Exhibit 10.1

$40,000,000

FINANCIAL INSTITUTIONS, INC.

Common Stock, $0.01 Par Value Per Share

Sales Agency Agreement

May 30, 2017

Sandler O’Neill + Partners, L.P.

1251 Avenue of the Americas, 6th Floor

New York, New York 10020

Ladies and Gentlemen:

Financial Institutions, Inc., a New York corporation (the “Company”), the
holding company for Five Star Bank, a New York chartered bank (the “Bank”),
proposes, subject to the terms and conditions stated herein, to sell from time
to time through Sandler O’Neill & Partners, L.P., as sales agent and/or
principal (the “Agent”) shares of the common stock, $.01 par value per share
(“Common Stock”), of the Company, having an aggregate gross sales price of up to
$40.0 million (the “Shares”) on the terms set forth in this agreement (the
“Agreement”). The Company agrees that whenever it determines to sell the Common
Stock directly to the Agent, as principal or otherwise other than as set forth
in Section 2 hereof, it will enter into a separate agreement, which will include
customary terms and conditions consistent with the representations, warranties
and provisions in this Agreement and which will be agreed upon by the parties
thereto (each, a “Terms Agreement”).

The Company has filed with the Securities and Exchange Commission (the
“Commission”) a shelf registration statement on Form S-3 (No. 333-202791),
including the related prospectus, covering the registration of various
securities, including the Shares, under the Securities Act of 1933, as amended
(the “1933 Act”) (the “Base Prospectus”). Such registration statement is
effective under the 1933 Act. Promptly after execution and delivery of this
Agreement, the Company will prepare and file a Prospectus Supplement (as defined
below) with respect to the Shares in accordance with the provisions of Rule 430B
(“Rule 430B”) of the rules and regulations of the Commission under the 1933 Act
(the “1933 Act Regulations”) and paragraph (b) of Rule 424 (“Rule 424(b)”) of
the 1933 Act Regulations. Any information included in such Prospectus Supplement
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective pursuant to Rule 430B is referred to as “Rule 430B
Information.” The shelf registration statement, at any given time, including any
amendments thereto, including post-effective amendments, the exhibits and any
schedules thereto at such time, the documents incorporated by reference therein
and the documents otherwise deemed to be a part thereof or included therein by
the 1933 Act, is referred to herein as the “Registration Statement.” The term
“Effective Date”

 

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shall mean each date that the Registration Statement and any post-effective
amendment or amendments thereto became or become effective. The term
“Prospectus” means the prospectus supplement to the Base Prospectus that
describes the Shares and the offering thereof (the “Prospectus Supplement”)
filed with the Commission pursuant to Rule 424(b) under the 1933 Act, together
with the Base Prospectus, in the form used by the Agent in connection with the
sale of the Shares from time to time. The Company will furnish to the Agent, for
use by the Agent, copies of the Prospectus included as part of such Registration
Statement, as supplemented by the Prospectus Supplement, relating to the
Shares. Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as a “Rule 462(b) Registration Statement,” and
after such filing the term “Registration Statement” shall include the last filed
Rule 462(b) Registration Statement.

For purposes of this Agreement, all references to the Registration Statement,
the Prospectus Supplement, the Prospectus, any Issuer-Represented Free Writing
Prospectus (as hereinafter defined) or any amendment or supplement to any of the
foregoing shall be deemed to include the copy, if any, filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
(“EDGAR”).

All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” (or other references of
like import) in the Registration Statement, the Prospectus Supplement or the
Prospectus shall be deemed to mean and include all such financial statements and
schedules and other information which is incorporated or deemed to be
incorporated by reference in, or otherwise deemed by the 1933 Act Regulations to
be a part of or included in, the Registration Statement, the Prospectus
Supplement or the Prospectus, as the case may be.

For the purpose of this Agreement, the term “subsidiary” or “subsidiaries” shall
include each direct or indirect subsidiary of the Company listed on Schedule II
hereto.

1.     (a) The Company represents and warrants to the Agent, as of the date
hereof, each Representation Date (as defined in Section 5(o) below), each
Applicable Time (as defined in Section 1(a)(v) below) and each Delivery Date (as
defined in Section 2(i) below), and agrees with the Agent, as follows:

(i)    (A)(1) At the time of filing the Registration Statement, (2) as of the
date hereof, and (3) as of each Applicable Time and Delivery Date, the Company
satisfied the registrant the eligibility requirements for the use of Form S-3
under the 1933 Act that were in effect prior to October 21, 1992, and (B) at the
date hereof, the Company was not an “ineligible issuer” as defined in Rule 405
of the 1933 Act Regulations. The Company has filed with the Commission the
Registration Statement on Form S-3, including a Base Prospectus for registration
under the 1933 Act of the offering and sale of the Shares, and the Company has
filed with the Commission one or more amendments to such Registration Statement,
each in the form previously delivered to the Agent. Such Registration Statement,
as so amended, has been declared effective by the Commission and the Shares have
been registered under the Registration Statement in compliance with the
requirements for the use of Form S-3. The Company has not received from the

 

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Commission any notice pursuant to Rule 401(g) of the 1933 Act Regulations
objecting to the Company’s use of Form S-3. Although the Base Prospectus may not
include all the information with respect to the Shares and the offering thereof
required by the 1933 Act and the 1933 Act Regulations to be included in the
Prospectus, the Base Prospectus includes all such information required by the
1933 Act and the 1933 Act Regulations to be included therein as of the Effective
Date. The Company has complied to the Commission’s satisfaction with all
requests of the Commission for additional or supplemental information, to the
extent the Commission has requested such information in conjunction with the
filing of the Registration Statement or otherwise; and no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been initiated or, to the knowledge of the
Company, threatened by the Commission. Promptly after the execution of this
Agreement, the Company will file with the Commission pursuant to Rules 415 and
424(b)(2) or (5) of the 1933 Act Regulations the Prospectus Supplement to the
Base Prospectus included in such Registration Statement relating to the Shares
and the offering thereof, with such information as is required or permitted by
the 1933 Act and as has been provided to and approved by the Agent prior to the
date hereof or, to the extent not completed at the date hereof, containing only
such specific additional information and other changes (beyond that contained in
the Base Prospectus) as the Company has advised the Agent, prior to the date
hereof, will be included or made therein. If the Company has elected to rely on
Rule 462(b) of the 1933 Act Regulations and the Rule 462(b) Registration
Statement is not effective, (x) the Company will file a Rule 462(b) Registration
Statement in compliance with, and that is effective upon filing pursuant to,
Rule 462(b) and (y) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 of the 1933 Act
Regulations, or the Commission has received payment of such filing fee.

(ii)    At the time of the original filing of the Registration Statement, at the
earliest time thereafter that the Company or another offering participant made a
bona fide offer (within the meaning of Rule 164(h) of the 1933 Act Regulations)
of the Shares and at each Representation Date, the Company was not, is not and
will not be an “ineligible issuer” as defined in Rule 405 under the 1933 Act.

(iii)    There are no contracts or other documents required to be described in
the Prospectus or to be filed as exhibits to the Registration Statement which
have not been described or filed as required. The Prospectus and any amendment
or supplements thereto delivered to the Agent for use in connection with the
offering of the Shares (whether to meet requests of purchasers pursuant to
Rule 173 of the 1933 Act Regulations or otherwise) was identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T under the 1933 Act.

(iv)    (A) at the respective times the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendments thereto
became or becomes effective and as of the date hereof, the Registration
Statement, any Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (B) at the time the Prospectus or any amendments or
supplements thereto were

 

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filed and at each Applicable Time and Delivery Date, neither the Prospectus nor
any amendment or supplement thereto included, includes or will include an untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, that the
representations and warranties in clauses (A) and (B) above shall not apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in strict conformity with information furnished to the
Company in writing by the Agent expressly for use in the Registration Statement
or the Prospectus, it being understood and agreed that the only such information
provided by the Agent is the Agent’s Information described
in Section 8(b) hereof. No order preventing or suspending the use of the
Prospectus or any Issuer-Represented Free Writing Prospectus has been issued by
the Commission.

(v)    Each Issuer-Represented Free Writing Prospectus, as of its issue date and
at all subsequent times through the completion of the public offer and sale of
the Shares or until any earlier date that the Company notified or notifies the
Agent as described in Section 5(b), did not, does not and will not include any
material information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with the Agent Information provided by
the Agent expressly for use therein.

As used in this Section 1(a)(v) and elsewhere in this Agreement:

“Applicable Time” means, with respect to any Shares, the time of sale of such
Shares pursuant to this Agreement or any relevant Terms Agreement.

“General Disclosure Package” means (i) the Prospectus, (ii) the
Issuer-Represented General Use Free Writing Prospectuses, if any, identified
in Schedule II hereto and (iii) any other Issuer-Represented Free Writing
Prospectus that the parties hereto shall hereafter expressly agree in writing to
treat as part of the General Disclosure Package.

“Issuer-Represented Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“Rule 433”),
relating to the Shares (including, without limitation, any such issuer free
writing prospectus that (i) is required to be filed with the Commission by the
Company, (ii) is a “road show that is a written communication” within the
meaning of Rule 433(d)(8)(i) of the 1933 Act Regulations, whether or not
required to be filed with the Commission or (iii) is exempt from filing pursuant
to Rule 433(d)(5)(i) of the 1933 Act Regulations because it contains a
description of the Shares or of the offering that does not reflect the final
terms), in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) of the 1933 Act Regulations.

“Issuer-Represented General Use Free Writing Prospectus” means any
Issuer-Represented Free Writing Prospectus that is intended for general
distribution to prospective investors, as evidenced by its being specified
in Schedule II hereto.

 

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“Issuer-Represented Limited-Use Free Writing Prospectus” means any
Issuer-Represented Free Writing Prospectus that is not an Issuer-Represented
General Use Free Writing Prospectus.

(vi)     The documents incorporated or deemed to be incorporated by reference in
the Registration Statement, the Prospectus and the General Disclosure Package or
from which information so incorporated by reference, at the time they were or
hereafter are filed with the Commission, complied, comply and will comply in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended (the “1934 Act”) and the rules and regulations of the Commission
thereunder (the “1934 Act Regulations”), and, when read together with the other
information in the Prospectus, at the time the Registration Statement became
effective, at the time the Prospectus was or is issued, at each Applicable Time
and at each Delivery Date, did not, do not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

(vii)     The consolidated financial statements of the Company, including the
related schedules and notes, filed with the Commission as a part of the
Registration Statement and included in the Prospectus (the “Financial
Statements”) present fairly in all material respects the consolidated financial
position of the Company and its consolidated subsidiaries as of and at the dates
indicated and the consolidated results of their operations, changes in
stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified. The Financial Statements, unless
otherwise noted therein, have been prepared in conformity with generally
accepted accounting principles in effect in the United States (“GAAP”) applied
on a consistent basis throughout the periods involved, except as may be
expressly stated in the notes thereto. The selected financial data and the
summary financial information included in the Registration Statement and the
Prospectus present fairly in all material respects the information therein and
have been prepared on a basis consistent with that of the audited consolidated
financial statements contained in the Registration Statement, any preliminary
prospectus and the Prospectus. No other financial statements or supporting
schedules are required to be included in the Registration Statement and the
Prospectus. To the extent applicable, all disclosures contained in the
Prospectus regarding “non-GAAP financial measures” as such term is defined by
the rules and regulations of the Commission comply with Regulation G of the 1934
Act, the rules and regulations of the Commission under the 1934 Act (“the “1934
Act Regulations”) and Item 10(e) of Regulation S-K. The pro forma financial
statements and the related notes thereto included in the Registration Statement
and the Prospectus present fairly in all material respects the information shown
therein, have been prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The interactive data in eXtensible Business Reporting Language included
in the Registration Statement, the General Disclosure Package and the Prospectus
presents fairly in all material respects the information included therein and
has been prepared in all material respects in accordance with the Commission’s
rules and guidelines applicable thereto.

(viii)    KPMG LLP (“KPMG”), the independent registered public accounting firm
that audited the financial statements of the Company and its subsidiaries that
are included in the

 

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Registration Statement and the Prospectus, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.

(ix)    The statistical and market-related data contained in the Registration
Statement, the General Disclosure Package and the Prospectus are based on or
derived from sources which the Company believes are reliable and accurate in all
material respects.

(x)    This Agreement has been duly authorized, executed and delivered by the
Company and, when duly executed by the Agent, will constitute the valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors’ rights generally or by general equitable principles and
except as any indemnification or contribution provisions thereof may be limited
under applicable securities laws, banking laws and public policy considerations.

(xi)    Since the date of the most recently dated audited consolidated balance
sheet contained in the Financial Statements, (A) the Company and its
subsidiaries, considered as one enterprise, have not sustained any material loss
or material interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, and there has not been any
material change in the capital stock or long-term debt of the Company and its
subsidiaries or any material adverse change in or affecting the general affairs,
management, earnings, business, properties, assets, consolidated financial
position, business prospects, consolidated shareholders’ equity or consolidated
results of operations of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business (a
“Material Adverse Effect”), in each case in this clause (A) other than as set
forth or contemplated in the Registration Statement, the General Disclosure
Package and the Prospectus, (B) there have been no transactions entered into by
the Company or any of its subsidiaries which are material with respect to the
Company and its subsidiaries considered as one enterprise, otherwise than as set
forth or contemplated in the Registration Statement, the General Disclosure
Package and the Prospectus and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock, otherwise than as set forth or contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus.

(xii)    The Company and its subsidiaries have good and marketable title to all
real property and good and marketable title to all personal property owned by
them, in each case free and clear of all mortgages, pledges, security interests,
claims, restrictions, liens, encumbrances and defects except such as are
described generally in the Registration Statement, the General Disclosure
Package and the Prospectus or such as do not materially affect the value of such
properties taken as a whole and do not materially interfere with the use made
and proposed to be made of such property by the Company and its subsidiaries and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries, and neither the Company nor any subsidiary has received any
written or oral notice of any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning the

 

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rights of the Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease.

(xiii)    The Company is a registered financial holding company under the Bank
Holding Company Act of 1956, as amended (“BHCA”), and has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of New York, with the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement, the General Disclosure Package and the Prospectus and to
enter into and perform its obligations under this Agreement. The Company is duly
qualified as a foreign corporation to transact business and is in good standing
under the laws of each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or to be in good
standing would not reasonably be expected to result in a Material Adverse
Effect.

(xiv)    Each of the Company’s subsidiaries, has been duly incorporated or
organized and is validly existing as a corporation or limited liability company
in good standing under the laws of the jurisdiction of its incorporation or
organization, has corporate or limited liability company power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement, the General Disclosure Package and the Prospectus
and is duly qualified as a foreign entity to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except in each case where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect. The activities of the Company’s
subsidiaries are permitted of subsidiaries of a financial holding company under
applicable law and the rules and regulations of the Federal Reserve Board (the
“FRB”) set forth in Title 12 of the Code of Federal Regulations. Except as
otherwise disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, all of the issued and outstanding capital stock or
membership interests of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable (to the extent applicable) and
is owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.    With
respect to Five Star REIT, Inc., the Bank directly owns all of the outstanding
common stock of such subsidiary. None of the outstanding shares of capital stock
or membership interests of any subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such subsidiary. There are
no outstanding rights, warrants or options to acquire or instruments convertible
into or exchangeable for any capital stock or equity securities of any of the
subsidiaries. Except as otherwise disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, no subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distributions on such subsidiary’s capital stock
or common securities, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such subsidiary’s
property or assets to the Company or any other subsidiary of the Company. The
only subsidiaries of the Company are the subsidiaries listed on Schedule I
hereto.

(xv)    All of the issued shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and have
been issued in compliance with federal and state securities laws.    None of the
outstanding shares of capital stock were issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or

 

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purchase securities of the Company. The description of the Company’s stock
option, stock bonus and other stock plans or compensation arrangements and the
options or other rights granted thereunder, set forth in the Registration
Statement, the General Disclosure Package and the Prospectus, accurately and
fairly presents, in all material respects, the information required to be
described therein with respect to such plans, arrangements, options and rights.
Except as described in each of the General Disclosure Package and Prospectus,
there are no outstanding rights (contractual or otherwise), warrants or options
to acquire, or instruments convertible into or exchangeable for, or agreements
or understandings with respect to the sale or issuance of, any shares of capital
stock of or other equity interest in the Company, other than in the ordinary
course of business, consistent with past practice, under the Company’s equity
compensation programs.

(xvi)    The Shares have been duly and validly authorized and, when issued,
delivered to and paid for by the Agent pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and will conform to the
description of the capital stock contained in each of the Registration
Statement, the General Disclosure Package and the Prospectus. The issuance of
the Shares is not subject to the preemptive or other similar rights of any
securityholder of the Company.

(xvii)    The Shares will conform in all material respects to the respective
statements relating thereto contained in the Registration Statement, the General
Disclosure Package and the Prospectus.

(xviii)    The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the consummation by
the Company of the transactions herein contemplated have been duly authorized by
all necessary corporate action of the Company and do not and will not, whether
with or without the giving of notice or passage of time or both, (A) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default or result in a Repayment Event (as defined below) under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
(B) result in any violation of the provisions of the certificate of
incorporation, certificate of organization, certificate of formation, articles
of incorporation, articles of association, or charter (as applicable), bylaws or
other governing documents of the Company or any of its subsidiaries, or
(C) subject to compliance by all necessary persons with the applicable
provisions of the Change in Bank Control Act of 1978 and Regulation Y
promulgated in part thereunder, result in any violation of any statute or any
order, rule or regulation of any federal, state, local or foreign court,
arbitrator, regulatory authority or governmental agency or body (each a
“Governmental Entity”) having jurisdiction over the Company or any of its
subsidiaries or any of their properties, except for, in the case of clauses
(A) and (C) those conflicts, breaches, violations, defaults or Repayment Events
that would not reasonably be expected to result in a Material Adverse Effect. No
consent, approval, authorization, order, registration or qualification of or
with any such court or Governmental Entity is required for the issue and sale of
the Shares, the performance by the Company of its obligations hereunder or the
consummation by the Company of the transactions contemplated by this Agreement,
except the registration under the 1933 Act of the Shares and except as may be
required under the rules and regulations of the NASDAQ Global Select Market
(“NASDAQ”) or the Financial Industry Regulatory Authority (“FINRA”) and such
consents, approvals, authorizations,

 

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registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Agent. As used herein, a “Repayment Event” means any event or condition, the
occurrence or existence of which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any subsidiary prior to its scheduled
maturity.

(xix)    Neither the Company nor any of its subsidiaries is (A) in violation of
its certificate of incorporation, certificate of organization, certificate of
formation, articles of incorporation, articles of association or charter (as
applicable), bylaws or other governing documents or (B) in breach, violation or
default (with or without notice or lapse of time or both) of any obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it or any of its properties may be bound or to
which any of the property or assets of the Company or any subsidiary is subject
except in each case for such breaches, violations or defaults that would not
result in a Material Adverse Effect.

(xx)    Except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, the Company and its subsidiaries have
conducted and are conducting their respective businesses in compliance in all
material respects with all federal, state, local and foreign statutes, laws,
rules, regulations, decisions, directives and orders and administrative and
court decrees applicable to them (including, without limitation, all regulations
and orders of, or agreements with, the FRB, the New York Department of Financial
Services (“NYDFS”), the Federal Deposit Insurance Corporation (the “FDIC”), and
the Commission, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage Disclosure Act, all other
applicable fair lending laws or other laws relating to discrimination and the
Bank Secrecy Act and Title III of the USA Patriot Act), and neither the Company
nor any of its subsidiaries has received any written or oral communication from
any Governmental Entity asserting that the Company or any of its subsidiaries is
not in compliance with any statute, law, rule, regulation, decision, directive
or order that would reasonably be expected to result in a Material Adverse
Effect.

(xxi)    There are no legal or governmental actions or suits, investigations,
inquiries or proceedings before or by any court or Government Entity, now
pending or, to the knowledge of the Company, threatened, to which the Company or
any of its subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject (A) that is required to be disclosed in
the Registration Statement by the 1933 Act or the 1933 Act Regulations and is
not disclosed therein or (B) which, if not disclosed in the Registration
Statement, if determined adversely to the Company or any of its subsidiaries,
would be reasonably expected to result, individually or in the aggregate, in a
Material Adverse Effect; all pending legal or governmental proceedings to which
the Company or any of its subsidiaries is a party or of which any of their
property is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to their respective businesses,
are not reasonably expected to result, individually or in the aggregate, in a
Material Adverse Effect, and there are no contracts or documents of the Company
or any of its subsidiaries which would be required by the 1933 Act or the 1933
Act Regulations to be described in the Registration Statement or to be filed as
exhibits thereto which have not been so described or filed.

 

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(xxii)    Each of the Company and its subsidiaries (A) possesses all permits,
licenses, approvals, consents and other authorizations (collectively,
“Governmental Licenses”) of any Governmental Entity, (B) has made all filings,
applications and registrations with, any Governmental Entity necessary to permit
the Company or such subsidiary to conduct the business now operated by the
Company or such subsidiary, and (C) is in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure to so
possess, file, apply, register or comply would not, individually or in the
aggregate, have a Material Adverse Effect. All of the Governmental Licenses
currently held by the Company or any of its subsidiaries are valid and in full
force and effect, except where the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and effect would
not, individually or in the aggregate, have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such material
Governmental Licenses. Neither the Company nor any its subsidiaries have failed
to file with applicable regulatory authorities any statement, report,
information or form required by any applicable law, regulation or order, except
where the failure to so file in compliance would not, individually or in the
aggregate, have a Material Adverse Effect; all such filings were in compliance
in all material respects with applicable laws when filed and no material
deficiencies have been asserted in writing by any regulatory commission, agency
or authority with respect to any such filings or submissions.

(xxiii)    Except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus and except as would not, individually or
in the aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state or local
statute, law, rule, regulation, ordinance, or code or any applicable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products, asbestos-containing
materials or mold (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (B) each
of the Company and its subsidiaries has all permits, authorizations and
approvals required to be held by it under any applicable Environmental Laws and
each such of the Company and its subsidiaries are in compliance with the
requirements of each such permit, authorization and approval held by it,
(C) there are no pending or, to the knowledge of the Company, threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any of its
subsidiaries, and (D) there are no events or circumstances that would reasonably
be expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or Governmental Entity, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.

(xxiv)    The Company and each of its subsidiaries own or possess adequate
rights to use or can acquire on reasonable terms ownership or rights to use all
patents, patent applications, patent rights, licenses, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights and know-how (including trade secrets and other unpatented and/or

 

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unpatentable proprietary or confidential information, systems or procedures and
excluding generally commercially available “off the shelf” software programs
licensed pursuant to shrink wrap or “click and accept” licenses) and licenses
(collectively, “Intellectual Property”) necessary for the conduct of their
respective businesses, except in each case where the failure to own or possess
such rights would not, individually or in the aggregate, result in a Material
Adverse Effect, and have not received any notice of any claim of infringement or
conflict with, any such rights of others or any facts or circumstances that
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, except in each case
where such infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would not result in a Material Adverse Effect.

(xxv)    No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or any of its subsidiaries
on the other hand, which is required to be disclosed in the Registration
Statement and the Prospectus by the 1933 Act or the 1933 Act Regulations which
has not been so disclosed.

(xxvi)    Neither the Company nor any of its subsidiaries is, or after giving
effect to the offering and sale of the Shares, and after receipt of payment for
the Shares and the application of the net proceeds as described in each of the
Registration Statement, the General Disclosure Package and the Prospectus, will
be an “investment company,” as such term is defined in the Investment Company
Act of 1940, as amended (the “Investment Company Act”).

(xxvii)    The Company is in compliance in all material respects with the
provisions of the Sarbanes-Oxley Act and the rules and regulations of the
Commission thereunder applicable to the Company and the Company is in compliance
in all material respects with the applicable rules and regulations of NASDAQ.
The Company has taken no action designed to, or likely to have the effect of,
terminating the listing of the Company’s common stock on the NASDAQ Global
Select Market, nor has the Company received notification that NASDAQ is
contemplating terminating such listing. There is no requirement to receive the
approval of the NASDAQ for the Shares to be listed on the NASDAQ Global Select
Market.

(xxviii)     Neither the Company nor any of its subsidiaries, nor any affiliates
of the Company or its subsidiaries, has taken or will take, directly or
indirectly, any action designed to or that would be reasonably expected to cause
or result in stabilization or manipulation of the price of any securities of the
Company to facilitate the sale or resale of the Shares.

(xxix)    None of the Company, its subsidiaries and, to the knowledge of the
Company, their respective directors, officers, employees and agents and other
persons, in each case, acting on behalf of the Company or any of its
subsidiaries has (A) used any corporate funds of the Company or any of its
subsidiaries for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity, (B) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds of the Company or any of its subsidiaries, (C) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, or
(D) made any bribe, illegal rebate, payoff, influence payment, kickback or other
unlawful payment, (E) materially violated applicable privacy of customer
information

 

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requirements contained in any federal or state privacy act laws and regulations;
or (F) made any payment of funds to the Company or any of its subsidiaries or
received or retained funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in each of the Registration Statement, General Disclosure Package and
the Prospectus, that is not described in each of the Registration Statement,
General Disclosure Package and the Prospectus as required.

(xxx)    The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management’s general or
specific authorization, (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (C) access to assets is permitted only in accordance
with management’s general or specific authorization, and (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and each of its subsidiaries maintain a system of internal control over
financial reporting (as such term is defined in Rule 13a-15(f) and Rule
15d-15(f) under the 1934 Act), that complies with the requirements of the 1934
Act, as applicable to them; the Company’s internal control over financial
reporting is effective; and since the end of the Company’s most recent audited
fiscal year, there has been (X) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (Y) no change
in the Company’s internal control over financial reporting that has materially
affected adversely, or is reasonably likely to materially affect adversely, the
Company’s internal control over financial reporting.

(xxxi)    The Company maintains “disclosure controls and procedures” (as such
term is defined in Rule 13a-15(e) and Rule 15d-15(f) under the 1934 Act) that
comply with the requirements of the 1934 Act that are applicable to an issuer
that has a class of securities registered under Section 12 of the 1934 Act.

(xxii)    None of the Company, the Bank and any of their subsidiaries is in
violation of any order or directive from the FRB, the NYDFS, the FDIC, the
Commission or any regulatory authority to make any material change in the method
of conducting its respective businesses. Except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, neither the
Company nor any of its subsidiaries is subject or is party to, or has received
any notice or advice that any of them may become subject or party to, any
investigation with respect to, any corrective, suspension or cease-and-desist
order, agreement, consent agreement, memorandum of understanding or other
regulatory enforcement action, proceeding or order with or by, or is a party to
any commitment letter, or is subject to any directive by, or has been a
recipient of any supervisory letter from any Regulatory Agency (as defined
below) that, in each case, currently relates to or restricts in any respect the
conduct of their business or that in any manner relates to capital adequacy,
credit policies or management, nor at the request or direction of any Regulatory
Agency has the Company or any of its subsidiaries adopted any board resolution
that is reasonably likely to have a Material Adverse Effect (each, a “Regulatory
Agreement”), nor has the Company or any of its subsidiaries been advised by any
Regulatory Agency that such Regulatory Agency is considering issuing or
requesting any such Regulatory Agreement or any such Regulatory Agreement is
pending or, to the knowledge of the Company, threatened. Except as disclosed in
the Registration Statement, the General Disclosure Package and the Prospectus,
the Company and its subsidiaries are each in compliance with any Regulatory
Agreements, and there

 

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is no unresolved violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the Company
or any of its subsidiaries which, in the reasonable judgment of the Company,
currently results in or is expected to result in a Material Adverse Effect. As
used herein, the term “Regulatory Agency” means any Governmental Entity having
supervisory or regulatory authority with respect to the Company or any of its
subsidiaries, including, but not limited to, any federal or state agency charged
with the supervision or regulation of depositary institutions or holding
companies of depositary institutions, or engaged in the insurance of depositary
institution deposits.

(xxxiii)     Each “employee benefit plan” (as defined under the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, “ERISA”)) established or
maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as
defined below) is in compliance with ERISA, except where the failure to be in
compliance with ERISA would not result in a Material Adverse Effect. “ERISA
Affiliate” means, with respect to the Company or a subsidiary, any member of any
group of organizations described in Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”) of which the Company or such subsidiary
is a member. No “reportable event” (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates. The fair market value of the assets of each ERISA Affiliate defined
benefit pension plan exceeds the present value of such plan’s “benefit
liabilities” (as defined in Section 4001(a)(16) of ERISA), and no ERISA
Affiliate defined benefit pension plan has an “accumulated funding deficiency”
(as defined in Section 302 of ERISA). None of the Company, its subsidiaries nor
any of their ERISA Affiliates has incurred or reasonably expects to incur any
liability under (A) Title IV of ERISA with respect to termination of, or
withdrawal from, any “employee benefit plan” or (B) Sections 412, 4971 or 4975
of the Code. Each “employee benefit plan” established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination or opinion letter from the Internal Revenue Service regarding its
qualification under such section and, to the knowledge of the Company, its
subsidiaries and its ERISA affiliates, nothing has occurred whether by action or
failure to act, which would cause the loss of such qualification.

(xxxiv)     The Company and its subsidiaries, taken as a whole, are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company reasonably believes are prudent and customary
in the business in which the Company and its subsidiaries are engaged. Neither
the Company nor any of its subsidiaries has any reason to believe that it will
not be able to obtain insurance coverage from insurers similar to their current
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect. To the knowledge of the Company, neither the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied in any instance in which such insurance
coverage was offered by the carrier from which the Company or such subsidiary
sought such coverage or to which it applied for such coverage.

(xxxv)    At the Delivery Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares will have been fully

 

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paid or provided for by the Company and all laws imposing taxes will have been
fully complied with.

(xxxvi)     The Company and its subsidiaries have (i) filed all necessary
federal, state and foreign income and franchise tax returns that they are
required to have filed or have properly requested extensions of the deadline for
the filing therefor and all such tax returns as filed are true, complete and
correct in all material respects and (ii) have paid all taxes required to be
paid by any of them, other than such taxes as may be paid at a later date
without any penalty or fine and except for any such tax, assessment, fine or
penalty that is currently being contested in good faith by appropriate actions
and except for such taxes, assessments, fines or penalties, the nonpayment or
late payment of which would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.

(xxxvii) No labor dispute with the employees of the Company or any subsidiary
exists or, to the knowledge of the Company, is imminent, which, in any case,
would reasonably be expected to result in a Material Adverse Effect.

(xxxviii) Except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, the operations of the Company and its
subsidiaries are and have been conducted at all times in compliance in all
material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, money laundering statutes applicable to the Company and its
subsidiaries, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”), and no action,
suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its subsidiaries with
respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

(xxxix)     The Company has not distributed and, prior to the later to occur of
(i) the Delivery Date and (ii) completion of the distribution of the Shares,
will not distribute any offering materials in connection with the offering and
sale of the Shares other than the Prospectus and, subject to compliance with the
terms and conditions herein, any Issuer-Represented Free Writing Prospectus.

(xxxvii) No forward-looking statement (within the meaning of Section 27A of the
1933 Act and Section 21E of the 1934 Act) contained in the Registration
Statement, the General Disclosure Package, the Prospectus and any
Issuer-Represented Free Writing Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

(xxxviii) Neither the Company nor any of its subsidiaries has participated in
any reportable transaction, as defined in Treasury Regulation Section
1.6011-(4)(b)(1).

(xxxix) Each of the Company and its subsidiaries has good and marketable title
to all securities held by it (except securities sold under repurchase
agreements, pledged to secure deposits or derivative contracts or held in any
fiduciary or agency capacity) free and clear of any lien, claim, charge, option,
encumbrance, mortgage, pledge or security interest or other restriction of any
kind, except to the extent such securities are pledged in the ordinary course of
business

 

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consistent with prudent business practices to secure obligations of the Company
or any of its subsidiaries and except for such defects in title or liens,
claims, charges, options, encumbrances, mortgages, pledges or security interests
or other restrictions of any kind that would not, individually or in the
aggregate, result in a Material Adverse Effect. The value of such securities as
reflected in the accounting records of the Company and its subsidiaries has been
determined in accordance with GAAP.

(xl)    Any and all material swaps, caps, floors, futures, forward contracts,
option agreements (other than employee stock options) and other derivative
financial instruments, contracts or arrangements, whether entered into for the
account of the Company or one of its subsidiaries or for the account of a
customer of the Company or one of its subsidiaries, were entered into in the
ordinary course of business and in accordance with prudent business practice and
applicable laws, rules, regulations and policies of all applicable regulatory
agencies and with counterparties believed to be financially responsible at the
time of execution of such instruments, contracts or arrangements. The Company
and each of its subsidiaries have duly performed all of their respective
obligations thereunder to the extent that such obligations to perform have
accrued, and there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder, except for such breaches,
violations, defaults, allegations or assertions that, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

(xli)    Neither the Company nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company is (a) currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); or (b) located, organized or resident in a
country or territory that is the subject of such sanctions (including, without
limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria). The Company will
not, directly or indirectly, use the proceeds of the offering contemplated
hereby, or lend, contribute or otherwise make available such proceeds to any of
its subsidiaries, any joint venture partner of the Company or any of its
subsidiaries or any other person or entity, for the purpose of financing the
activities of any person, or engage in dealings or transactions with any person,
or in any country, or territory, subject to any U.S. sanctions administered by
OFAC in violation of such sanctions.

(xlii)    Except as described in the Registration Statement, General Disclosure
Package or the Prospectus, there are no material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), or any other
relationships with unconsolidated entities or other persons to which the Company
or any of its subsidiaries is a party, that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

(xliii)    To the knowledge of the Company, after due inquiry, there are no
affiliations with any FINRA member firm among the Company’s officers, directors,
or principal shareholders, except as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus, or as otherwise disclosed in
writing to the Agent.

(b)     The Bank represents and warrants to the Agent, as of the date hereof,
each Representation Date (as defined in Section 5(o) below), each Applicable
Time (as defined to in

 

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Section 1(a)(v) hereof) and each Delivery Date (as defined in Section 2(i)
below), and agrees with the Agent, as follows:

(i)    The Bank has been duly chartered and is validly existing as a New
York-chartered bank in good standing under the laws of the jurisdiction of its
organization, with the corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement. The Bank is the
only depository institution subsidiary of the Company and the Bank is a member
in good standing of the Federal Home Loan Bank System. The Bank is duly
qualified as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or to be in good standing would not
reasonably be expected to result in a Material Adverse Effect. The activities of
the Bank and its subsidiaries are permitted under the laws and regulations of
the State of New York and the deposit accounts in the Bank are insured up to the
applicable limits by the FDIC and no proceeding for the termination or
revocation of such insurance is pending or, to the knowledge of the Bank,
threatened against the Bank.

(ii)    The Bank is not in violation of its articles of incorporation or bylaws
or in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound or to which any of the
property or assets of the Bank is subject except for such defaults that would
not be expected to result in a Material Adverse Effect. This Agreement has been
duly authorized, executed and delivered by the Bank and, when duly executed by
the Agent, will constitute the valid and binding agreement of the Bank,
enforceable against the Bank in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors’ rights generally or by
general equitable principles and except as any indemnification or contribution
provisions thereof may be limited under applicable securities, banking laws and
public policy considerations. The Bank has the full power and authority to enter
into this Agreement.

(iii) The execution and delivery of this Agreement by the Bank and the
compliance and performance by the Bank with the provisions of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Bank and do not
and will not, whether with or without the giving of notice or passage or time or
both, conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default or result in a Repayment Event under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Bank or any of its subsidiaries is a party or by which
the Bank or any of its subsidiaries is bound or to which any of the property or
assets of the Bank or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the articles of association or
bylaws of the Bank or any statute or any order, rule or regulation of any
Governmental Entity having jurisdiction over the Bank or any of its subsidiaries
or any of their properties, except for those conflicts, breaches, violations,
defaults or Repayment Events that would not result in a Material Adverse Effect.

 

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(c)     Any certificate signed by an officer of the Company or the Bank and
delivered to the Agent in connection with the offering of Shares shall be deemed
to be a representation and warranty by the Company and/or the Bank, as
applicable, to the Agent as to the matters set forth therein.

2.     (a) On the basis of the representations, warranties and agreements herein
contained and subject to the terms and conditions set forth herein, upon the
Agent’s acceptance of the terms of a Placement Notice (as defined
in Section 2(b) below) or such other instructions provided by the Company to the
Agent pursuant to Section 2(b) or upon receipt by the Agent of an Acceptance (as
defined in Section 2(c) below), as the case may be, and unless the sale of the
Placement Shares (as defined in Section 2(b) below) described therein has been
declined, suspended or otherwise terminated in accordance with the terms of this
Agreement, the Company agrees to issue and sell through the Agent, as sales
agent, and the Agent agrees, subject to the limitations and provisions in
this Section 2 or as may otherwise be agreed to between the parties from time to
time, to use its commercially reasonable efforts consistent with its normal
trading and sales practices to sell as sales agent for the Company, the
Shares. Sales of the Shares, if any, through the Agent acting as sales agent
will be made by means of ordinary brokers’ transactions or otherwise at market
prices prevailing at the time of sale, at prices related to prevailing market
prices or at negotiated prices.

(b)    The Shares are to be sold on a daily basis or otherwise as shall be
agreed to by the Company and the Agent on any day that is a trading day for the
NASDAQ Global Select Market (other than a day on which the NASDAQ Stock Market
is scheduled to close prior to its regular weekday closing time) (each, a
“Trading Day”), and the Company has instructed the Agent to make such
sales. Prior to the commencement of the offering, when the Company wishes to
issue and sell the Shares hereunder, it will notify the Agent at least one
“business day,” as defined in Rule 100 of Regulation M of the 1933 Act
Regulations (a “Regulation M Business Day”), to the extent Regulation M is
applicable to the Company, prior to the Trading Day on which sales are desired
to commence by e-mail notice (or other method mutually agreed to in writing by
the parties) containing the parameters in accordance with which it desires the
Shares to be sold, which shall at a minimum include the number of Shares desired
to be issued (the “Placement Shares”), a form of which is attached hereto
as Annex I (a “Placement Notice”). The Placement Notice shall originate from any
of the individuals from the Company set forth on Schedule I (with a copy to each
of the other individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from the Agent set forth on Schedule I, as
such Schedule I may be amended from time to time. On any Trading Day that the
Company wishes to issue and sell the Shares hereunder (each, a “Placement”), the
Company may instruct the Agent by telephone (confirmed promptly by telecopy or
email, which confirmation will be promptly acknowledged by the Agent), or such
other method mutually agreed to in writing by the parties, as to the maximum
number of Shares to be sold by the Agent on such day (in any event not in excess
of the number available for sale under the Prospectus and the currently
effective Registration Statement) and the minimum price per Share at which such
Shares may be sold.

(c)    If the Agent wishes to accept such proposed terms included in the
Placement Notice (which it may decline to do for any reason in its sole
discretion) or, following discussion with the Company, wishes to accept amended
terms, the Agent will, prior to 4:30 p.m. (New York City Time) on the business
day following the business day on which such

 

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Placement Notice is delivered to the Agent, issue to the Company a notice by
e-mail (or other method mutually agreed to in writing by the parties) addressed
to all of the individuals from the Company and Agent set forth on Schedule I)
setting forth the terms that the Agent is willing to accept. Where the terms
provided in the Placement Notice are amended as provided for in the immediately
preceding sentence, such terms will not be binding on the Company or the Agent
until the Company delivers to the Agent an acceptance by e-mail (or other method
mutually agreed to in writing by the parties) of all of the terms of such
Placement Notice, as amended (the “Acceptance”), which e-mail shall be addressed
to all of the individuals from the Company and the Agent set forth on Schedule
I. The Placement Notice (as amended by the corresponding Acceptance, if
applicable) shall be effective upon receipt by the Company of the Agent’s
acceptance of the terms of the Placement Notice or upon receipt by the Agent of
the Company’s Acceptance, as the case may be, unless and until (i) the entire
amount of the Placement Shares has been sold, (ii) in accordance with the notice
requirements set forth in the second sentence of Section 2(d) below, the Company
terminates the Placement Notice, (iii) the Company issues a subsequent Placement
Notice with parameters superseding those on the earlier dated Placement Notice,
(iv) this Agreement has been terminated under the provisions of Section 9 or
(v) either party shall have suspended the sale of the Placement Shares in
accordance with the terms of this Agreement. It is expressly acknowledged and
agreed that neither the Company nor the Agent will have any obligation
whatsoever with respect to a Placement or any Placement Shares unless and until
the Company delivers a Placement Notice to the Agent and either (i) the Agent
accepts the terms of such Placement Notice or (ii) where the terms of such
Placement Notice are amended, the Company accepts such amended terms by means of
an Acceptance pursuant to the terms set forth above, and then only upon the
terms specified in the Placement Notice (as amended by the corresponding
Acceptance, if applicable) and herein. In the event of a conflict between the
terms of this Agreement and the terms of a Placement Notice (as amended by the
corresponding Acceptance, if applicable), the terms of the Placement Notice (as
amended by the corresponding Acceptance, if applicable) will control.

(d)    Notwithstanding the foregoing, the Company shall not authorize the
issuance and sale of, and the Agent shall not be obligated to use its
commercially reasonable efforts to sell, any Shares (i) at a price lower than
the minimum price therefor authorized from time to time, or (ii) in a number in
excess of the aggregate number of shares or gross sale price of Shares
authorized from time to time to be issued and sold under this Agreement, in each
case, by the Company’s board of directors (the “Board”) or a duly authorized
committee or subcommittee thereof (the “Designated Subcommittee”), and notified
to the Agent in writing. In addition, the Company or the Agent may, upon notice
to the other party hereto by telephone (confirmed promptly by e-mail to those
individuals specified on Schedule I), suspend or terminate the offering of the
Shares for any reason and at any time; provided, however, that such suspension
or termination shall not affect or impair the parties’ respective obligations
with respect to the Shares sold hereunder or which an investor has agreed to
purchase but which have not been delivered by the Company and paid for by such
investor as contemplated hereby, prior to the giving of such notice.

(e)    Under no circumstances shall the aggregate gross sale price or number of
Shares sold pursuant to this Agreement exceed the aggregate gross sale price or
number of shares, as the case may be, of Common Stock (i) set forth in the
preamble paragraph of this Agreement, (ii) available for issuance under the
Prospectus and the then currently effective Registration

 

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Statement or (iii) authorized from time to time to be issued and sold under this
Agreement by the Board or the Designated Subcommittee and notified to the Agent
in writing. In addition, under no circumstances shall any Shares be sold at a
price lower than the minimum price therefor authorized from time to time by the
Board or the Designated Subcommittee and notified to the Agent in writing. The
Agent covenants and agrees not to make any sales of the Shares on behalf of the
Company other than as permitted by the terms of this Agreement.

(f)    Subject to the terms of the Placement Notice (as amended by the
corresponding Acceptance, if applicable) or such other instructions provided by
the Company to the Agent pursuant to Section 2(b), the Agent may sell Placement
Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415 of the Act, including without limitation sales made
directly on the NASDAQ Global Select Market, on any other existing trading
market for the Common Stock or to or through a market maker. Subject to the
terms of the Placement Notice (as amended by the corresponding Acceptance, if
applicable) or such other instruction provided by the Company to the Agent
pursuant to Section 2(b), the Agent may also sell Placement Shares by any other
method permitted by law, including but not limited to privately negotiated
transactions subject to the approval of the Company. Notwithstanding anything to
the contrary herein and for a period of time beginning one Regulation M Business
Day prior to the time when the first sale pursuant to a Placement Notice occurs,
to the extent Regulation M is applicable, and continuing through the time such
Placement Notice is in effect, the Agent agrees that in no event will it or any
of its affiliates engage in any market making, stabilization or other market or
trading activity with regard to the Shares if such activity would be prohibited
under Regulation M or other anti-manipulation rules under the 1933 Act or the
1934 Act.

(g)    The compensation payable to the Agent for sales of Shares shall be equal
to 3.0% of the aggregate purchase price of the Shares sold in the offering. The
remaining proceeds, after further deduction for any transaction fees, transfer
taxes or other similar fees, taxes or charges imposed by any federal, state,
local or other governmental, regulatory or self-regulatory organization in
respect of such sales, shall constitute the net proceeds to the Company for such
Shares (the “Net Proceeds”). The Agent shall notify the Company as promptly as
practicable if any deduction described in the preceding sentence will be
required.

(h)    The Agent shall provide written confirmation (which may be by e-mail) to
the Company following the close of trading on the NASDAQ Global Select Market
each day on which Shares are sold under this Agreement setting forth the number
of Shares sold on such day, the gross sales prices of the Shares, the volume
weighted average price for all sales of the Company’s common stock (including
the sale of the Shares pursuant to this Agreement) on such day, the Net Proceeds
to the Company and the compensation payable by the Company to the Agent under
this Agreement with respect to such sales.

(i)    Settlement for sales of Shares will occur on the third business day that
is also a Trading Day following the trade date on which such sales are made,
unless another date shall be agreed to by the Company and the Agent (each such
day, a “Delivery Date”). On each Delivery Date, the Shares sold through the
Agent for settlement on such date shall be delivered by the Company to the Agent
against payment of the Net Proceeds from the sale of such Shares. Settlement for
all Shares shall be effected by book-entry delivery of Shares to the Agent’s
account at The Depository Trust Company against payment by the Agent of the Net
Proceeds from

 

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the sale of such Shares in same day funds delivered to an account designated by
the Company. If the Company or its transfer agent (if applicable) shall default
on its obligation to deliver Shares on any Delivery Date, the Company shall
(A) indemnify and hold the Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (B) pay the Agent
any commission to which it would otherwise be entitled absent such default. If
the Agent breaches this Agreement by failing to deliver the applicable Net
Proceeds on any Delivery Date for Shares delivered by the Company, the Agent
will pay the Company interest based on the effective overnight federal funds
rate until such Net Proceeds, together with such interest, have been fully paid.

(j)    The Company agrees that any offer to sell, any solicitation of an offer
to buy, or any sales of Shares or any other equity security of the Company shall
only be effected by or through the Agent, from the period beginning one
Regulation M Business Day prior to the time when the first sale pursuant to a
Placement Notice occurs, to the extent Regulation M is applicable, and
continuing through the time such Placement Notice is in effect; provided,
however, that the foregoing limitation shall not apply to (i) exercise of any
option, warrant, right or any conversion privilege set forth in the instrument
governing such security or any other security of the Company or (ii) sales
solely to employees or security holders of the Company or its Subsidiaries, or
to a trustee or other person acquiring such securities for the accounts of such
persons.

(k)    The Company consents to the Agent trading in the Common Stock for the
Agent’s own account and for the account of its clients at the same time as sales
of the Shares occur pursuant to this Agreement or pursuant to a Terms Agreement.

(l)    The Company acknowledges and agrees that (i) there can be no assurance
that the Agent will be successful in selling Shares, (ii) the Agent may not
solicit any offers to buy the Shares, (iii) the Agent will incur no liability or
obligation to the Company or any other person or entity if it does not sell
Shares for any reason other than a failure by the Agent to use its commercially
reasonable efforts consistent with its normal trading and sales practices to
sell such Shares as required under this Section 2, subject to the limitations
and provisions in this Section 2 or as may otherwise be agreed to between the
parties from time to time and (iv) the Agent shall be under no obligation to
purchase Shares on a principal basis pursuant to this Agreement, except as
otherwise agreed by the Agent and the Company in a Terms Agreement.

(m)    At each Applicable Time, each Delivery Date and each Representation Date,
the Company and the Bank shall be deemed to have affirmed each representation,
warranty, covenant and other agreement contained in this Agreement.

3.     (a) If the Company wishes to issue and sell the Shares other than as set
forth in Section 2 of this Agreement (an “Alternative Placement”), it will
notify the Agent of the proposed terms of such Alternative Placement. If the
Agent, acting as principal or agent, wishes to accept such proposed terms and
the Company wishes to enter into an Alternative Placement with the Agent (which
it may decline to do for any reason in its sole discretion) or, following
discussions with the Company wishes to accept amended terms, then the Agent and
the Company will enter into a Terms Agreement, setting forth the terms of such
Alternative Placement.

 

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(b)    The terms set forth in a Terms Agreement will not be binding on the
Company or the Agent unless and until the Company and the Agent have each
executed such Terms Agreement accepting all of the terms of such Terms
Agreement. In the event of a conflict between the terms of this Agreement and
the terms of a Terms Agreement, the terms of such Terms Agreement will control.

4.    (a) Notwithstanding any other provision of this Agreement, (i) the Company
shall not offer or sell, or request the offer or sale of, any Shares, (ii) the
Company, by notice to the Agent given by telephone (confirmed promptly by
e-mail), shall cancel any instructions for the offer or sale of Shares, and
(iii) the Agent shall not be obligated to offer or sell any Shares, (x) unless
otherwise agreed to in writing by the parties hereto (which agreement may be
contained in a Placement Notice or in such other instructions provided by the
Company to the Agent pursuant to Section 2(b)) during any period in which the
Company’s insider trading policy, as it exists on the date of this Agreement,
would prohibit the purchases or sales of the Common Stock by its officers or
directors, (y) at any time or during any period that the Company is in
possession of material non-public information or (z) except as provided
in Section 4(b) below, at any time from and including the date (each, an
“Announcement Date”) on which the Company shall issue a press release
containing, or shall otherwise publicly announce, its earnings, revenues or
other results of operations (each, an “Earnings Announcement”) through and
including the time that is twenty-four (24) hours after the time that the
Company files (a “Filing Time”) a Quarterly Report on Form 10-Q or an Annual
Report on Form 10-K that includes consolidated financial statements as of and
for the same period or periods, as the case may be, covered by such Earnings
Announcement. For purposes of this Section 4(a) and Section 4(b) below,
references to “twenty-four (24) hours” shall exclude any hours in a day that is
not a business day.

(b)    If the Company wishes to offer or sell Shares on any date during the
period from and including an Announcement Date through and including the time
that is twenty-four (24) hours after the corresponding Filing Time, the Company
shall (i) prepare and deliver to the Agent (with a copy to counsel to the Agent)
a Current Report on Form 8-K which shall include substantially the same
financial and related information as was set forth in the relevant Earnings
Announcement (other than any earnings projections or similar forward-looking
data) (each, an “Earnings 8-K”), in form and substance reasonably satisfactory
to the Agent, and obtain the consent of the Agent to the filing thereof (such
consent not to be unreasonably withheld or delayed), (ii) provide the Agent with
the officers’ certificate and accountants’ letter called for
by Section 5(o) and Section 5(q), respectively, and (iii) file such Earnings 8-K
with the Commission. If the Company fully satisfies the requirements of clauses
(i) through (iii) of this Section 4(b), then the provisions of clause
(ii) of Section 4(a) shall not be applicable for the period from and after the
time at which the foregoing conditions shall have been satisfied (or, if later,
the time that is twenty-four (24) hours after the time that the relevant
Earnings Announcement was first publicly released) through and including the
time that is twenty-four (24) hours after the Filing Time of the relevant
Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may
be. For purposes of clarity, the parties hereto agree that (A) the delivery of
any officers’ certificate or accountants’ letter pursuant to
this Section 4(b) shall not relieve the Company from any of its obligations
under this Agreement with respect to any such Quarterly Report on Form 10-Q or
Annual Report on Form 10-K, as the case may be, including, without limitation,
the obligation to deliver officers’ certificates, accountants’ letters and legal
opinions and related letters as provided in Section 7 hereof,
(B) this Section 4(b) shall in no way

 

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affect the provisions of clause (x) of Section 4(a), which shall have
independent application and (C) the provisions of this Section 4(b) shall in no
way affect the Company’s ability to file, subject to compliance with other
applicable provisions of this Agreement, Current Reports on Form 8-K relating to
earnings or other matters.

5.    The Company agrees with the Agent:

(a)    To prepare the Prospectus in a form approved by the Agent and to file
such Prospectus pursuant to Rule 424(b) of the 1933 Act Regulations (without
reliance on Rule 424(b)(8) of the 1933 Act Regulations) not later than the
Commission’s close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430B of the 1933 Act Regulations (or, if applicable,
Rule 430A of the 1933 Act Regulations); to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be
disapproved by the Agent promptly after reasonable notice thereof; to advise the
Agent, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement or any Rule 462(b) Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Agent with copies thereof; to
advise the Agent, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Issuer-Represented Free Writing Prospectus or Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement, any Issuer-Represented Free Writing Prospectus or
Prospectus (in each case, including any document incorporated or deemed to be
incorporated by reference therein) or for additional information; and in the
event of the issuance of any stop order or of any order preventing or suspending
the use of any Issuer-Represented Free Writing Prospectus or Prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order.

(b)    The Company will, during any period when the delivery of a prospectus is
required in connection with the offering or sale of Shares (including, without
limitation, pursuant to Rule 173(d) of the 1933 Act Regulations), if any event
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or,
if for any other reason it shall be necessary to amend or supplement the
Prospectus (including, without limitation, any document incorporated by
reference therein) in order to comply with the 1933 Act or the 1934 Act, notify
the Agent and, upon its request, file such document and prepare and furnish
without charge to the Agent as many copies as the Agent may from time to time
reasonably request of an amended or supplemented Prospectus (or incorporated
document, as the case may be) that will correct such statement or omission or
effect such compliance. Upon such notification, the Agent will cease selling the
Shares on the Company’s behalf pursuant to this Agreement and suspend the use of
the Prospectus until such amendment or supplement is filed; provided, however,
that such suspension or termination shall not affect or impair the parties’
respective obligations with respect to the Shares sold hereunder or which an
investor has agreed to purchase but which has not been delivered by the Company
and paid for by such investor as contemplated hereby, prior to the giving of
such notice.

 

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(c)    The Company represents and agrees that, unless it obtains the prior
written consent of the Agent, and the Agent represents and agrees that, unless
it obtains the prior written consent of the Company, it has not made and will
not make any offer relating to the Shares that would constitute an “issuer free
writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations, or that
would otherwise constitute a “free writing prospectus,” as defined in Rule 405
of the 1933 Act Regulations, required to be filed with the Commission. Any such
free writing prospectus consented to by the Company and the Agent is hereinafter
referred to as a “Permitted Free Writing Prospectus.” The Company represents
that it has treated and agrees that it will treat each Permitted Free Writing
Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and
has complied and will comply with the requirements of Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely filing with the Commission
where required, legending and record keeping. The Company represents that it has
satisfied the conditions in Rule 433 to avoid a requirement to file with the
Commission any electronic road show.

(d)     Promptly from time to time, to take such action as the Agent may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such states and other jurisdictions as the Agent may
reasonably request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction or subject itself to taxation in any such jurisdiction if it is
otherwise not so subject.

(e)        Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement during the period in which a
prospectus is required to be delivered under the 1933 Act or the 1934 Act in
connection with any sale of Shares (including, without limitation, pursuant to
Rule 173(d) of the 1933 Act Regulations), to furnish the Agent with copies of
the Prospectus in New York City in such quantities as the Agent may from time to
time reasonably request, and, if the delivery of a prospectus is required at any
time prior to the expiration of nine (9) months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and if at such
time any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order to
comply with the 1933 Act or the 1933 Act Regulations, to notify the Agent and
upon its request to prepare and furnish without charge to the Agent and to any
dealer in securities as many copies as the Agent may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case the Agent is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine (9) months or more after the time of issue of
the Prospectus, upon its request, to prepare and deliver to the Agent as many
copies as the Agent may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the 1933 Act.

 

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(f)    To make generally available to its securityholders as soon as
practicable, an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the 1933 Act and the 1933
Act Regulations (including Rule 158).

(g)    Until completion of the distribution of the Shares or such time as the
Company is no longer subject to the requirements of the 1934 Act, the Company
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.

(h)    During a period of five (5) years from the date of the latest effective
date of the Registration Statement, to furnish to the Agent copies of all
reports or other communications (financial or other) furnished to shareholders,
and to deliver to the Agent as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed; provided, however, that any such reports or communications that have
been furnished or filed with the Commission and are available on its EDGAR
system, or successor filings system thereto, shall be deemed to have been
furnished to the Agent.

(i)    To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in each of the General
Disclosure Package and the Prospectus under the caption “Use of Proceeds”.

(j)    If the Company elects to rely on Rule 462(b) of the 1933 Act Regulations,
the Company shall file a Rule 462(b) Registration Statement with the Commission
in compliance with Rule 462(b) of the 1933 Act Regulations by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement, and the Company shall at
the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) of the 1933 Act Regulations.

(k)    The Company will comply with all requirements of the NASDAQ Global Select
Market with respect to the issuance of the Shares and will use its reasonable
best efforts to cause the Shares to be listed on the NASDAQ Global Select Market
and will file with the NASDAQ Global Select Market all documents and notices
required by the NASDAQ Global Select Market of companies that have securities
that are traded on the NASDAQ Global Select Market to effect such listing.

(l)    If applicable, to file with the Commission such information on Form 10-K
or Form 10-Q as may be required by Rule 463 of the 1933 Act Regulations.

(m)    To comply, and to use its reasonable best efforts to cause the Company’s
directors and officers, in their capacities as such, to comply, in all material
respects, with all effective applicable provisions of the Sarbanes-Oxley Act of
2002 and the rules and regulations thereunder.

(n)    The Company will reasonably cooperate on a timely basis with any
reasonable due diligence request from, or review conducted by, the Agent or its
counsel from time to time in connection with offers and sales of Shares,
including, without limitation, and upon reasonable notice, providing information
and making available documents and appropriate

 

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corporate officers, during regular business hours and at the Company’s principal
offices and/or by telephone, as the Agent or its counsel may reasonably request
(each such process, a “Due Diligence Process”).

(o)    Upon the commencement of the period during which Shares are to be sold as
instructed by the Company under the applicable Placement Notice (as amended by
the corresponding Acceptance if applicable) given hereunder and during the
pendency thereof, promptly after each (i) date the Registration Statement or the
Prospectus shall be amended or supplemented (other than (1) by an amendment or
supplement providing solely for the determination of the terms of the Shares,
(2) in connection with the filing of any report or other document under
Section 13, 14 or 15(d) of the 1934 Act or (3) by a prospectus supplement
relating to the offering of other securities (including, without limitation,
other shares of Common Stock)) (each such date, a “Registration Statement
Amendment Date”) and (ii) date on which the Company shall file (x) an Annual
Report on Form 10-K, Quarterly Report on Form 10-Q or Earnings 8-K or (y) an
amendment to any such document (each such date, a “Company Periodic Report
Date”) (each of the date of the commencement of the offering of Shares under
this Agreement and each Registration Statement Amendment Date and Company
Periodic Report Date is hereinafter referred to as a “Representation Date”), the
Company will furnish or cause to be furnished to the Agent (with a copy to
counsel to the Agent) a certificate dated such Representation Date (or, in the
case of an amendment or supplement to the Registration Statement or the
Prospectus (including, without limitation, by the filing of an Annual Report on
Form 10-K, Quarterly Report on Form 10-Q or Earnings 8-K or any amendment
thereto), the date of the effectiveness of such amendment to the Registration
Statement or the date of filing with the Commission of such supplement or any
such Form 10-K, Form 10-Q, Earnings 8-K or amendment thereto, as the case may
be), in a form reasonably satisfactory to the Agent to the effect that the
statements contained in the certificates referred to in Section 7(i) and (j) of
this Agreement which was last furnished to the Agent are true and correct as of
the date of such certificate as though made at and as of the date of such
certificate (except that such statements shall be deemed to relate to the
Registration Statement, the Prospectus and the General Disclosure Package as
amended and supplemented to the date of such certificate) or, in lieu of such
certificates, a certificate of the same tenor as the certificates referred to
in Section 7(i) and (j), but modified as necessary to relate to the Registration
Statement, the Prospectus and the General Disclosure Package as amended and
supplemented to the date of such certificate. As used in this paragraph, to the
extent there shall be an Applicable Time on or following the applicable
Representation Date, “promptly” shall be deemed to be on or prior to the next
succeeding Applicable Time.

(p)    Upon the commencement of the period during which Shares are to be sold as
instructed by the Company under the applicable Placement Notice (as amended by
the corresponding Acceptance if applicable) given hereunder and during the
pendency thereof, and promptly after a Representation Date, the Company will
furnish or cause to be furnished to the Agent (with a copy to counsel to the
Agent), unless the Agent otherwise agrees in writing, the written opinion and
letter of counsel to the Company, dated such Representation Date (or, in the
case of an amendment or supplement to the Registration Statement or the
Prospectus (including, without limitation, by the filing of an Annual Report on
Form 10-K or Quarterly Report on Form 10-Q or any amendment thereto), the date
of the effectiveness of such amendment to the Registration Statement or the date
of filing with the Commission of such supplement or any such Form 10-K,
Form 10-Q or amendment thereto, as the case may be), in a form and substance

 

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reasonably satisfactory to the Agent and its counsel, of the same tenor as the
opinions and letters referred to in Section 7(c) of this Agreement, but modified
as necessary to relate to the Registration Statement, the Prospectus and the
General Disclosure Package as amended and supplemented to the date of such
opinion and letter or, in lieu of such opinion and letter, counsel last
furnishing any such opinion and letter to the Agent shall furnish the Agent with
a letter substantially to the effect that the Agent may rely on such counsel’s
last opinion and letter to the same extent as though each were dated the date of
such letter authorizing reliance (except that statements in such last opinion
and letter shall be deemed to relate to the Registration Statement, the
Prospectus and the General Disclosure Package as amended and supplemented to the
date of such letter authorizing reliance). As used in this paragraph, to the
extent there shall be an Applicable Time on or following the applicable
Representation Date, “promptly” shall be deemed to be on or prior to the next
succeeding Applicable Time. Solely for the purposes of this paragraph, the term
“Representation Date” shall not include the date of filing of any Earnings 8-K
or any amendment thereto.

(q)    Upon the commencement of the period during which Shares are to be sold as
instructed by the Company under the applicable Placement Notice (as amended by
the corresponding Acceptance if applicable) given hereunder and during the
pendency thereof, and promptly after a Representation Date, the Company will
cause KPMG, LLP, or other independent accountants reasonably satisfactory to the
Agent, to furnish to the Agent (with a copy to counsel to the Agent), unless the
Agent otherwise agrees in writing, a letter, dated such Representation Date (or,
in the case of an amendment or supplement to the Registration Statement or the
Prospectus (including, without limitation, by the filing of an Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Earnings 8-K or any amendment
thereto), the date of the effectiveness of such amendment to the Registration
Statement or the date of filing with the Commission of such supplement or any
such Form 10-K, Form 10-Q, Earnings 8-K or any amendment thereto, as the case
may be), in form reasonably satisfactory to the Agent and its counsel, of the
same tenor as the letter referred to in Section 7(d) hereof, but modified as
necessary to relate to the Registration Statement, the Prospectus and the
General Disclosure Package as amended and supplemented to the date of such
letter. As used in this paragraph, to the extent there shall be an Applicable
Time on or following the applicable Representation Date, “promptly” shall be
deemed to be on or prior to the next succeeding Applicable Time.

(r)    The Company will not, and will cause its Subsidiaries not to, and use
reasonable efforts to cause its affiliates and any person acting on their behalf
not to, directly or indirectly, (i) take any action designed to or that has
constituted or that reasonably would be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company or
(ii) sell, bid for or purchase the Shares to be issued and sold pursuant to this
Agreement, or pay anyone any compensation for soliciting purchases of the Shares
to be issued and sold pursuant to this Agreement other than the Agent.

(s)    During the pendency of any Placement Notice (as amended by the
corresponding Acceptance, if applicable) given hereunder, (i) the Company shall
provide the Agent notice no less than one Regulation M Business Day, to the
extent Regulation M is applicable, before it or any of its subsidiaries or any
person acting on their behalf, directly or indirectly, offers to sell, contracts
to sell, sells, grants any option to sell or otherwise disposes of any Common
Stock (other than Placement Shares offered pursuant to the provisions of this

 

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Agreement) or securities convertible into or exchangeable for Common Stock,
warrants or any rights to purchase or acquire Common Stock; provided, that no
such restriction shall apply in connection with (1) the issuance, grant or sale
of Common Stock, options to purchase Common Stock, restricted stock units for
Common Stock or Common Stock issuable upon the exercise of options or other
equity awards pursuant to any stock option, stock bonus or other stock or
compensatory plan or arrangement described in the Prospectus or (2) the issuance
or sale of Common Stock pursuant to any dividend reinvestment plan that the
Company may adopt from time to time, provided the implementation of such is
disclosed to the Agent in advance; (ii) the Company shall not, and shall cause
any affiliated purchasers (as defined in Rule 100 of Regulation M of the 1933
Act Regulations) of the Company to not, bid for, purchase or induce any other
persons to bid for or purchase Shares; and (iii) the Company shall provide the
Agent notice no less than one Regulation M Business Day, to the extent
Regulation M is applicable, before it or any of its subsidiaries or affiliates
or any person acting on their behalf engages in any special selling efforts or
selling methods with regard to Shares, including but not limited to presenting
at any investor conference or other similar meeting where potential investors
may be present.

6.    The Company covenants and agrees with the Agent that the Company will pay
or cause to be paid the following, whether or not the transactions contemplated
herein are completed (regardless of whether the sale of the Shares is
consummated): (i) the reasonable out-of-pocket expenses incurred by the Agent in
connection with its engagement, including without limitation, outside legal fees
and expenses, marketing, syndication and travel expenses; (ii) the cost of
obtaining all securities and bank regulatory approvals, including any required
FINRA fees, including the filing fees incident thereto; (iii) all fees and
disbursements of the Company’s counsel and accountants in connection with the
registration of the Shares under the 1933 Act and all other expenses in
connection with the preparation, printing and filing of amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Agent and dealers; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state securities as provided in Section 5(d)
hereof, including the fees and disbursements of counsel for the Agent in
connection with such qualification and in connection with the Blue Sky survey
(which counsel’s legal fees would be subject to the cap in Section 6(i) above);
(v) the cost of printing or reproducing this Agreement, the Blue Sky survey,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(vi) the cost and charges of any transfer agent or registrar; (vii); and
(viii) all other costs and expenses incident to the performance of the Company’s
obligations hereunder which are not otherwise specifically provided for in this
Section 6.     Under no circumstances will the Company be obligated to reimburse
the Agent for more than $150,000 of its out-of-pocket expenses. For the
avoidance of doubt, the $150,000 limitation on legal fees and expenses includes
(i) all fees and expenses incurred by the Agent in connection with this offering
through the commencement of this offering, and (ii) all fees and expenses
incurred by the Agent in connection with the engagement letter entered into
between the Agent and the Company dated April 24, 2017.

7.     The obligations of the Agent hereunder shall be subject, in its sole
discretion, to the condition that all representations and warranties and other
statements of the Company herein or in certificates of any officer of the
Company delivered pursuant to the provisions hereof are true and correct as of
the time of the execution of this Agreement, and as of each Representation Date,

 

27

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Applicable Time and Delivery Date, to the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:

(a)     The Prospectus containing the Rule 430B Information shall have been
filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations in
the manner and within the time period required by Rule 424(b) of the 1933 Act
Regulations (without reliance on Rule 424(d)(8) of the 1933 Act Regulations) and
in accordance with Section 5(a) hereof; the Registration Statement, including
any Rule 462(b) Registration Statement, has become effective and no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to the
reasonable satisfaction of the Agent; and FINRA shall have raised no objection
to the fairness and reasonableness of the sales agency terms and arrangements.

(b)     The Agent shall have received the opinion of Harter Secrest & Emery LLP,
counsel for the Company, in form and substance reasonably satisfactory to
counsel for the Agent. Such counsel may also state that, insofar as either such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(c)     The Agent shall have received the opinion of Kilpatrick Townsend &
Stockton LLP, counsel for the Agent. The opinion shall address the matters as
the Agent may reasonably request. In giving such opinion such counsel may rely,
as to all matters governed by the laws of jurisdictions other than the law of
the State of New York and the federal law of the United States, upon the
opinions of counsel satisfactory to the Agent. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.

(d)     On each date specified in Section 5(q), KPMG shall have furnished to the
Agent a letter or letters, dated the respective dates of delivery thereof, in
form and substance as previously provided to counsel to the Agent.

(e)    The Agent shall have received satisfactory evidence of the good standing
or corporate existence of the Company and its Subsidiaries in their respective
jurisdictions of organization, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of such
jurisdictions.

(f)     (i) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in each of
the General Disclosure Package and the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental or
regulatory action, order or decree, otherwise than as set forth or contemplated
in each of the General Disclosure Package and the Prospectus, and (ii) since the
respective dates as of which information is given in each of the Registration
Statement, the General Disclosure Package and the Prospectus there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any change in or affecting the general affairs,

 

28

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management, financial position, capital adequacy for regulatory purposes,
shareholders’ equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in each of the General
Disclosure Package and the Prospectus, or their business affairs, business
prospects or regulatory affairs, the effect of which, in any such case described
in clause (i) or (ii), is in the judgment of the Agent so material and adverse
as to make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Shares being delivered at such Applicable Time or
Delivery Date, as the case may be, on the terms and in the manner contemplated
in each of the General Disclosure Package and the Prospectus.

(g)     On or after the date hereof there shall not have occurred any of the
following: (i) a Material Adverse Effect; (ii) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange,
the NASDAQ Capital Market, the NASDAQ Global Market or the NASDAQ Global Select
Market; (iii) a suspension or material limitation in trading in the Company’s
securities on NASDAQ Global Select Market; (iv) a general moratorium on
commercial banking activities declared by either federal or New York authorities
or a material disruption in commercial banking or securities settlement or
clearance services in the United States; (v) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war; or (vi) the occurrence of any other calamity or
crisis or any change in financial, political or economic conditions in the
United States or elsewhere, including, without limitation, as a result of
terrorist activities occurring after the date hereof, if the effect of any such
event specified in clause (v) or (vi), in the reasonable judgment of the Agent
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Applicable Time or Delivery Date,
as the case may be, on the terms and in the manner contemplated in each of the
General Disclosure Package and the Prospectus or to enforce contracts for the
sale of Shares.

(h)    The Common Stock (including the Shares) is and continues to be registered
pursuant to Section 12(b) of the 1934 Act and is listed on the NASDAQ Global
Select Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
1934 Act or delisting the Common Stock from the NASDAQ Global Select Market, nor
has the Company received any notification that the Commission or FINRA is
contemplating terminating such registration or listing.

(i)    The Agent shall have received a certificate of the Chief Executive
Officer of the Company and of the Chief Financial Officer of the Company on each
Representation Date specified in Section 5(o) to the effect that (i) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though made at and as of each Representation Date,
(ii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to each Representation
Date, and (iii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are to their knowledge contemplated by the
Commission.

(j)     The Agent shall have received a certificate from the President of the
Bank and of the Chief Financial Officer of the Bank or Chief Accounting Officer
of the Bank, dated as of each Representation Date to the effect that the
representations and warranties in Section 1(b)

 

29

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hereof are true and correct with the same force and effect as though made at and
as of each Representation Date.

(k)    The Company shall have furnished or cause to be furnished promptly to the
Agent a Placement Notice or such other instructions provided pursuant to
Section 2(b) as requested by the Agent;

(l)    The Company and the Agent hereby agree that the date of commencement of
sales under this Agreement shall be the date the Company and the Agent mutually
agree (which may be later than the date of this Agreement).

8.    (a) The Company agrees to indemnify and hold harmless the Agent, each
person, if any, who controls any Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, and its respective partners, directors,
officers, employees and agents and each affiliate of an Agent within the meaning
of Rule 405 against any losses, claims, damages or liabilities, joint or
several, to which an Agent may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
General Disclosure Package, the Prospectus, or any individual Issuer-Represented
Limited-Use Free Writing Prospectus, which considered together with the General
Disclosure Package, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and will
reimburse the Agent for any legal or other expenses reasonably incurred by the
Agent in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
the General Disclosure Package, the Prospectus, or any individual
Issuer-Represented Limited-Use Free Writing Prospectus, which considered
together with the General Disclosure Package, or any amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Agent expressly for use therein, provided that the Company and
the Agent hereby acknowledge and agree that the only information that the Agent
has furnished to the Company consists solely of the information described as
such in subsection (b) below.

(b)     The Agent agrees to indemnify and hold harmless the Company, its
officers, directors and each person, if any, who controls the Company, within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any losses, claims, damages or liabilities to which the Company may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the General Disclosure Package, the
Prospectus, or any individual Issuer-Represented Limited-Use Free Writing
Prospectus, which considered together with the General Disclosure Package, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein

 

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or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, the General
Disclosure Package, the Prospectus, or any individual Issuer-Represented
Limited-Use Free Writing Prospectus, which considered together with the General
Disclosure Package, or any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company by any Agent
expressly for use therein (provided, however, that the Company and the Agent
hereby acknowledge and agree that the only such information that any Agent has
furnished to the Company consists solely of the following: (i) the statements
set forth in the final sentence of the first paragraph under the “Plan of
Distribution” in the Prospectus Supplement, and (ii) such other statements as
the Agent may, by notice given to the Company in writing after the date of this
Agreement, have been furnished to the Company by the Agent specifically for
inclusion in the Registration Statement, the Prospectus, the General Disclosure
Package, any Issuer-Represented Limited-Use Free Writing Prospectus or any
amendment or supplement thereto (collectively, the “Agent’s Information”) and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.

(c)     Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability that it may have to any indemnified party
otherwise than under such subsection, unless the indemnifying party has been
prejudiced thereby. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party which consent shall not be unreasonably withheld,
conditioned or delayed, be counsel to the indemnifying party), provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to its and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses of such indemnified party
or parties (but not to control the defense of such action as to the indemnifying
party) and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties, and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than
one separate counsel (together with, to the extent necessary in the
circumstances, one separate local counsel in the jurisdiction in which such
action is pending)

 

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to represent all indemnified parties, approved by the indemnifying party) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of one counsel for the
indemnified party or parties (in addition to local counsel) shall be at the
expense of the indemnifying party. The indemnifying party under this Section 8
shall not be liable for any settlement or compromise of or agreed judgment in
any proceedings effected or agreed to without its prior express written consent,
but if any such proceeding is settled or compromised, or an agreed judgment is
entered into, with such consent or if there be a final judgment (other than an
agreed judgment) rendered in favor of for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement, compromise, agreed judgment
or other judgment. No indemnifying party shall, without the written consent of
the indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.

(d)     If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Agent on the other from the offering of
the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company, on the one hand, and the Agent, on the other,
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Agent, on the other, shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Agent. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or the Agent,
on the other, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Agent agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim.

 

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(e)     The obligations of the Company under this Section 8 shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls (within the
meaning of the 1933 Act) the Agent, or any of the respective partners,
directors, officers and employees of the Agent or any such controlling person.
The obligations of the Agent under this Section 8 shall be in addition to any
liability which the Agent may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls (within the meaning
of the 1933 Act) the Company or any of the directors and officers of the Company
or any such controlling person.

(f)     The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to an
indemnified party at law or in equity.

9.     (a) The Company shall have the right, by giving written notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that (i) with respect to any pending sale through the Agent for the
Company, the obligations of the Company, including in respect of compensation of
the Agent, shall remain in full force and effect notwithstanding such
termination and (ii) the representations and warranties in Section 1 and the
provisions of Sections 6, 8, 12, 13, 14, 15 and 16 of this Agreement shall
remain in full force and effect notwithstanding such termination.

(b)    The Agent shall have the right, by giving written notice as hereinafter
specified, to terminate this Agreement in its sole discretion at any time. Any
such termination shall be without liability of any party to any other party
except that the representations and warranties in Section 1 and the provisions
of Sections 6, 8, 12, 13, 14, 15 and 16 of this Agreement shall remain in full
force and effect notwithstanding such termination.

(c)    This Agreement shall remain in full force and effect unless terminated
pursuant to Section 9(a) or Section 9(b) above or otherwise by mutual agreement
of the parties; provided, that any such termination shall in all cases be deemed
to provide that the representations and warranties in Section 1 and the
provisions of Sections 6, 8, 12, 13, 14, 15 and 16 of this Agreement shall
remain in full force and effect notwithstanding such termination and will
automatically terminate following the sale of the Shares having an aggregate
gross sales price of $40 million.

(d)    Any termination of this Agreement shall be effective on the date
specified in such notice of termination or the date mutually agreed by the
parties, as the case may be; provided, that such termination shall not be
effective until the close of business on the date of receipt of such notice by
the Agent or the Company, or the date mutually agreed by the parties, as the
case may be. If such termination shall occur prior to the Delivery Date for any
sale of Stock, such sale shall settle in accordance with the provisions
of Section 2(i) hereof.

10.     The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Agent, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of the Agent

 

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or any controlling person of the Agent, or the Company, or any officer or
director or controlling person of the Company, and shall survive delivery of and
payment for the Shares.

11.    If this Agreement is terminated, the Company shall not then be under any
liability to the Agent except as provided in Section 6 and Section 8 hereof,
which provisions shall survive termination.

12.    The Company acknowledges and agrees that:

(a)    in connection with the sale of the Shares, the Agent has been retained
solely to act as a sales agent, and no fiduciary, advisory or agency
relationship between the Company or the Bank, on the one hand, and the Agent, on
the other hand, has been created in respect of any of the transactions
contemplated by this Agreement;

(b)    it has been advised that the Agent and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and that the Agent has no obligation to disclose such interests
and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; and

(c)    it waives, to the fullest extent permitted by law, any claims it may have
against the Agent for breach of fiduciary duty or alleged breach of fiduciary
duty and agrees that the Agent shall have no liability (whether direct or
indirect) to the Company in respect of such a fiduciary duty claim or to any
person asserting a fiduciary duty claim on behalf of or in right of the Company,
including shareholders, employees, depositors or creditors of the Company.

13.    All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Agent shall be delivered or sent by mail, overnight
delivery service or facsimile transmission to the Agent at Sandler O’Neill +
Partners, L.P., 1251 Avenue of the Americas, 6th Floor, New York, New York
10020, Attention: General Counsel, with a copy to Kilpatrick Townsend & Stockton
LLP, 607 14th Street, NW, Suite 900, Washington, DC 20005, Attention: Christina
M. Gattuso, Esq.; and if to the Company shall be delivered or sent by mail or
facsimile to Financial Institutions, Inc., 220 Liberty Street, Warsaw, NY 14569
Attention: General Counsel, with a copy to Harter Secrest & Emery LLP, 1600
Bausch & Lomb Place, Rochester, NY 14604-2711, Attention: Craig S. Wittlin, Esq.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.

14.     This Agreement shall be binding upon, and inure solely to the benefit
of, the Agent and the Company, and, to the extent provided in Sections 8 hereof,
the officers and directors of the Company and each person who controls the
Company or the Agent, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from the
Agent shall be deemed a successor or assign by reason merely of such purchase.

15.     Time shall be of the essence of this Agreement. As used herein, the term
“business day” shall mean any day when the Commission’s office in Washington,
D.C. is open for business.

16.     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD

 

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TO CONFLICT OF LAWS PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.

THE COMPANY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES, HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY,
IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT. THE COMPANY, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES, IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

17.     This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
Any facsimile or electronically transmitted copies hereof or signatures hereon
shall, for all purposes, be deemed originals.

18.     No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective
unless the same shall be in writing and signed by the parties hereto.

19.     The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.

20.    This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company, the Bank and the Agent, or any of
them, with respect to the subject matter hereof.

[Signatures on Next Page]

 

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If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Agent, the Bank and the Company.

 

 

Very truly yours,

 

FINANCIAL INSTITUTIONS, INC.

By:

 

/s/ Martin K. Birmingham

 

Martin K. Birmingham

 

President and Chief Executive Officer

 

FIVE STAR BANK

By:

 

/s/ Martin K. Birmingham

 

Martin K. Birmingham

 

President and Chief Executive Officer

Accepted as of the date hereof:

SANDLER O’NEILL + PARTNERS, L.P.

 

By:   Sandler O’Neill & Partners, Corp.,   the sole general partner By:  

/s/ Emmett J. Daly

Name:   Emmett J. Daly Title:   Principal

Signature Page to Sales Agency Agreement

 

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SCHEDULE I

Placement Notice Information

Company Representatives

 

  1. Kevin B. Klotzbach

 

  2. William L. Kreienberg

Agent Representatives

Robert A. Kleinert

Steve McAuley

Attention Syndicate Desk

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Schedule II

List of Subsidiaries

 

Banking Subsidiary

   Jurisdiction of Organization

Five Star Bank

   New York

Nonbanking Subsidiary

   Jurisdiction of
Organization

Scott Danahy Naylon, LLC

   New York

Courier Capital, LLC

   New York

Five Star REIT, Inc.

   New York

--------------------------------------------------------------------------------

ANNEX I

Form of Placement Notice

            , 201    

 

From: Financial Institutions, Inc.

   Attention: Martin K. Birmingham

Chief Executive Officer and President

   220 Liberty Street

   Warsaw, NY 14569

 

To: Sandler O’Neill & Partners, L.P.

   Attention: Syndicate Desk

   1251 Avenue of the Americas, 6th Floor

   New York, New York 10020

 

   Subject: Placement Notice

Ladies and Gentlemen:

Pursuant to the terms and subject to the conditions contained in the Sales
Agency Agreement between Financial Institutions, Inc. (the “Company”), and
Sandler O’Neill & Partners, L.P. (the “Agent”) dated            , 201     (the
“Agreement”), I,                     , Chief Executive Officer and President of
the Company, hereby request on behalf of the Company that the Agent sell up to
the lesser of shares of the Company’s common stock, $ .01 par value per share
(the “Common Stock”) having an aggregate gross sales price of up to
$40.0 million, in accordance with the following instructions, if any:

 

First date on which Shares may be sold:                , 201     Last date on
which Shares may be sold:    [Insert first date of next blackout period] Dates
on which Shares may not be sold:    N/A Maximum number of Shares to be sold per
Trading Day:    N/A

Capitalized terms defined in the Agreement shall have the same meanings when
used herein.

ADDITIONAL SALES PARAMETERS MAY BE ADDED, SUCH AS THE MANNER IN WHICH SALES ARE
TO BE MADE BY THE AGENT.

[Signature Page Follows]

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FINANCIAL INSTITUTIONS, INC. By:  

 

  Martin K. Birmingham   President and Chief Executive Officer

 

Accepted as of the date hereof: SANDLER O’NEILL & PARTNERS, L.P. By:   Sandler
O’Neill & Partners Corp., the sole general partner By:  

 

Name:   Title: