Price less than the greater of the
Original Issue Price or the Fair Market Value of the Stock on the date of the
grant. If any Option intended to be an Incentive Stock Option is granted to any
person holding Stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of Bancshares, the Option Price
shall be not less than one hundred ten percent (110%) of the Fair Market Value
of the Stock on the date of the grant.

            (b) Term. Each Option granted under the Plan shall be exercisable
only during a term commencing on the date when the Option was granted and ending
(unless the Option shall have terminated earlier under other provisions of the
Plan) on a date to be fixed by the Committee, but not later than ten (10) years
from the date of grant in the case of any Option intended to be an Incentive
Stock Option, subject to the following limitations:

                  (i) any Option intended to be an Incentive Stock Option which
         is granted to any person possessing more than ten percent (10%) of the
         total combined voting power of all classes of stock of Bancshares shall
         be exercisable not later than five (5) years from the date of grant;
         and

                  (ii) any Option intended to be an Incentive Stock Option may
         not be exercisable more than three (3) months after Participant ceases
         to be an employee of Bancshares.

            (c) Death or Disability. Upon the death or disability (within the
meaning of Section 22(e)(3) of the Code) of a Participant holding a
Non-Qualified Stock Option, in the absence of terms in the Option Agreement to
the contrary, the Option may be

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exercised, to the extent not previously exercised, by Participant's legal
representative, the legatees of the Option under Participant's Will or the
distributees of the Option under the applicable laws of descent and distribution
until the Termination Date, but only to the extent that the Option would
otherwise have been exercisable by Participant. Upon the death of a Participant
holding an Incentive Stock Option, in the absence of terms in the Option
Agreement to the contrary, the Option may be exercised, to the extent not
previously exercised, by Participant's legal representative, the legatees of the
Option under Participant's Will or the distributees of the Option under the
applicable laws of descent and distribution until the Termination Date, but only
to the extent that the Option would otherwise have been exercisable by
Participant. Upon the disability of a Participant holding an Incentive Stock
Option, the Option may be exercised by Participant or Participant's legal
representative, to the extent not previously exercised, until the earlier of the
termination date for such Option or the date occurring one year from the date of
the termination of Participant's employment due to disability.

            (d) Exercise of Options. Options shall be exercised by delivering or
mailing to the Committee (i) a notice and "investment letter" in the form
prescribed by the Committee, specifying the number of shares to be purchased;
and (ii) a check payable to Bancshares or such other medium or payment as the
Committee shall approve, in an amount equal to the Option Price plus any
withholding tax required by law as determined by Bancshares. Upon receipt of
each of the foregoing, Bancshares shall promptly deliver to Participant a
certificate or certificates for the Stock purchased, without charge to
Participant for issue in Participant's name and the name of another person as
joint tenants with the right of survivorship, provided that any restrictions
upon such Stock shall apply equally to such joint tenant. In the event that such
shares are not registered under the Securities Act of 1933, such certificates
shall bear the following legend:

         THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
         STATE SECURITIES ACT ("STATE ACTS"), AND MAY NOT BE SOLD OR OTHERWISE
         TRANSFERRED UNLESS SUCH SHARES ARE REGISTERED UNDER SUCH ACT AND EACH
         RELEVANT STATE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO BANCSHARES
         IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT NECESSARY.

            (e) Transferability of Options. No Option may be transferred,
assigned, pledged or hypothecated (whether by operation of law or otherwise),
except that an Option may be transferred upon the death of a Participant as
provided by Participant's Will or the applicable laws of descent or
distribution. No Option shall be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an Option, or levy of attachment or similar process upon the
Option not specifically permitted herein shall be null and void and without
effect. Notwithstanding the provisions of this Section, a Participant, at any
time prior to his death, may assign all or any portion of a Non-Qualified Stock
Option to (i) his or her spouse or lineal descendant, (ii) the trustee of a
trust for the primary benefit of his or her

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spouse and lineal descendant, (iii) a partnership of which his or her spouse and
lineal descendants are the only partners, or (iv) a tax exempt organization as
described in Section 501(c)(3) of the Code. In such event, the permitted
transferee will be entitled to all of the rights of Participant with respect to
the assigned portion of such Non-Qualified Stock Option, and such portion of the
Non-Qualified Stock Option will continue to be subject to all of the terms,
conditions and restrictions applicable to the Option, as set forth herein and in
the related Option Agreement, immediately prior to the effective date of the
assignment. Any such assignment will be permitted only if (i) Participant does
not receive any consideration therefore, and (ii) the assignment is expressly
permitted by the applicable Option Agreement, as approved by the Committee. Any
such assignment shall be evidenced by a written document executed by
Participant, and a copy thereof shall be delivered to Bancshares prior to the
assignment.

            (f) Stockholders' Agreement. The exercise of an Option shall be
conditioned upon Participant executing, if so requested by Bancshares, a
Stockholders' Agreement. All Stock issued to a Participant pursuant to an Option
shall be subject to any applicable Stockholders' Agreement previously entered
into by such Participant. Any legend required by any such agreement shall be
placed on the certificates evidencing the Stock.

            (g) Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon a Participant to exercise such Option.

         8. Participant's Rights. No person shall have the rights of a
stockholder by virtue of an Option except with respect to Stock actually issued
to the stockholder, and issuance of Stock shall confer no retroactive rights to
dividends. Nothing in the Plan or any Option Agreement entered into pursuant to
the Plan shall confer upon any Participant the right to continue as a member of
the Board or affect any right which Bancshares may have to remove such
Participant as a director of Bancshares or its affiliate(s). Nothing in this
Plan or in any Option Agreement shall confer upon any employee any right to
continue in the employ of Bancshares or its affiliate(s) or interfere in any way
with the right of Bancshares or its affiliate(s) to terminate his or her
employment at any time.

         9. Adjustments. In the event of the declaration of any stock dividend
on the Stock or in the event of any reorganization, merger, consolidation,
acquisition, separation, recapitalization, split-up, combination or exchange of
shares of Stock, or like adjustment, the number of shares of Stock and the class
of shares of Stock available pursuant to the Plan, and the Option Prices, shall
be adjusted by appropriate changes in the Plan and in any Option Agreement
outstanding pursuant to the Plan. Any such adjustments to the Plan or to Option
Agreements or Option Prices shall be made by action of the Committee, whose
determination shall be conclusive; provided, however, that each Option granted
pursuant to the Plan intended to be an Incentive Stock Option shall be so
adjusted as to continue to qualify as an Incentive Stock Option. Notwithstanding
the foregoing, in the event of such a reorganization, merger, consolidation,
acquisition, separation, recapitalization, split-up, combination or exchange of
shares of stock, or like adjustment which results in substantially all the
shares of the Stock of Bancshares being exchanged for, or converted into cash or
other property, the

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Committee shall have the right to terminate the Plan as of the date of the
exchange or conversion in which case the Options shall convert into the right to
receive such cash or property net of the exercise price of the Options.

         10. Termination, Suspension or Amendment of Plan. The Committee may at
any time terminate, suspend or amend the Plan, except that the Committee shall
not, without the authorization of the holders of a majority of the Stock voted
at a stockholders' meeting duly called and held, change any provisions (other
than those adjustments for changes in capitalization as hereinbefore provided)
which determines (a) the aggregate number of shares for which Options may be
granted under the Plan or to any person; (b) the classes of persons eligible for
Options; or (c) the duration of the Plan.

         11. Postponement of Exercise. The Committee may postpone any exercise
of an Option for such time as the Committee may deem necessary in order to
permit Bancshares (i) to effect, amend or maintain any necessary registration of
the Plan or the shares of Stock issuable upon the exercise of an Option under
the Securities Act of 1933, as amended, or the securities laws of any applicable
jurisdiction, (ii) to permit any action to be taken in order to (A) list such
shares of Stock on a stock exchange if shares of Stock are then listed on such
exchange or (B) comply with restrictions or regulations incident to the
maintenance of a public market for its shares of Stock, including any rules or
regulations of any stock exchange on which the shares of Stock are listed, or
(iii) to determine that such shares of Stock and the Plan are exempt from such
registration or that no action of the kind referred to in (ii)(B) above need to
be taken; and Bancshares shall not be obligated by virtue of any terms and
conditions of any Option Agreement or any provision of the Plan to recognize the
exercise of an Option or to sell or issue shares of Stock in violation of the
Securities Act of 1933 or the law of any government having jurisdiction thereof.
Any such postponement shall not extend the terms of an Option and neither
Bancshares nor its directors or officers shall have any obligation or liability
to any Participant or to any other person with respect to any shares of Stock as
to which the Option shall lapse because of such postponement.

         12. Application of Proceeds. The proceeds received by Bancshares from
the sale of its Stock under the Plan shall be used for general corporate
purposes.

         13. Elimination of Fractional Shares. If under any provision of the
Plan that requires a computation of the number of shares of Stock subject to an
Option, the number so computed is not a whole number of shares of Stock, such
number of shares of Stock shall be rounded down to the next whole number.

         14. Validity. In the event that any provision of the Plan or any
related agreement is held to be invalid, void or unenforceable, the Board shall
have the right to declare the entire Plan void and unenforceable, taking such
action as shall be deemed to be in the best interest of the stockholders of
Bancshares.

         15. Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.

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         16. Governing Law. All questions pertaining to the validity,
construction and administration of the Plan and Options granted hereunder shall
be determined in conformity with the laws of the State of Tennessee.<PAGE>   1

                                                                   EXHIBIT 10.2

                KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

This agreement, made and entered into as of this 1st day of March, 1999, by and
between Cornerstone Community Bank, Inc., a Tennessee chartered state bank,
(the "Bank"), which is a 100% wholly owned affiliate of Cornerstone Bancshares,
Inc., (the "Company"), and Gregory B. Jones (the "Executive").

WHEREAS, the Executive has been employed by the Bank as an executive officer,
and the Bank enters into this agreement as additional incentive to the
Executive to continue as an executive employee of the Bank; and,

WHEREAS, the parties desire by this written agreement to set forth their
understanding as to their respective rights and obligations in the event of a
Change-in-Control with respect to the Bank or the Company.

NOW, THEREFORE, the undersigned parties agree as follows:

1.       Definitions:

         a.       Change-in-Control of the Bank or Company. A Change-in-Control
                  occurs when:

                  (i)      The shareholders of the Bank or the Company approve
                           a merger or consolidation of either entity with any
                           other entity as a result of which less than 50% of
                           the outstanding voting securities of the surviving
                           entity are owned by the former shareholders of the
                           Bank or the Company; or,

                  (ii)     The shareholders of the Company approve the sale of
                           substantially all of the Bank's assets to an entity
                           that is not a wholly owned affiliate of the Company.

         b.       Code. The term "Code" means the Internal Revenue Code of
                  1986, as amended.

         c.       Merger Agreement. The "Merger Agreement" means that agreement
                  entered into by the Bank or the Company and the Negotiating
                  Successor Entity defining the terms, conditions, rights,
                  warranties and responsibilities of the entities involved in
                  the proposed merger or consolidation. The "Merger Agreement"
                  must be approved by the Board of Directors of the Bank or the
                  Company prior to the date of the Change-in-Control.

         d.       Negotiating Successor Entity. The "Negotiating Successor
                  Entity" is the entity expected to be the surviving entity
                  subsequent to the date of the Change-in-Control, as defined
                  above, excluding affiliates of the Bank or the Company.

         e.       Termination Date. Except as otherwise provided the term
                  "Termination Date" means the date the Executive's employment
                  is terminated.

2.       Term of Agreement. This agreement shall be effective as of this 1st
         day of March, 1999, and continue for the term of three (3) years,
         which term may be extended for additional periods or cancelled as
         determined by the Board of Directors of the Bank or the Company. If
         this agreement should expire within nine (9) months of the date of
         Change-in-Control, then this agreement shall automatically be extended
         to the date of Change-in-Control.

3.       Continuation of Employment. As a precondition of any Merger Agreement,
         Company or Bank shall require the Negotiating Successor Entity to
         negotiate with the Executive. The Executive has an obligation to
         negotiate with the Negotiating Successor Entity and accept a position,
         if a position of executive status in the Chattanooga area is offered,
         and this offer is documented by a continuing employee agreement ("the
         Employment Agreement"). Executive status is defined as Vice President
         level or above. The Employment Agreement will define among other
         things, but not be limited to, salary, title, responsibilities,
         employment location, employment benefits, death benefits, disability
         benefits, expense and interest with respect to enforcement of the
         Employment Agreement, non-compete definitions, definitions of "Cause"
         for termination by the Negotiating Successor Entity and definitions of
         "Good Reason" for termination by the Executive. The terms as agreed to
         by the Executive and the Negotiating Successor Entity will be included
         in the Merger Agreement. It is the intention of this agreement that
         the terms of the Employment Agreement be included in the Merger
         Agreement or incorporated by reference prior to the final approval by
         the Board of Directors of the

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         Bank or the Company of the Merger Agreement. If an Employment
         Agreement is finalized between the Executive and the Negotiating
         Successor Entity, it must include at a minimum the following items:

         a.       The Executive shall receive an Employment Agreement for two
                  years from the date of the Change-in-Control;

         b.       The Executive shall receive an annual salary not less than
                  100% of the Executive's aggregated annual base compensation
                  as in effect as of the date of the Change-in-Control;

         c.       The Executive shall be reimbursed, according to standard
                  policies in effect on the date of the Change-in-Control, for
                  any and all reasonable and necessary expenses incurred by the
                  Executive on behalf of the Bank, the Company or the
                  Negotiating Successor Entity including, but not limited to,
                  travel expenses;

         d.       The Executive shall be included in any and all benefit plans
                  providing general benefits for the employees, including, but
                  not limited to, group life insurance, medical insurance,
                  dental insurance, long-term disability insurance, pension,
                  profit-sharing. The Executive shall be provided any and all
                  other benefits and perquisites made available to other
                  employees of comparable status and position offered by the
                  Negotiating Successor Entity;

         e.       The Executive shall receive annually not less than the amount
                  of paid vacation and holidays received annually on the date
                  of the Change-in-Control, or such amount of paid vacation and
                  holidays as may be made available to other employees of
                  comparable status and position; and,

         f.       The Executive shall be included in all plans providing
                  special benefits to other employees of comparable status and
                  position, including but not limited to, profit-sharing,
                  bonus, deferred compensation, incentive compensation, stock
                  options.

4.       Payment Upon Termination. If the Negotiating Successor Entity does not
         offer the Executive an Employment Agreement in accordance with
         paragraph 3 above, the following will be the terms for a Payment upon
         Termination due to the Executive:

                  (i)      All salary earned or accrued but not yet paid
                           through the Termination Date;

                  (ii)     Reimbursement for any and all expenses incurred by
                           the Executive on behalf of the Bank, the Company or
                           the Negotiating Successor Entity, but not yet paid,
                           through the Termination Date;

                  (iii)    Any and all cash benefits previously earned, but not
                           yet paid, including any deferred compensation,
                           accrued pension, bonus or incentive compensation
                           through the Termination Date;

                  (iv)     All other payments and benefits to which the
                           Executive may be entitled under the terms of any
                           benefit plan of the Bank or the Company;

                  (v)      All incentive stock options, restricted stock and
                           stock appreciation rights to which the Executive may
                           be entitled will become immediately vested at 100%;
                           and,

                  (vi)     A lump sum payment, equal to two (2) times the
                           Executive's annualized base compensation then in
                           effect at the Termination Date.

         a.       If the Negotiating Successor Entity and the Executive fail to
                  reach an understanding on the terms and conditions of the
                  Employment Agreement because the Executive does not negotiate
                  in "Good-Faith", the Executive's termination date will be the
                  date of Change-in-Control. The Payment Upon Termination will
                  include items 3(i) to 3(iv) from above. "Good Faith" shall
                  mean the Executive should negotiate with the Negotiating
                  Successor Entity for an Employment Agreement with similar
                  terms and conditions as are applicable at the Bank or Company
                  on the date immediately preceding the Change-in-Control.

         b.       It is the intention of the Bank and the Company that no
                  portion of the Payment Upon Termination be deemed to be a
                  parachute payment as defined in Section 280G(b)(2) of the
                  Code, as amended. The Payment Upon Termination shall not
                  exceed the maximum limit imposed by Section 4999 of the Code,
                  as amended.

         c.       The Payment upon Termination will be paid in full by the 15th
                  day following the Termination Date.

<PAGE>   3

         d.       It is the intention of this agreement that the terms of the
                  Payment Upon Termination be included in the Merger Agreement
                  prior to the final approval by the Board of Directors of the
                  Bank or the Company of the Merger Agreement.

5.       Non-competition. In the event of payment pursuant to paragraph 4, for
         (1) year following the Termination Date the executive agrees not to
         become engaged in any business or activities within the Chattanooga
         Standard Metropolitan Statistical Area, which is directly or
         indirectly in competition with any business or activity engaged in by
         the Negotiating Successor Entity.

6.       Enforcement. The provisions of this agreement shall be regarded as
         divisible, and if any of said provisions or any parts of any
         provisions are declared invalid or unenforceable by a court of
         competent jurisdiction, the validity and enforceability of the
         remaining agreement shall not be affected.

7.       Amendment or Cancellation. The Bank or the Company shall retain the
         right to terminate the employment of the Executive at any time for
         sufficient cause. This agreement may not be amended, modified or
         cancelled within nine (9) months of the date of Change-in-Control
         except by written instrument executed by the Bank and the Executive.

8.       Venue and Governing Law. This agreement and the rights and obligations
         hereunder shall be governed by and construed in accordance with the
         laws of the State of Tennessee. Any action concerning this agreement
         shall be brought in the federal or state courts located in the County
         of Hamilton, Tennessee, and each party consents to the venue and
         jurisdiction of such courts.

9.       Notice. Notices given pursuant to this agreement shall be in writing
         and shall be deemed given when received and if mailed, shall be mailed
         by United States registered or certified mail, if to the Bank or the
         Company, to:

                                      Cornerstone Community Bank
                                      5319 Highway 153
                                      Hixson, TN  37343

         or if to the Executive, at the address set forth below the Executive's
         signature line of this agreement.

10.      No Waiver. No waiver by either party at any time of any breach by the
         other party of, or compliance with, any condition or provision of this
         agreement to be performed by the other party shall be deemed a waiver
         of similar or dissimilar provisions or conditions at the same time or
         any prior or subsequent time.

11.      Company Consent. This agreement is conditioned upon the consent of the
         Company and the Company's agreement to implement those provisions of
         the agreement over which it has control.

12.      Headings. The headings herein contained are for reference only and
         shall not affect the meaning or interpretation of any provision of
         this agreement.

13.      Entire Agreement. This agreement expresses the entire agreement of the
         parties with respect to the subject matter hereof.

<PAGE>   4

IN WITNESS WHEREOF, the parties have executed this agreement as of the day and
year first written above.

CORNERSTONE COMMUNITY BANK

EXECUTIVE:

By: Gregory B. Jones
   ----------------------------------
Title: Chief Executive Officer and
       President

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