Letter Agreement between the Company and the UST



 Exhibit 10.1 
 UNITED STATES DEPARTMENT OF THE TREASURY 
 1500 PENNSYLVANIA AVENUE, NW 
 WASHINGTON, D.C. 20220 

Dear Ladies and Gentlemen: 
 The company set forth on the
signature page hereto (the “Company”) intends to issue in a private placement the number of shares of a series of its preferred stock set forth on Schedule A hereto (the “Preferred Shares”) and a warrant to purchase
the number of shares of a series of its preferred stock set forth on Schedule A hereto (the “Warrant” and, together with the Preferred Shares, the “Purchased Securities”) and the United States Department of the
Treasury (the “Investor”) intends to purchase from the Company the Purchased Securities. 
 The purpose of this letter
agreement is to confirm the terms and conditions of the purchase by the Investor of the Purchased Securities. Except to the extent supplemented or superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in the
Securities Purchase Agreement – Standard Terms attached hereto as Exhibit A (the “Securities Purchase Agreement”) are incorporated by reference herein. Terms that are defined in the Securities Purchase Agreement are used in
this letter agreement as so defined. In the event of any inconsistency between this letter agreement and the Securities Purchase Agreement, the terms of this letter agreement shall govern. 
 Each of the Company and the Investor hereby confirms its agreement with the other party with respect to the issuance by the Company of the Purchased
Securities and the purchase by the Investor of the Purchased Securities pursuant to this letter agreement and the Securities Purchase Agreement on the terms specified on Schedule A hereto. 
 This letter agreement (including the Schedules hereto), the Securities Purchase Agreement (including the Annexes thereto), the Disclosure Schedules and
the Warrant constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof. This letter agreement
constitutes the “Letter Agreement” referred to in the Securities Purchase Agreement. 
 This letter agreement may be executed in
any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement. Executed signature pages to this letter agreement may be delivered by
facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been delivered. 
 * * * 
  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 In witness whereof, this letter agreement has been duly executed and delivered by the duly authorized
representatives of the parties hereto as of the date written below. 
  

			
	 UNITED STATES DEPARTMENT OF THE
 TREASURY


		
	By:	 	 /s/ Neel Kashkari

	Name:	 	Neel Kashkari
	Title:	 	Interim Assistant Secretary for Financial Stability
	
	COMPANY: ALARION FINANCIAL SERVICES, INC.
		
	By:	 	 /s/ Jon M. Kurtz

	Name:	 	Jon M. Kurtz
	Title:	 	Chief Executive Officer


 Date: January 23, 2009 
  


 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 EXHIBIT A 
 SECURITIES PURCHASE AGREEMENT 
  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 SCHEDULE A 
 ADDITIONAL TERMS AND CONDITIONS 
 Company Information: 
 Name of the Company: Alarion Financial Services, Inc. 
 Corporate or other organizational form: Corporation 
 Jurisdiction of Organization: Florida

 Appropriate Federal Banking Agency: The Board of Governors of the Federal Reserve System 
  

			
	Notice Information:	 	Matthew Ivers
		 	Chief Financial Officer
		 	Alarion Financial Services, Inc.
		 	One Northeast First Avenue
		 	Ocala, Florida 34470
		 	matt.ivers@alarionbank.com
		 	Telephone: (352) 547-1222
		 	Facsimile: (352) 854-9784

 Terms of the Purchase: 
 Series of Preferred Stock Purchased: Fixed Rate Cumulative Perpetual Preferred Stock, Series A 
 Per
Share Liquidation Preference of Preferred Stock: $1,000 
 Number of Shares of Preferred Stock Purchased: 6,514 
 Dividend Payment Dates on the Preferred Stock: February 15, May 15, August 15, and November 15 of each year

 Series of Warrant Preferred Stock: Fixed Rate Cumulative Perpetual Preferred Stock, Series B 
 Number of Warrant Shares: 327 
 Number of Net Warrant Shares (after net settlement): 326 
 Exercise Price of the Warrant: $0.01 per share 

Purchase Price: $6,514,000 
  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 Closing: 
  

			
	Location of Closing:	 	Hughes Hubbard & Reed LLP
		 	One Battery Park Plaza
		 	New York, New York 10004

 Time of Closing: 9:00 a.m. Eastern Standard Time 
 Date of Closing: January 23, 2009 
  

			
	Wire Information for Closing:	 	ABA Number: 061003415
		 	Bank: Silverton Bank, NA
		 	Account Name: Alarion Bank
		 	Account Number: 063115686
		 	Beneficiary: Alarion Financial Services, Inc.

  

			
	Contact for Confirmation of Wire Information:	 	Matthew Ivers
		 	Chief Financial Officer
		 	Alarion Financial Services, Inc.
		 	One Northeast First Avenue
		 	Ocala, Florida 34470
		 	matt.ivers@alarionbank.com
		 	Telephone: (352) 547-1222
		 	Facsimile: (352) 854-9784

  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 SCHEDULE B 
 CAPITALIZATION 
 Capitalization Date: December 31, 2008 
 Common Stock 
 Par value: $0.01 
 Total Authorized: 4,000,000 
 Outstanding: 2,653,208 
 Subject to warrants, options, convertible securities, etc.: 220,619 
 Reserved for benefit plans and other issuances: 0 
 Remaining authorized but unissued: 1,126,173 
 Shares issued after Capitalization Date (other than
pursuant to warrants, options, convertible securities, etc. as set forth above): 0 
 Preferred Stock 
 Par value: $0.01 
 Total Authorized:
1,000,000 
 Outstanding (by series): 0 
 Reserved for issuance: 0 
 Remaining authorized but unissued: 1,000,000 
  

			
	Holders of 5% or more of any class of capital stock	 	Primary Address
		
	None	 	

  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 SCHEDULE C 
 LITIGATION 
 List any exceptions to the representation and warranty in Section 2.2(l) of the Securities
Purchase Agreement – Standard Terms. 
 If none, please so indicate by checking the box: ¢. 
  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 SCHEDULE D 
 COMPLIANCE WITH LAWS 
 List any exceptions to the representation and warranty in the second sentence of
Section 2.2(m) of the Securities Purchase Agreement – Standard Terms. 
 If none, please so indicate by checking the box: ¢. 
 List any exceptions to the representation and warranty in the last sentence of Section 2.2(m) of the Securities
Purchase Agreement – Standard Terms. 
 If none, please so indicate by checking the box: ¢. 
  

 Alarion Financial Services, Inc. 
 UST Seq. No. 378 








 SCHEDULE E 
 REGULATORY AGREEMENTS 
 List any exceptions to the representation and warranty in Section 2.2(s) of the
Securities Purchase Agreement – Standard Terms. 
 If none, please so indicate by checking the box: ¢. 

 

 Alarion Financial Services, Inc. 
 UST Seq. No. 378