Document:

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 Except to the extent supplemented or superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in the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. 378Form of Waiver

 Exhibit 10.2 
 WAIVER 
 In consideration for the benefits I will receive as a result of my employer’s participation in the
United States Department of the Treasury’s TARP Capital Purchase Program, I hereby voluntarily waive any claim against the United States or my employer for any changes to my compensation or benefits that are required to comply with the
regulation issued by the Department of the Treasury as published in the Federal Register on October 20, 2008. 
 I acknowledge that this regulation may
require modification of the compensation, bonus, incentive and other benefit plans, arrangements, policies and agreements (including so-called “golden parachute” agreements) that I have with my employer or in which I participate as they
relate to the period the United States holds any equity or debt securities of my employer acquired through the TARP Capital Purchase Program. 
 This waiver
includes all claims I may have under the laws of the United States or any state related to the requirements imposed by the aforementioned regulation, including without limitation a claim for any compensation or other payments I would otherwise
receive, any challenge to the process by which this regulation was adopted and any tort or constitutional claim about the effect of these regulations on my employment relationship.Form of Compliance Agreement

 Exhibit 10.3 
 ALARION FINANCIAL SERVICES, INC. 
 January 23, 2009 
 Alarion Bank 
 One Northeast First Avenue 
 Ocala, Florida 34470 
 Dear Mr.
                                : 
 Alarion Financial Services, Inc. (the “Company”) anticipates entering into a Securities Purchase Agreement (the “Participation
Agreement”) with the United States Department of the Treasury (the “Treasury”) that provides, among other things, for the purchase by the Treasury of securities issued by the Company. This purchase is anticipated to occur as part of
the Company’s participation in the Treasury’s Troubled Asset Relief Program—Capital Purchase Program (the “CPP”). 
 As a condition to the closing of the investment contemplated by the Participation Agreement, the Company is required to take certain actions with respect to compensation arrangements of its senior executive officers. The Company has
determined that you are or may be a senior executive officer for purposes of the CPP. To comply with the requirements of the CPP, and in consideration of the benefits that you will receive as a result of the Company’s participation in the CPP
and for other good and valuable consideration, the sufficiency of which you hereby acknowledge, you agree as follows: 
  

	 	(1)	No Golden Parachute Payments. You will not be entitled to receive from the Company any golden parachute payment (as defined below) during any period in which the
Treasury holds an equity or debt position acquired from the Company in the CPP (the “CPP Covered Period”) (or during the year following any acquisition of the Company, to the extent required by the CPP Limitations (as defined below)).

  

	 	(2)	Recovery of Bonus and Incentive Compensation. You will be required to and shall return to the Company any bonus or incentive compensation paid to you by the Company
during the CPP Covered Period if such bonus or incentive compensation is paid to you based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria. 

  

	 	(3)	Compensation Program Amendments. Each of the Company’s compensation, bonus, incentive and other benefit plans, arrangements and agreements, including your
Employment Security Agreement (all such plans, arrangements and agreements, the “Benefit Plans”) are hereby amended to the extent necessary to give effect to provisions (1) and (2) of this letter. 

  

	 	(4)	 Review of Compensation. The Company is also required as a condition to participation in the CPP to review the Benefit Plans to ensure that the Benefit
Plans 

 January 23, 2009 
  Page
 2
 
  

	 	 
do not encourage its senior executive officers to take unnecessary and excessive risks that threaten the value of the Company. To the extent that the Company
determines that the Benefit Plans must be revised as a result of such review, or determines that the Benefit Plans must otherwise be revised to comply with Section 111(b) of the Emergency Economic Stabilization Act of 2008 (the
“EESA”) as implemented by any guidance or regulation thereunder that has been issued and is in effect as of the closing date of the Company's issuance of preferred stock and warrants to acquire common stock to the Treasury pursuant to the
CPP (the “CPP Limitations”), you and the Company agree to negotiate and effect such changes promptly and in good faith. 

  

	 	(5)	Definitions and Interpretation. This letter shall be interpreted as follows: 

  

	 	•	 	 “Senior executive officer” means the Company’s “senior executive officers” as defined in Q&A 2 of the Interim Final Rule issued by the
Treasury at 31 CFR Part 30, effective on October 20, 2008 (the “Interim Final Rule”). 

  

	 	•	 	 “Golden parachute payment” shall have the meaning set forth in Q&A 9 of the Interim Final Rule. 

  

	 	•	 	 The term “Company” includes any entities treated as a single employer with the Company under Q&A 1 and Q&A 11 of the Interim Final Rule.

  

	 	•	 	 This letter is intended to, and shall be interpreted, administered and construed to comply with Section 111 of the EESA and the regulations and guidance
promulgated thereunder (and, to the maximum extent consistent with the preceding, to permit operation of the Benefit Plans in accordance with their terms before giving effect to this letter). 

  

	 	(6)	Miscellaneous. To the extent not subject to federal law, this letter will be governed by and construed in accordance with the laws of the State of Florida with venue
lying exclusively in the Federal and State courts located in Collier County, Florida. This letter may be executed in two or more counterparts, each of which will be deemed to be an original. A signature transmitted by facsimile will be deemed an
original signature. 

  

	 	(7)	No Force and Effect. If the Treasury does not purchase the securities contemplated by the Participation Agreement, then this letter shall be of no force or effect. In
addition, upon such time as the Treasury no longer holds securities or debt of the Company acquired under the CPP, this letter shall be of no further force or effect, except to the extent required by the CPP Limitations. If you cease to be a senior
executive officer of the Company for purposes of the CPP, you shall be released from the restrictions and obligations set forth in this letter to the extent permissible under the CPP. If it is determined that you are not a senior executive officer
of the Company as of the date hereof, this letter shall be of no force or effect. 

 January 23, 2009 
  Page
 3
 
  

 The Company appreciates the concessions you are making and looks forward to your continued leadership
during these financially turbulent times. 
  

			
	Sincerely,
	
	ALARION FINANCIAL SERVICES INC.
		
	By:	 	 /s/ Jon M. Kurtz

		 	Jon M. Kurtz
		 	Chief Executive Officer

 Intending to be legally bound, I agree with and accept the 
 foregoing terms on the date set forth below. 
  

									
	By:	 	  
	 		 	January 23, 2009
		 		 		 	Date

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