On September 28, 2018, SmartFinancial, Inc. entered into Subordinated Note Purchase Agreements with certain institutional accredited investors pursuant to which the company sold and issued $40,000,000 in aggregate principal amount of 5.625% Fixed-to-Floating Rate Subordinated Notes due October 2, 2028 (the “Notes”). The Notes were issued by the Company to the Purchasers at a price equal to 100% of their face amount. The Notes were offered and sold by the Company to eligible purchasers in a private offering in reliance on the exemptions from registration available under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and the provisions of Regulation D there under (the “Private Placement”). The Company intends to use the net proceeds of the Private Placement to repay the outstanding balance on the Company’s existing revolving line of credit with CapStar Bank, to pay the cash consideration payable to holders of Foothills Bancorp, Inc. common stock and holders of options to purchase Foothills Bancorp, Inc. common stock in connection with the Company’s pending acquisition of Foothills Bancorp, Inc., and for other general corporate purposes, including improving the liquidity position at the Company and its wholly owned bank subsidiary, SmartBank. The Company’s line of credit with CapStar Bank remains in place and future borrowings there under, if any, will be subject to the terms of the loan agreement between the Company and CapStar Bank evidencing the line of credit. The Notes have a stated maturity date of October 2, 2028, and will bear interest at a fixed annual rate of 5.625% from and including September 28, 2018, to but excluding October 2, 2023 (the “Fixed Interest Rate Period”). From and including October 2, 2023, to but excluding the maturity date or early redemption date (the “Floating Interest Rate Period”), the interest rate will reset quarterly to an annual floating rate equal to three-month LIBOR, or an alternative rate determined in accordance with the terms of the Notes if three-month LIBOR cannot be determined, plus 255 basis points. The Company will pay interest semi-annually in arrears during the Fixed Interest Rate Period and quarterly in arrears during the Floating Interest Rate Period. The Notes are redeemable by the Company, in whole or in part, on or after October 2, 2023, and at any time, in whole but not in part, upon the occurrence of certain events. The Purchase Agreements contain certain customary representations, warranties, and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand.