Exhibit 10.17
SECOND AMENDMENT TO TERM LOAN CREDIT AGREEMENT
          This Second Amendment, effective as of September 30, 2005, between
Financial Institutions, Inc. (the “Borrower”), a New York corporation having its
head office at 220 Liberty Street, Warsaw, New York 14569 and Manufacturers and
Traders Trust Company (the “Bank”), a New York banking corporation having its
principal banking office at One M&T Plaza, Buffalo, New York 14203.
WITNESSETH:
          WHEREAS, Bank and Borrower previously entered into a Term Loan Credit
Agreement dated as of December 15, 2003 (the “Original Agreement”); and
          WHEREAS, Bank, at Borrower’s request, amended certain provisions of
the Original Agreement, and the form of Promissory Note executed in connection
therewith, in accordance with the provisions of that certain First Amendment to
Term Loan Credit Agreement, dated as of June 15, 2004 (the Original Agreement,
as amended by the First Amendment to Term Loan Credit Agreement, the “Amended
Agreement”); and
          WHEREAS, Bank and Borrower desire to extend the term and further amend
the provisions of the Amended Agreement, and further amend the form of the
Promissory Note executed in connection with the Amended Agreement;
          NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, Bank and Borrower covenant and agree as follows:
     1. Maturity Date.
          The definition of “Maturity Date” contained in Section 1.1 of the
Amended Agreement is hereby amended in its entirety as follows:
          “Maturity Date. December 15, 2010 or such earlier date on which the
Loan is terminated in accordance with the terms hereof.”
     2. Promissory Note.
          The form of Promissory Note attached to the Amended Agreement is
hereby replaced with the form of Promissory Note attached hereto as Exhibit A
(“Replacement Note”), provided that the LIBOR Rate specified therein shall
decrease from 2.00 percentage points above LIBOR to 1.75 percentage points above
LIBOR as of the beginning of the Interest Period immediately following Bank’s
receipt of Borrower’s third quarter 2006 covenant compliance certificate if such
certificate accurately states that that there has been no violation of any of
the affirmative covenants contained in Section V of the Amended Agreement, nor
of any of the negative covenants contained in Section VI

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of the Amended Agreement, as further amended by this Second Amendment, and that
no “Event of Default” specified in Section VII of the Amended Agreement, as
further amended by this Second Amendment, nor any event which with notice or
lapse of time or both would become such an Event of Default, has occurred.
     3. Nonperforming Assets Ratio.
          Section 6.7 of the Amended Agreement is hereby deleted and replaced in
its entirety as follows:
          a6.7. Nonperforming Assets to Total Loans and Other Real Estate Ratio.
The Borrower shall not permit its Nonperforming Assets to Total Loans and Other
Real Estate Ratio to be greater than 5.00%. As used in this Section 6.7,
“Nonperforming Assets to Total Loans and Other Real Estate Ratio” means the
ratio of (A) “Nonperforming Assets” to (B) the sum of (i) “Total Loans”, plus
(ii) “Other Real Estate”; “Nonperforming Assets” means the Consolidated loans,
leases and other assets of the Borrower that are not accruing interest or are
90 days or more past due in the payment of principal or interest, plus
Consolidated “other real estate owned” by the Borrower (“Other Real Estate”);
and “Total Loans” means the Consolidated principal of loans made by Borrower to
unrelated third parties; in each case as shown on the Consolidated financial
statements of Borrower, prepared in accordance with FFIEC requirements.@
     4. Minimum Tangible Common Equity.
          Section 6.9 of the Amended Agreement is hereby deleted and replaced in
its entirety as follows:
          “6.9. Minimum Tangible Common Equity. The Borrower shall not permit
its Tangible Common Equity to be less than $100,000,000.00, as of 9/30/05 and
12/31/05. The minimum amount of Tangible Common Equity specified in the
immediately preceding sentence shall increase $4,000,000.00 at each succeeding
year end thereafter. By way of example, the minimum Tangible Common Equity shall
be $104,000,000.00 as of 12/31/06, and $108,000,000.00 as of 12/31/07. As used
in this Section 6.9, “Tangible Common Equity” means the difference between
(A) the Consolidated stockholder equity in the Borrower, including, but not
limited to, accumulated other comprehensive income accounted for under FASB 115
as gains or losses on securities held for sale, minus (B) the sum of (i) the
Consolidated preferred stockholder equity in the Borrower, and (ii) the
Consolidated goodwill and intangibles of the Borrower; in each case as shown on
the Consolidated financial statements of Borrower, prepared in accordance with
FFIEC requirements.”
     5. Debt Service Coverage Ratio.
          Section 6.10 of the Amended Agreement is hereby deleted and replaced
in its entirety as follows:
          “6.10. Debt Service Coverage Ratio. The Borrower shall not permit, on
a “Rolling

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Four-Quarter Basis”, the ratio of (A) the Consolidated net income of the
Borrower, during any such fiscal period, as shown on the Consolidated financial
statements of Borrower, prepared in accordance with FFIEC requirements, to
(B) the total of (i) the installments of all principal payable by the Borrower
in connection with any indebtedness or other obligation required to be paid
during the next four fiscal quarters and arising from the borrowing of any money
or the deferral of the purchase price of any asset and (ii) the total interest
expense of the Borrower thereon during such next four fiscal quarters,
calculated on the basis of the interest rate(s) applicable to such principal
obligations as of the end of the last fiscal quarter included in the Rolling
Four-Quarter Basis, in each case excluding the one-time costs associated with
the Borrower’s consolidation of it’s four subsidiary banks into one, and as
shown on the financial statements of Borrower, prepared in accordance with FFIEC
requirements, to be less than the following for the specified measurement date:

     
9/30/05
  1.25 to 1.00
12/31/05 through 9/30/06
  1.75 to 1.00
12/31/06 and thereafter
  1.35 to 1.00.

The measurements for 9/30/05, 12/31/05 and 3/31/06 shall exclude Borrower’s
second quarter 2005 loss of $11,965,000.00. The measurements for 9/30/05,
12/31/05, 3/31/06 and 6/30/06 shall exclude Borrower’s third quarter 2005
after-tax gain on the sale of assets of $5,539,000.00. As used in this
Section 6.10, “Rolling Four-Quarter Basis” means a basis using the most recently
completed four (4) full consecutive fiscal quarters of Borrower which precede
and include the date on which the Debt Service Coverage Ratio is calculated.”
     6. Limitation on Indebtedness.
          A new Section 6.11 is hereby added to the Amended Agreement, as
follows:
          “6.11 Limitation on Indebtedness. Without the Bank’s prior written
consent, the Borrower shall not at any time create, incur or assume, or become
or be liable (directly or indirectly) in respect of, any Indebtedness, other
than Indebtedness arising under or contemplated by this Agreement. For purposes
of this Agreement, “Indebtedness” shall mean any obligation of Borrower which,
in accordance with GAAP, would be classified as indebtedness upon Borrower’s
balance sheet including any footnote thereto prepared at such time and, in any
event shall include, without limitation, and without duplication: (i) all
indebtedness of arising or incurred under or in respect of (A) any guaranties
(whether direct or indirect) by Borrower of the indebtedness, obligations or
liabilities of any other person or entity, or (B) any endorsement by Borrower of
any of the indebtedness, obligations or liabilities of any other person or
entity, or (C) the discount by Borrower, with recourse to Borrower, of any of
the indebtedness, obligations or liabilities of any other person or entity.”

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     7. No Adverse Change.
          A new Section 6.12 is hereby added to the Amended Agreement, as
follows:
          “6.12 No Adverse Change. Borrower shall not suffer or permit (i) any
change to occur in the assets, liabilities or financial condition of Borrower
which, individually or in the aggregate, are materially adverse, or (ii) any
adverse development in the business or in the operations or prospects of
Borrower.”
     8. Regulatory Enforcement.
          A new Section 6.13 is hereby added to the Amended Agreement, as
follows:
          “6.13 Regulatory Enforcement. Neither Borrower nor any of its Material
Subsidiaries shall be subject to any enforcement action by any regulatory body
that are unrelated in cause or nature to the National Bank of Geneva Formal
Agreement or the Bath National Bank Formal Agreement, both of which Formal
Agreements were entered into in September 2003 with the Office of the
Comptroller of the Currency.”
     9. Events of Default.
          Section 7.1(b) of the Amended Agreement is hereby deleted and replaced
in its entirety as follows:
          “(b) The Borrower shall fail to perform any term, covenant or
agreement contained in Sections 5.1(f), 5.5, 6.2, 6.3, 6.5, 6.8, 6.9, 6.10,
6.11, 6.12 or 6.13; or”
     10. Form of CFO Report.
          Exhibit E to the Amended Agreement is hereby deleted in its entirety
and replaced with the Exhibit E attached to this Second Amendment.
     11. Inducement.
          As a material inducement to Bank to enter into this Second Amendment,
the Borrower hereby:

  (a)   agrees that it shall simultaneously execute and deliver to Bank the
Replacement Note, effective as of September 30, 2005;     (b)   represents that
no “Event of Default” specified in Section VII of the Amended Agreement, nor any
event which with notice or lapse of time or both would become such an Event of
Default, has occurred, except as has been disclosed to Bank in writing;

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  (c)   covenants that the representations and warranties contained in
Section IV of the Amended Agreement continue to be true and correct in all
respects on and as of the date of this Second Amendment, with the same force and
effect as if made on and as of the date of this Second Amendment;     (d)  
represents and warrants that there has been no violation of any of the
affirmative covenants contained in Section V of the Amended Agreement, nor of
any of the negative covenants contained in Section VI of the Amended Agreement,
as further amended by this Second Amendment, except as has been disclosed to
Bank in writing;     (e)   agrees it shall, upon the consolidation of Borrower’s
currently existing four operating subsidiary banks, execute and deliver a Pledge
of Securities, in the form attached hereto as Exhibit B, whereby Borrower shall
pledge and deliver the stock of Borrower’s surviving consolidated subsidiary
operating bank, as collateral for all indebtedness of Borrower to Bank, now or
hereafter existing and however evidenced; and     (f)   agrees it shall pay to
Bank a modification fee of $31,250 upon execution of this Second Amendment,
together with Bank’s legal fees arising out of or in connection with this Second
Amendment.

     12. Applicability of Amended Agreement Provisions.
          Except as they may have been specifically amended by this Second
Amendment, the terms and conditions of the Amended Agreement, remain in full
force and effect.
     IN WITNESS WHEREOF, the parties have caused this Second Amendment to be
executed by their duly authorized officers as of the day and year first above
written.

                  FINANCIAL INSTITUTIONS, INC.    
 
           
 
  By:        
 
     
 
   
 
  Its:        
 
     
 
   
 
                MANUFACTURERS AND TRADERS         TRUST COMPANY    
 
           
 
  By:        
 
     
 
   
 
  Its:        
 
     
 
   

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ACKNOWLEDGMENTS

             
STATE OF NEW YORK
    )      
 
          : ss.
COUNTY OF                     
    )      

On the                      day of October, in the year 2005, before me, the
undersigned, a Notary Public in and for said State, personally appeared Ronald
A. Miller , personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
                                                                                
Notary Public

             
STATE OF                     
    )      
 
          : ss.
COUNTY OF                     
    )      

On the                      day of October, in the year 2005, before me, the
undersigned, a Notary Public in and for said State, personally appeared
Christopher Padgett , personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
                                                                                
Notary Public

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(M&T BANK LOGO) [l16636al1663600.gif]
LIBOR TERM NOTE
New York

Buffalo, New York September 30, 2005   $25,000,000.00

BORROWER: FINANCIAL INSTITUTIONS, INC.
a(n) o individual(s) o partnership x corporation o trust o                     
organized under the laws of New York
Address of residence/chief executive office: 220 Liberty Street, Warsaw, New
York 14569
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M&T Plaza, Buffalo, New York 14240,
Attention: Office of General Counsel
1. DEFINITIONS. As used in this Note, each capitalized term shall have the
meaning specified in the Note or as it appears in initial capitalization.
Additionally, the following terms shall have the indicated meanings:

  a.   “Authorized Person” shall mean, each individually, Ronald A. Miller.
Mention of the Authorized Person’s name is for reference purposes only and the
Bank may rely on a person’s title to ascertain whether someone is an Authorized
Person.     b.   “Applicable Rated” shall mean either the LIBOR Rate, the Base
Rate, or the Fixed Rate as the case may be.     c.   “Adjustment Date” shall
mean two (2) Business Days before the last day of the Interest Period selected
below (see LIBOR Rate definition).     d.   “Base Rate” shall mean 0 percentage
points above the rate of interest announced by the Bank as its prime rate of
interest.     e.   “Business Day” shall mean any day of the year on which
banking institutions in New York, New York are not authorized or required by law
or other governmental action to close and, in connection with the LIBOR Rate, on
which dealings are carried on in the London interbank market.     f.  
“Continuation Date” shall mean the last day of each Interest Period.     g.  
“Conversion Date” shall mean the date on which Borrower’s election to convert
the LIBOR Rate applicable to this Note to a Fixed Rate becomes effective in
accordance with this Note.     h.   “Fixed Rate” shall mean 2.00    percentage
points above the most recent yield on the United States Treasury Obligations
adjusted to a constant maturity having a term most nearly corresponding to, but
not greater than, the unexpired portion of the term of this Note, in effect two
(2) Business Days prior to the Conversion Date, as published by the Board of
Governors of the Federal Reserve System in the Federal Reserve Statistical
Release H15(519), or by such other quoting service, index or commonly available
source utilized by the Bank, plus the “ask” side of the swap spread most nearly
corresponding to, but not greater than, the unexpired portion of the term of
this Note, in effect two (2) Business Days prior to the Conversion Date, as set
forth in Bloomberg, L.P., or by such other quoting service, index or commonly
available source utilized by the Bank.     i   “Interest Period” shall mean, as
to the LIBOR Rate, the period commencing on the date of this Note or
Continuation Date (as the case may be) and ending on, with respect thereto, the
numerically corresponding day (or, if there is no numerically corresponding day,
on the last day) of the calendar month that is one (1), two (2), three (3) or
six (6) months thereafter (as selected by Borrower below); provided, however,
that if an Interest Period would end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the immediately preceding Business
Day.     j.   “LIBOR” shall mean the rate per annum (rounded upward, if
necessary, to the nearest 1/16th of 1%) obtained by dividing (i) the one-day,
one-month, two-month,or three-month or six -month interest period London
Interbank Offered Rate (as selected by Borrower) as fixed by the British Bankers
Association for United States dollar deposits in the London Interbank Eurodollar
Market at approximately 11:00 a.m. London, England time (or as soon thereafter
as practicable) as determined by the Bank from any broker, quoting service or
commonly available source utilized by the Bank by (ii) a percentage equal to
100% minus the stated maximum rate of all reserves required to be maintained
against “Eurocurrency Liabilities” as specified in Regulation D (or against any
other category of liabilities which includes deposits by reference to which the
interest rate on LIBOR Rate Loan or Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States’ office of a bank to United States’ residents) on such date to any member
bank of the Federal Reserve System. Notwithstanding any provision above, the
practice of rounding to determine LIBOR may be discontinued at any time in the
Bank’s sole discretion.     k.   “LIBOR Rate” shall mean 2.00 percentage points
above LIBOR with an initial Interest Period duration of o one month, o two
months, x three months or o six months. (Select applicable Interest Period. If
no interest period is selected, the one month interest period shall apply.)    
l.   “Maturity Date” is the Payment Due Day in December , 2010 .     m.  
“Payment Due Day” shall mean the 15th day of each calendar month; provided,
however, if that day is not a Business Day, the Payment Due Day shall be
extended to the next succeeding Business Day.     n.   “Principal Amount” shall
mean Twenty-Five Million and 00/100 Dollars ($ 25,000,000.00 ).

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2. PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.
     a. Promise to Pay. For value received, and intending to be legally bound,
Borrower promises to pay to the order of the Bank on the dates set forth below,
the Principal Amount, plus interest as agreed below and all fees and costs
(including without limitation attorneys’ fees and disbursements whether for
internal or outside counsel) the Bank incurs in order to collect any amount due
under this Note, to negotiate or document a workout or restructuring, or to
preserve its rights or realize upon any guaranty or other security for the
payment of this Note (aExpenses@).
     b. Initial Applicable Rate. The initial Applicable Rate shall be the LIBOR
Rate based on the Interest Period (with the duration selected by Borrower) in
effect two (2) Business Days before the date of this Note. The initial Interest
Period shall start on the date of this Note.
     c. Interest. Interest shall accrue on the outstanding Principal Amount
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) at the Applicable Rate that on each day shall be:

  i.   If the LIBOR Rate is the Applicable Rate. Interest shall accrue on the
Principal Amount from and including the first day of the Interest Period (with
the duration selected by Borrower) until, but not including, the last day of
such Interest Period or the day the Principal Amount is paid in full (if sooner)
at a rate per annum equal to the LIBOR Rate in effect on the each Adjustment
Date.     ii.   If the Base Rate is the Applicable Rate. Interest shall accrue
on the Principal Amount from and including the first date the Base Rate is the
Applicable Rate to but not including, the day such Principal Amount is paid in
full or the Applicable Rate is converted to the LIBOR Rate or the Fixed Rate, at
the rate per annum equal to the Base Rate. Any change in the Base Rate resulting
from a change in the Bank’s prime rate shall be effective on the date of such
change.     iii.   If the Fixed Rate is the Applicable Rate. Interest shall
accrue on the Principal Amount from and including the first date the Fixed Rate
is the Applicable Rate to but not including, the day such Principal Amount is
paid in full, at the rate per annum equal to the Fixed Rate in effect on the
Conversion Date.

     d. Payment Schedule. Borrower shall pay the outstanding Principal Amount in
the following installments: (i) Six Million Two Hundred Fifty Thousand and
00/100 Dollars ($6,250,000.00) on December 15, 2007; (ii) Six Million Two
Hundred Fifty Thousand and 00/100 Dollars ($6,250,000.00) on December 15, 2008;
(iii) Six Million Two Hundred Fifty Thousand and 00/100 Dollars ($6,250,000.00)
on December 15, 2009; (iv) Six Million Two Hundred Fifty Thousand and 00/100
Dollars ($6,250,000.00) on December 15, 2010; and (v) ONE (1) FINAL INSTALLMENT
on the Maturity Date in an amount equal to the outstanding Principal Amount at
that time together with all other amounts outstanding hereunder including,
without limitation, accrued interest, costs and Expense. In addition, until the
outstanding Principal Amount is paid in full, Borrower shall pay all accrued and
unpaid interest, in amounts which may vary, as follows: (i) if the LIBOR Rate is
the Applicable Rate, on the last day of each Interest Period; (ii) if the Base
Rate is the Applicable Rate, on the Payment Due Date for each month; (iii) if
the Fixed Rate is the Applicable Rate, on the Payment Due Date for each month;
and (iv) at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
     e. Maximum Legal Rate. It is the intent of the Bank and Borrower that in no
event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the “Maximum Legal Rate”). Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled, and, if received by the Bank, shall be refunded to
Borrower.
     f. Default Rate. If an Event of Default (defined below) occurs, the
interest rate on the unpaid Principal Amount shall immediately be automatically
increased to 5 percentage points per year above the higher of the LIBOR Rate or
the Base Rate, and any judgment entered hereon or otherwise in connection with
any suit to collect amounts due hereunder shall bear interest at such default
rate.
     g. Repayment of Principal and Interest; Late Charge. Payments shall be made
in immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank’s then current late charge as announced from time to time. Payments
may be applied in any order in the sole discretion of the Bank but, prior to
default, shall be applied first to past due interest, Expenses, late charges and
principal, then to current interest, Expenses, late charges and principal, and
last to remaining principal.
     h. Prepayment.

  i.   Subject to the following, during the term of this Note, Borrower shall
have the option of paying the Principal Amount to the Bank in advance of the
Maturity Date, in whole or in part, at any time and from time to time upon
written notice received by the Bank at least three (3) business days prior to
making such payment.

  (A)   If (i) Borrower pays, in whole or in part, any Principal Amount when the
Applicable Rate is the LIBOR Rate, before the expiration of its respective
Interest Rate Period, (ii) fails to draw down, in whole or in part, any
Principal Amount when the Applicable Rate is the LIBOR Rate after giving a
request therefor, (iii) otherwise tries to revoke any LIBOR Rate, in whole or in
part, or (iv) there occurs a “Bankruptcy Event “ as hereinafter defined, or the
Applicable Rate is converted from the LIBOR Rate to the Base Rate pursuant to
Section 3(b), then Borrower shall be liable for and shall pay the Bank, on
demand, the actual amount of the liabilities, expenses, costs or funding losses
that are a direct or indirect result of such prepayment, failure to draw, early
termination of

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      an Interest Period, revocation, bankruptcy or otherwise, whether such
liability, expense, cost or loss is by reason of (a) any reduction in yield, by
reason of the liquidation or reemployment of any deposit or other funds acquired
by the Bank, or (b) the fixing of the interest rate payable on any LIBOR Rate
Loans. The determination by the Bank of the foregoing amount shall, in the
absence of manifest error, be conclusive and binding upon Borrower.     (B)   If
Borrower prepays, in whole or in part, any Principal Amount when the Applicable
Rate is the Fixed Rate, then Borrower shall be liable for and shall pay to the
Bank, on demand, an amount equal to the present value of the positive difference
between (i) the amount of interest that would have accrued on the Principal
Amount during the original remaining term of this Note, at the Applicable Rate
in effect on the date of prepayment, minus 2.00 percentage points, and (ii) the
amount of interest that would have accrued on the Principal Amount during the
original remaining term of this Note at the Current Market Rate. aCurrent Market
Rate@ shall mean the most recent yield on United States Treasury Obligations
adjusted to a constant maturity having a term most nearly corresponding to, but
not greater than, the term remaining from the date of prepayment to the original
Maturity Date, in effect two (2) business days prior to the date of prepayment
as published by the Board of Governors of the Federal Reserve System in the
Federal Reserve Statistical Release H.15 (519), or by such other quoting
service, index or commonly available source utilized by the Bank, plus the “ask”
side of the swap spread most nearly corresponding to, but not greater than, the
term remaining form the date of prepayment to the original Maturity Date, in
effect two (2) Business Days prior to the date of prepayment, as set forth in
Bloomberg, L.P., or by such other quoting service, index or commonly available
source utilized by the Bank. The present value calculation used herein shall use
the Current Market Rate as the discount rate and shall be calculated as if each
installment of the Principal Amount had been made during the original remaining
term of this Note. Each partial prepayment of the Principal shall be applied in
inverse order of maturity.     (C)   In addition to any payments due under
subparagraphs (A) and (B) above, Borrower shall be liable for and shall pay to
the Bank, at the time of such prepayment, a premium of one percent (1%) of the
amount so prepaid, provided that Borrower may make such prepayment in an amount
of up to $3,000,000.00 per annum, non-cumulative, on December 15th of each year,
commencing December 15, 2006, without being liable for or required to pay such
1% premium.

  ii.   Upon making any prepayment of the Principal Amount in whole, Borrower
shall pay to the Bank all interest and Expenses owing pursuant to the Note and
remaining unpaid. Each partial prepayment of the Principal Amount shall be
applied in inverse order of maturity to the principal included in the
installments provided herein.     iii.   In the event the Maturity Date is
accelerated following an Event of Default by Borrower, any tender of payment of
the amount necessary to satisfy the entire indebtedness made after such Event of
Default shall be expressly deemed a voluntary prepayment. In such a case, to the
extent permitted by law, the Bank shall be entitled to the amount necessary to
satisfy the entire indebtedness, plus the appropriate prepayment premium
calculated in accordance with this Section 2(h).

3. CONTINUATIONS AND CONVERSIONS.
     a. Expiration of Interest Period. Subject to Section 3(b) and Section 3(c),
upon the expiration of the first Interest Period and each Interest Period
thereafter, on the Continuation Date the LIBOR Rate will be automatically
continued with an Interest Period of the same duration as the Interest Period
duration initially selected by Borrower, unless Borrower shall have delivered
notice to the Bank of Borrower’s selection of an alternative Interest Period,
set forth in Section 1(i), by 2:00 p.m. (Eastern Time) at least two (2) Business
Days prior to the expiration of the then applicable Interest Period.
     b. Conversion Upon Default. Unless the Bank shall otherwise consent in
writing, if (i) Borrower has failed to pay when due, in whole or in part, the
indebtedness under the Note (whether upon maturity, acceleration or otherwise),
or (ii) there exists a condition or event which with the passage of time, the
giving of notice or both shall constitute an Event of Default, the Bank, in its
sole discretion, may (i) permit the LIBOR Rate to continue until the last day of
the applicable Interest Period at which time such the Applicable Rate shall
automatically be converted to the Base Rate or (ii) convert the LIBOR Rate to
the Base Rate before the end of the applicable Interest Period. Notwithstanding
the foregoing, if Borrower commences, or has commenced against it, any
proceeding or request for relief under any bankruptcy, insolvency or similar
laws now or hereafter in effect in the United States of America or any state or
territory thereof or any foreign jurisdiction or any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against
or winding up of affairs of Borrower (a “Bankruptcy Event”), the Applicable Rate
shall be automatically converted to the Base Rate without further action by the
Bank and Borrower shall have no right to have the Applicable Rate converted from
the Base Rate to the LIBOR Rate. Nothing herein shall be construed to be a
waiver by the Bank to have the Principal Amount accrue interest at the Default
Rate or the right of the Bank to the amounts set forth in Section 2(h) of this
Note.
     c. Conversion To Fixed Rate. During the term of this Note, Borrower shall
have a one (1) time option to convert the Applicable Rate to the Fixed Rate, for
the whole of the then remaining term of this Note and with respect to the then
total outstanding Principal Amount, subject to all of the following conditions:

  i)   an Authorized Person must deliver to the Bank by 2:00 p.m. (Eastern Time)
on a Business Day a Notice of Conversion (“Notice of Conversion”) for an
election under this Section 3(c) .     ii)   The Continuation Date shall be the
later of (A) two (2) Business Days from the Business Day the Bank receives the
Notice of Conversion in accordance with the foregoing Section or (B) the last
day of the relevant Interest Period if a Notice of Conversion is received by the
Bank more than two (2) Business Days before the last day of an Interest Period.
If a Notice of Conversion is received after 2:00 p.m. (Eastern Time), the Notice
of Conversion will be deemed to have been received on the next Business Day.
Notice of Conversion received more than two (2) Business Days before the end of
an Interest Period

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      shall be deemed to have been received two (2) Business Days before the end
of such Interest Period for purposes of determining the Fixed Rate for the
remaining term of this Note pursuant to Section 1(h). Accordingly, if, for
example, Borrower has a LIBOR Rate Loan with a one month Interest Period ending
on June 15 and wants to convert the LIBOR Rate to the Fixed Rate, Borrower must
deliver its Notice of Conversion to the Bank by 2:00 p.m. (Eastern Time) on
June 13 (provided that June 13 and June 14 are Business Days).     iii)   The
Bank may take action in reliance upon any oral, telephonic, written or
teletransmitted Notice of Conversion that the Bank in good faith believes to be
valid and to have been made by Borrower or on behalf of Borrower by an
Authorized Person. No Notice of Conversion may be delivered by e-mail. The Bank
may act on the Notice of Conversion from any Authorized Person until the Bank
shall have received from Borrower, and had a reasonable time to act on, written
notice revoking the authority of such Authorized Person. The Bank shall incur no
liability to Borrower or to any other person as a direct or indirect result of
acting on any Notice of Conversion under this Note. The Bank, in its sole
discretion, may reject any Notice of Conversion that is incomplete.     iv)   If
the Bank shall determine that for any reason adequate and reasonable means do
not exist for ascertaining the Fixed Rate with respect to this Note, the Bank
will give notice of such determination to Borrower and the Applicable Rate shall
remain equal to the interest rate in effect prior to the Notice of Conversion.  
  v)   Nothing herein shall be construed to be a waiver by the Bank of the right
to accrue interest at the default rate, or of any other rights of the Bank set
forth in this Note.

4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower agrees that the
representations and warranties contained in that certain Term Loan Credit
Agreement, of even date herewith, by and between the Borrower and the Bank (the
“Term Loan Credit Agreement”), are hereby incorporated herein by reference as if
fully set forth herein, which representations and warranties shall continue from
the date hereof until this Note is paid in full.
5. EVENTS OF DEFAULT; ACCELERATION. Upon the occurrence of an “Event of Default”
under the Term Loan Credit Agreement , the Bank shall be entitled to the
remedies set forth in Section 7.2 of the Term Loan Credit Agreement.
6. RIGHT OF SETOFF. After the occurrence of a “Default” as defined in the Term
Loan Credit Agreement, the Bank shall have the right to set off against the
amounts owing under this Note any property held in a deposit or other account
with the Bank or any Affiliate or otherwise owing by the Bank or any Affiliate
in any capacity to Borrower or any guarantor or endorser of this Note. Such
set-off shall be deemed to have been exercised immediately at the time the Bank
or such Affiliate elect to do so.
7. INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.
     a. Increased Costs. If the Bank shall determine that, due to either (a) the
introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any loans
based on LIBOR, then Borrower shall be liable for, and shall from time to time,
upon demand therefor by the Bank and pay to the Bank such additional amounts as
are sufficient to compensate the Bank for such increased costs.
     b. Inability to Determine Rates. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for the
Interest Period specified above, the Bank will give notice of such determination
to Borrower. Thereafter, the Bank may not maintain the loan hereunder at the
LIBOR Rate until the Bank revokes such notice in writing and, until such
revocation, the Bank may convert the Applicable Rate from the LIBOR Rate to the
Base Rate.
     c. Illegality. If the Bank shall determine that the introduction of any law
(statutory or common), treaty, rule, regulation, guideline or determination of
an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
loans at based on LIBOR then, on notice thereof by the Bank to Borrower, the
Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until
the Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist. If the Bank shall determine that it is
unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.
8. MISCELLANEOUS. This Note, together with any related loan and security
agreements and guaranties, contains the entire agreement between the Bank and
Borrower with respect to the Note, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank. All
rights and remedies of the Bank under applicable law and this Note or amendment
of any provision of this Note are cumulative and not exclusive. No single,
partial or delayed exercise by the Bank of any right or remedy shall preclude
the subsequent exercise by the Bank at any time of any right or remedy of the
Bank without notice. No waiver or amendment of any provision of this Note shall
be effective unless made specifically in writing by the Bank. No course of
dealing or other conduct, no oral agreement or representation made by the Bank,
and no usage of trade, shall operate as a waiver of any right or remedy of the
Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank’s course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Borrower hereby waives
protest, presentment and notice of any kind in connection with this Note.
Singular number includes plural and neuter gender includes masculine and
feminine as appropriate.
9. NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank’s records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower’s relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when

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delivered (i) by personal delivery and shall be deemed effective when delivered,
or (ii) by mail or courier and shall be deemed effective three (3) business days
after deposit in an official depository maintained by the United States Post
Office for the collection of mail or one (1) business day after delivery to a
nationally recognized overnight courier service (e.g., Federal Express). Notice
by e-mail is not valid notice under this or any other agreement between Borrower
and the Bank.
10. JOINT AND SEVERAL. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts which become due under this Note
and the term aBorrower@ shall include each as well as all of them.
11. GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by
the Bank and will be deemed to be made in the State of New York. This Note will
be interpreted in accordance with the laws of the State of New York excluding
its conflict of laws rules. Borrower hereby irrevocably consents to the
exclusive jurisdiction of any state or federal court in Erie County, New York;
provided that nothing contained in this Note will prevent the Bank from bringing
any action, enforcing any award or judgment or exercising any rights against
Borrower individually, against any security or against any property of Borrower
within any other county, state or other foreign or domestic jurisdiction.
Borrower acknowledges and agrees that the venue provided above is the most
convenient forum for both the Bank and Borrower. Borrower waives any objection
to venue and any objection based on a more convenient forum in any action
instituted under this Note.
12. WAIVER OF JURY TRIAL. Borrower and the Bank hereby knowingly, voluntarily,
and intentionally waive any right to trial by jury Borrower and the Bank may
have in any action or proceeding, in law or in equity, in connection with this
note or the transactions related hereto. Borrower represents and warrants that
no representative or agent of the Bank has represented, expressly or otherwise,
that the Bank will not, in the event of litigation, seek to enforce this jury
trial waiver. Borrower Acknowledges that the Bank has been induced to enter into
this note by, among other things, the provisions of this Section.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower’s deposit account # “XXXXXX” with the Bank automatically for any amount
which becomes due under this Note.
Acknowledgment. Borrower acknowledges that it has read and understands all the
provisions of this Note, including the Governing Law, Jurisdiction and Waiver of
Jury Trial, and has been advised by counsel as necessary or appropriate.
x Replacement Note. This Note is given in replacement of and in substitution
for, but not in payment of, a note dated December 15, 2003, in the original
principal amount of $25,000,000.00 issued by Borrower to the Bank (or its
predecessor in interest), as the same may have been amended from time to time.

              TAX ID/SS #
                                                                FINANCIAL
INSTITUTIONS, INC.         BORROWER    
 
           
 
  By:        
 
     
 
   
 
                Name: Ronald A. Miller         Its: Senior Vice President & CFO
   

ACKNOWLEDGMENT

     
STATE OF NEW YORK)
   
 
  : SS.
COUNTY OF WYOMING)
   

     On the                      day of October, in the year 2005 , before me,
the undersigned, a Notary Public in and for said State, personally appeared
Ronald A. Miller , personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.

         
 
 
 
Notary Public    

#196723v6

 
FOR BANK USE ONLY
Authorization Confirmed:
                                                                                                                                                                
Product Code: 22660
Disbursement of Funds:

                     
Credit A/C      #
      Off Ck      #       Payoff Obligation      #    
 
                 

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$
      $       $    
 
                   

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(M&T BANK LOGO) [l16636al1663600.gif]
PLEDGE OF SECURITIES
New York
Pledgor: FINANCIAL INSTITUTIONS, INC.
A(n) o individual(s) x corporation o partnership o                     
organized and registered under the laws of the State of New York
Organizational Identification Number (if any):                      (Note: this
number is not the same as the Taxpayer Identification Number.)
Chief executive office/principal residence: 220 Liberty Street, Warsaw, New York
14569
 
Borrower (if not same as Pledgor):
A(n) o individual(s) o corporation o partnership o                     
organized under the laws of the State of
                                        
Chief executive office/principal residence:                 
                                 
                                                                               
 
Bank: Manufacturers and Traders Trust Company (the “Bank”), a New York banking
corporation with its principal office at One M&T Plaza, Buffalo, New York 14240
Attention: Office of General Counsel.
THIS SECURITY AGREEMENT is granted to the Bank by Pledgor in consideration of
and as further security for payment of the Obligations, and for other valuable
consideration, the receipt and sufficiency of which is acknowledged. Pledgor,
intending to be legally bound, agrees with the Bank as follows:
1. DEFINITIONS. All terms unless otherwise defined in this Agreement shall have
the meanings assigned in the Uniform Commercial Code, as the same may be in
effect in the State of New York, as amended from time to time (“UCC”).
     a. “Brokerage Account” means any securities account or commodity account
included in the Collateral at any time together with all credit balances and
money credited to the account, all investment property carried in the account,
and, except as otherwise agreed by the Bank in writing, all other securities
accounts and commodity accounts maintained by Pledgor with the same Institution.
     b. “Collateral” means collectively, whether now owned or hereafter acquired
or existing and wherever located all Pledgor’s investment property described on
Schedule A, which Pledgor has delivered to the Bank or agrees to deliver (or
cause to be delivered or appropriate book-entries made) or otherwise identified
on any Institution’s books and records as being subject to the Bank’s security
interest, whether or not described in any schedule delivered to the Bank,
together with all Brokerage Accounts and all Income and Proceeds. In addition,
the word “Collateral” includes all property of Pledgor (however owned) in the
possession of, or subject to the control of, the Bank (or in the possession of,
or subject to the control of, a third party subject to the control of the Bank
including any Institution), whether now owned or hereafter existing and whether
tangible or intangible in character.
     c. “Control Agreement” means an agreement, in form and substance acceptable
to the Bank in its sole discretion, among Pledgor, the Bank and an Institution
for the purpose of perfecting the security interest granted to the Bank by
Pledgor herein.
     d. Any of the following events or conditions shall constitute an “Event of
Default”: (i) the occurrence of an “Event of Default” under that certain
Revolving Credit Agreement, dated April 25, 2001, as amended from time to time
(“Revolving Credit Agreement”), or that certain Term Loan Credit Agreement,
dated December 15, 2003, as amended from time to time (“Term Loan Agreement”),
by and between the Pledgor and the Bank; (ii) Pledgor defaults in the
performance of any covenant or other provision with respect to any Control
Agreement; or (iii) any Control Agreement is terminated without the consent of
the Bank.
     e. “Income and Proceeds” mean all present and future income, proceeds,
earnings, increases, and substitutions from or for the Collateral of every kind
and nature, whether direct or indirect, including without limitation all
payments, interest, profits, distributions, benefits, rights, options, warrants,
dividends, stock dividends, stock splits, stock rights, regulatory dividends,
distributions, subscriptions, monies, claims for money due and to become due,
proceeds of any insurance on the Collateral, shares of stock of different par
value or no par value issued in substitution or exchange for shares included in
the Collateral (whether voluntary or involuntary, by agreement or by operation
of law), proceeds of any sale, transfer, surrender, redemption, exchange or
other disposition of the Collateral (whether merger, dissolution or liquidation
of the issuer of the Collateral) and all other property Pledgor is entitled to
receive on account of such Collateral, including accounts, documents,
instruments, chattel paper, investment property, and general intangibles.
     f. “Institution” means any (i) securities intermediary (ii) broker; (iii)
issuer; or (iv) any other entity holding or who has issued any of the Collateral
to or on behalf of Pledgor, including, without limitation, any fiduciary.
     g. “Obligations” means collectively, any and all indebtedness and other
liabilities or obligations of Pledgor (or if Pledgor is a partnership, any
general partner of Pledgor) to the Bank of every kind and character and all
extensions, refinancings, renewals, modifications and replacements thereof,
including, without limitation, all unpaid accrued interest thereon and all of
the costs and expenses payable as hereinafter provided: (i) whether now existing
or hereafter incurred; (ii) whether direct, indirect, primary, absolute,
secondary, contractual, tortious, liquidated, unliquidated, contingent, secured,
unsecured, matured or unmatured, by guarantee or otherwise; (iii) whether such
indebtedness or obligations are from time to time reduced and thereafter
increased, or entirely extinguished and thereafter reincurred; (iv) whether such
indebtedness was originally contracted with the Bank or with another or others;
(v) whether or not such indebtedness or obligations are evidenced by a
negotiable or non-negotiable instrument or any other writing; (vi) whether such
indebtedness is contracted by Pledgor alone or jointly or severally with another
or others; and (vii) all indebtedness incurred prior to, during or after any
filing by or against Pledgor of any petition or request for liquidation,
reorganization, arrangement, adjudication as a bankrupt, relief as a debtor, or
other relief under bankruptcy, insolvency, or similar laws now or hereafter in
effect in the United States of America or any state or territory thereof or any
foreign jurisdiction, notwithstanding Pledgor’s legal status as a debtor or a
debtor-in-possession or Pledgor’s discharge in any such proceeding. Obligations
also include, without limitation, all payments recovered from the Bank such as
sums claimed as impermissible set-offs, diversion of trust funds or as a
preference or fraudulent transfer. Such recovered sums shall be reinstated as
Obligations of Pledgor as of the date they arose, but for purposes of any
statute limiting action by the Bank under this Agreement or relating to the
Obligations, as of the date of recovery from the Bank. As used in this Section,
if Pledgor and Borrower are not the same person or entity, then any reference to
“Pledgor” shall be deemed to include a reference to “Borrower”.

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     h. “Pledgor” means each of the persons or entities identified above as
Pledgor in any capacity, and each legal representative, successor or assign of
any thereof.
2. SECURITY INTEREST.
     a. Grant of Security Interest. As security for payment and performance of
the Obligations, Pledgor grants a security interest in, and assigns, pledges and
hypothecates to the Bank all of its rights, title and interest in and to the
Collateral, whether now or hereafter acquired or existing and wheresoever
located.
     b. Continuing and Unconditional Pledge. This Agreement is absolute and
unconditional and shall continue, notwithstanding any interim payment in full of
the Obligations, until released in writing by the Bank.
     c. Control Agreement. If any of the Collateral is, or is maintained in, a
Brokerage Account or with an Institution, Pledgor agrees that it shall before,
or at the same time as, it has executed and delivered this Agreement to the
Bank, execute and deliver to the Bank, and cause any Institution at which the
Brokerage Account is maintained or any of the Collateral is held to execute and
deliver to the Bank, a Control Agreement. If the Institution refuses to execute
a Control Agreement that is acceptable to the Bank in its sole discretion,
Pledgor shall transfer the Collateral to a Brokerage Account maintained by M&T
Securities, Inc. with National Financial Services Corporation or if the
Collateral is in certificated form, cause the Collateral to be delivered to the
Bank, duly endorsed in blank without restrictions and with all signatures
guaranteed with medallion signature guaranty acceptable to the Bank and with all
necessary transfer tax stamps affixed, if applicable. If any of the Collateral
is held in a Brokerage Account with National Financial Services Corporation
through M&T Securities, Inc., Pledgor authorizes and consents to such portion of
the Collateral being subject to a Master Control Agreement between the Bank,
National Financial Services Corporation, M&T Securities, Inc. and other
Affiliates dated as of January 1, 1997, as such agreement may be amended,
modified or replaced from time to time. Pledgor acknowledges that such Master
Control Agreement provides, among other things, that the Bank has the ability
and right to have such portion of the Collateral sold, transferred or otherwise
disposed of without further action or consent by Pledgor.
     d. Delivery of Certificated and Uncertificated Securities Not in Brokerage
Account. If the Collateral is not maintained in a Brokerage Account, then
contemporaneously with the execution and delivery of this Agreement to the Bank,
Pledgor shall:
          i. Certificated Securities. If certificated securities, deliver such
certificated securities to the Bank, duly endorsed in blank without restrictions
and with all signatures guaranteed with medallion signature guaranty acceptable
to the Bank and with all necessary transfer tax stamps affixed.
          ii. Uncertificated Securities. If uncertificated securities, either
(x) procure the issuance of security certificates to represent such
uncertificated securities and endorse and deliver such certificates as required
above; (y) cause the issuer thereof to register the Bank as the registered owner
of such uncertificated securities; or (z) cause the issuer of the uncertificated
securities to enter into a Control Agreement with the Bank and Pledgor.
3. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants to the
Bank that now and until this Agreement is terminated:
     a. Enforceability. Pledgor, if an entity, (i) is duly organized, validly
existing and in good standing under the law of the jurisdiction in which it was
formed; (ii) is duly authorized to do business in each jurisdiction in which
failure to be so qualified might have a material adverse effect on its business
or assets; and (iii) has the power, authority and approvals necessary to own the
Collateral and grant a security interest in the Collateral under this Agreement
and execute and deliver this Agreement and each Control Agreement (if
applicable). This Agreement and each Control Agreement (if applicable) have been
duly executed and delivered by Pledgor, constitute valid and legally binding
obligations of Pledgor and are enforceable in accordance with their respective
terms against Pledgor.
     b. No Conflicts. The execution, delivery and performance by Pledgor of this
Agreement and each Control Agreement (if applicable), the grant of the security
interest in the Collateral hereunder and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) violate any statute,
regulation or other law applicable to Pledgor; (ii) violate any judgment, order
or award of any court, agency or other governmental authority or of any
arbitrator applicable to Pledgor; (iii) if an entity, violate Pledgor’s
certificate of incorporation, by-laws, partnership agreement, operating
agreement or other applicable governing documents; (iv) constitute a default
under any agreement binding on Pledgor or result in a lien or encumbrance on any
assets of Pledgor; or (v) violate any restriction on the transfer of any of the
Collateral.
     c. No Consents. No consent, approval, license, permit or other
authorization of any third-party (other than an Institution) or any governmental
body or office is required for the valid and lawful execution and delivery of
this Agreement and each Control Agreement, the creation and perfection of the
Bank’s security interest in the Collateral or the valid and lawful exercise by
the Bank of the remedies available to it under this Agreement, any Control
Agreement or applicable law or of the voting and other rights granted to the
Bank in this Agreement or any Control Agreement except as may be required for
the offer of sale of those items of the Collateral that are securities under
applicable law.
     d. Sole Owner; No Other Lien. Pledgor is sole record and beneficial owner
of the Collateral free and clear of all liens, security interests, pledges
encumbrances and adverse claims (other than those created under this Agreement),
has the unrestricted right to grant the security interest granted under this
Agreement and has granted to the Bank a valid security interest in the
Collateral free of all liens, encumbrances and adverse claims. There are no
restrictions applicable to the transfer of any of the Collateral, unless fully
and accurately described in an exhibit to this Agreement. The Collateral is held
or registered in Pledgor’s legal name.
     e. Brokerage Account. If any of the Collateral is, or is maintained in, a
Brokerage Account, such Brokerage Account is a valid and legally binding
obligation of the Institution with which such Brokerage Account is maintained,
the securities entitlements credited thereto are valid and genuine and are
enforceable in accordance with their terms and Pledgor has provided the Bank
with a complete and accurate statement of the financial assets and money
credited to such Brokerage Account as of the date hereof.
     f. Certificates Genuine. If any of the Collateral is certificated
securities, each certificate or other document evidencing such portion of the
Collateral is genuine, has been duly authorized and validly issued by each of
the respective Issuers, is in all respects what it purports to be and is
enforceable in accordance with its terms.
     g. Judgments and Litigation. There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment, order or
award of any court, agency or other governmental authority or arbitrator that
involves Pledgor or any of the Collateral and might have a material adverse
effect upon, or threaten the validity of, this Agreement or any of the
Collateral. Pledgor shall immediately notify the Bank upon acquiring knowledge
of such an action.
     h. Name, Address and Organizational Information. Pledgor’s full legal name,
its principal residence or its chief executive office (if a business) address,
and its state of registration and organizational identification number (if any)
are correctly set forth at the beginning of this Agreement.
     i. Mutual Funds Held for 30 Days. If any of the Collateral consists of
mutual fund shares or any other interest in a mutual fund, such shares or
interest shall have been owned by Pledgor for more than thirty (30) days prior
to the date of this Agreement.

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4. COVENANTS. Pledgor hereby covenants and agrees with the Bank that now and
until this Agreement is terminated Pledgor shall:
     a. Defend Title. Defend its title to the Collateral and the security
interest of the Bank therein against the claims of any person claiming rights in
the Collateral against or through Pledgor and maintain and preserve such
security and its priority.
     b. Intentionally omitted.
     c. No Transfer. Neither sell, offer to sell nor otherwise transfer or
encumber any of the Collateral and if any of the Collateral is, or is in, a
Brokerage Account or subject to a Control Agreement, withdraw any money or
property from such Brokerage Account or enter into a control agreement with any
third-party relating to the foregoing. If any of the Collateral is, or is
maintained in, a Brokerage Account, this provision shall not prohibit Pledgor
from making trades in such Brokerage Account before the occurrence of an Event
of Default provided that (i) the Bank has agreed in a writing (acceptable to the
Bank in its sole discretion), signed by a duly authorized officer of the Bank
and the Institution, that Pledgor is authorized to engage in such trading;
(ii) the proceeds of such trades remain in the Brokerage Account; and (iii) the
trades do not have a material adverse effect on the value of all or any part of
the Collateral and are not otherwise inconsistent with the provisions of this
Agreement or any Control Agreement.
     d. Control and Customer Agreements. If the Collateral is held in a
Brokerage Account, neither attempt to modify or attempt to terminate any Control
Agreement or the customer agreement with the Institution under which such
Brokerage Account was established.
     e. Later Deliveries. Pledgor shall promptly deliver or transfer to the Bank
(with respect to any of the Collateral in the physical possession of the Bank)
or to an Institution (with respect to any of the Collateral held by such
Institution) for credit to the Brokerage Account and/or coverage by the Control
Agreement with such Institution, such portion of the Collateral (including,
without limitation, any certificate or instrument constituting or representing
such portion of the Collateral and any replacement or related certificates or
instruments, transaction statements, option contracts, warrants or related
documents evidencing transactions or proceeds thereof) that Pledgor may obtain
possession of after the date hereof, free and clear of all liens, encumbrances,
transfer restrictions and adverse claims so that the Bank has a first priority
interest in such portion of the Collateral. All such certificates, instruments
and the like shall be duly endorsed in blank without restriction and with all
signatures guaranteed with a medallion signature guaranty acceptable to the
Bank. Until such delivery or transfer, Pledgor shall hold each such item in
trust for the Bank.
     f. Recordkeeping and Financial Statements. Maintain, or cause each agent to
maintain, accurate and complete records in conformity with generally accepted
accounting principles consistently applied and furnish to the Bank financial
statements in accordance with the Term Loan Agreement.
     g. Taxes to be Paid. Pay when due every tax, assessment, fee and charge and
file each report required by any taxing authority for Pledgor or its assets,
including without limitation the Collateral.
     h. Intentionally omitted..
     i. Notice of Changes. Immediately notify the Bank of (i) any Event of
Default; (ii) any event or condition that might have a material adverse effect
upon Pledgor (or Borrower, if not same) the Institution, the value of the
Collateral or the security interest of the Bank; or (iii) any encumbrance upon
or claim asserted against any of the Collateral. Pledgor shall notify the Bank
at least ninety (90) days in advance of any change in (i) the name, identity or
structure of Pledgor (or Borrower, if not same) or (ii) the location of (A) any
of the Collateral, (B) any record concerning any of the Collateral, or
(C) Pledgor’s (or Borrower’s, if not same) state of registration, chief
executive office or principal residence.
     j. Intentionally omitted.
     k. Further Assurances.
          i. At Pledgor’s expense, Pledgor shall do such further acts and
execute and deliver to the Bank all such additional conveyances, financing
statements, certificates, stock or bond powers, instruments, legal opinions and
other assurances as the Bank may from time to time request or require to
protect, assure or enforce its interests, rights and remedies under this
Agreement. All endorsements must be in blank without restriction and with all
signatures guaranteed with a medallion signature guaranty acceptable to the
Bank.
          ii. Pledgor will promptly deliver to the Bank (with respect to any of
the Collateral in the physical possession of the Bank) or to an Institution
(with respect to any of the Collateral held by such Institution), all
endorsements and instruments that could be necessary or convenient to transfer
any financial asset in the physical possession of the Bank or an Institution,
that are registered in the name of, payable to the order of or specially
endorsed to Pledgor, to such Institution or one of their respective nominees.
5. POWER OF ATTORNEY, IRREVOCABLE PROXY.
     a. Pledgor irrevocably and unconditionally appoints the Bank as its
attorney-in-fact with full power to perform in the name of Pledgor each of
Pledgor’s obligations under this Agreement or any Control Agreement and take any
action or execute any instrument that the Bank deems necessary or convenient for
such purpose including, without limitation, the power to endorse or execute and
deliver all stock or bond powers, pledges, instruments of assignment,
certificates, orders for transfer, financing statements, releases and other
writings relating to any of the Collateral in the Bank’s or Pledgor’s name. Such
power of attorney is coupled with an interest in favor of the Bank, and shall
not be terminated or otherwise affected by the death, bankruptcy, disability or
incompetence of Pledgor or by lapse of time. The Bank may receive and open any
mail addressed to Pledgor, retain any enclosure constituting or relating to any
of the Collateral, and take any other action deemed necessary in the Bank’s sole
discretion to perfect or protect the Bank’s interests pursuant to this Agreement
or any Control Agreement. Pledgor authorizes (both prospectively and
retroactively) the Bank to file in any public office financing statements, and
any continuations and amendments thereof, regarding any of the Collateral
without the signature of Pledgor. A photocopy or other reproduction of this
Agreement or any financing statement relating to any of the Collateral shall be
sufficient as a financing statement. Pledgor hereby consents and agrees that the
issuers of or obligors of the Collateral or any registrar or transfer agent or
trustee for any of the Collateral shall be entitled to accept the provisions
hereof as conclusive evidence of the rights of the Bank to effect any transfer
pursuant to this Agreement and the authority granted to the Bank herein,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by Pledgor or any other person to any of such issuers, obligors,
registrars, transfer agents and trustees.
     b. Pledgor irrevocably consents and appoints the Bank, whether or not any
of the Collateral has been transferred into the name of the Bank or its nominee,
as Pledgor’s proxy with full power, in the same manner, to the same extent and
with the same effect as if Pledgor were to do the same: (i) to attend all
meetings of stockholders of the issuer of any financial asset which comprises
the Collateral (the “Company”) held from the date hereof and to vote such
portion of the Collateral at such meeting in such manner as the Bank shall, in
its sole discretion, deem appropriate, including, without limitation, in favor
of the liquidation of the Company; (ii) to consent, in the sole discretion of
the Bank, to any and all action by or with respect to the Company for which the
consent of the stockholders of the Company is or may be necessary or
appropriate; and (iii) without limitation, to do all things which Pledgor can or
could do as a stockholder of the Company, giving to the Bank full power of
substitution and revocation. Such proxy shall not be exercisable by the Bank and
Pledgor alone shall have the foregoing powers (whether or not any of the
Collateral has been transferred into the name of the Bank or its nominee) until
the occurrence of an Event of Default; provided, however, Pledgor shall not
exercise or, as the case may be, shall not refrain from exercising such rights
if, in the Bank’s judgment, such action would impair or otherwise have a
material adverse effect on the value of the Collateral or would otherwise be
inconsistent with this Agreement. The

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Bank, in its sole discretion, may elect to postpone having such proxy become
exercisable notwithstanding the occurrence of any Event of Default which would
otherwise cause such proxy to become exercisable. Such proxy shall terminate
when this Agreement is no longer in full force and effect as hereinafter
provided. Any expenses incurred with the exercise of any of the rights hereunder
shall constitute part of the Obligations.
     c. Pledgor hereby revokes for the duration of this Agreement each power of
attorney, authorization and proxy granted by Pledgor to any other person (other
than any Institution acting as safekeeping agent, if any) with respect to the
Collateral.
6. PLEDGOR’S WAIVERS. Neither Pledgor’s obligations under this Agreement nor
Bank’s interest in the Collateral shall be released, impaired or affected in any
way by (i) Pledgor’s (or Borrower’s, if not same) bankruptcy, reorganization or
insolvency under any law or that of any other party, or any action of a trustee
in any such proceeding; (ii) failure of any other party to perform its
obligations to the Bank; or (iii) any other circumstance that might constitute a
legal or equitable defense to Pledgor’s (or Borrower’s, if not same) obligations
under this Agreement, including without limitation: (A) any new agreements or
obligations of Pledgor (or Borrower, if not same) with or to the Bank,
amendments, changes in rate of interest, extensions of time for payments,
modifications, renewals or the existence of or waivers of default as to any
existing or future agreements of Pledgor (or Borrower, if not same) or any other
party with the Bank; (B) any adjustment, compromise or release of any of the
Obligations by the Bank or any other party; the existence or nonexistence or
order of any filings, exchanges, releases, impairment or sale of any security
for the Obligations or any part thereof or the order in which payments and
proceeds of collateral are applied; or acceptance by the Bank of any writing
intended by any other party to create an accord and satisfaction with respect to
any of the Obligations; (C) any delay in or failure to call for, take, hold,
continue, collect, preserve or protect, replace, assign, sell, lease, exchange,
convert or otherwise transfer or dispose of, perfect a security interest in,
realize upon or enforce any security interest in any security for the
Obligations or any part thereof, regardless of its value; (D) any exercise,
delay in the exercise or waiver of, any failure to exercise, or any forbearance
or other indulgence relating to, any right or remedy of the Bank against Pledgor
(or Borrower, if not same) or other person or relating to the Obligations, any
part thereof or any security for the Obligations; (E) any fictitiousness,
incorrectness, invalidity or unenforceability, for any reason, of any instrument
or other agreement, or act of commission or omission by the Bank or Pledgor (or
Borrower, if not same); (F) any composition, extension, moratoria or other
statutory relief granted to Pledgor (or Borrower, if not same); or (G) any
interruption in the business relations between the Bank and Pledgor (or
Borrower, if not same), or any dissolution or change in form of organization,
name or ownership of Pledgor (or Borrower, if not same) or death or declaration
of Pledgor or Borrower (if not same) if an individual as incompetent. Further,
Pledgor (or Borrower, if not same) waives without notice each demand,
presentment, protest and other act or thing upon which any of Pledgor’s (or
Borrower’s, if not same) obligations or the Bank’s rights or remedies pursuant
to this Agreement or otherwise would or might be conditioned.
7. INCOME AND PROCEEDS OF THE COLLATERAL.
     a. Cash Income. Until the occurrence of an Event of Default, Pledgor
reserves the right to request to receive all cash income and cash dividends that
comprise the Income and Proceeds (except cash income or cash dividends paid or
payable in respect of the total or partial liquidation or dissolution of an
issuer) paid on the Collateral; provided, however, until actually paid, all
rights to such cash income or cash dividends shall remain subject to the Bank’s
security interest granted hereunder. Any other Income and Proceeds shall be
delivered to the Bank immediately upon receipt (but not later than the next
business day), in the exact form received and without commingling with other
property which may be received by, paid or delivered to Pledgor or for Pledgor’s
account, whether as an addition to, in discharge of, in substitution of, or in
exchange of any of the Collateral.
     b. Bond Coupons. If the Collateral consists of bonds with coupons, Pledgor
authorizes the Bank to remove all coupons from such bonds when interest is due
and send them for collection on Pledgor’s behalf. The proceeds of such bonds
will be applied as directed by Pledgor in writing. The Bank shall have no
responsibility or liability for failure to process such coupons in a timely
fashion. If any coupon is returned unpaid, the Bank may either debit any of
Pledgor’s deposit accounts with the Bank or reverse the loan credit, as
appropriate, in the amount of each such coupon previously credited, plus the
Bank expenses incurred in the attempted collection. If Pledgor’s deposit
accounts have insufficient funds to pay any or all such amounts, each such
unpaid amount shall be added to the Obligations, and shall be secured by the
Collateral.
     c. Cash Income After Event of Default. Upon the occurrence of an Event of
Default, Pledgor shall not demand or receive any cash income or cash dividends
with regard to the Collateral, and if Pledgor receives any such cash income or
cash dividends, the same shall be held by Pledgor in trust for the Bank in the
same medium in which received, shall not be commingled with any assets of
Pledgor and shall be delivered to the Bank in the form received, properly
endorsed to permit collection, not later than the next business day following
the day of its receipt. The Bank may apply the net cash receipts from such
income or cash dividends to payment of the Obligations or any part thereof,
provided that the Bank shall account for and pay over to Pledgor any such income
or interest remaining after payment in full of the Obligations.
     d. Increases and Profits. Whether or not an Event of Default has occurred,
Pledgor authorizes the Bank to receive Income and Proceeds on the Collateral and
to hold the same as part of the Collateral and agrees to deliver the Income and
Proceeds (except as provided in 7(a) above) to the Bank immediately upon receipt
(but not later than the next business day), in the exact form received and
without commingling with other property which may be received by, paid or
delivered to Pledgor or for Pledgor’s account, whether as an addition to, in
discharge of, in substitution of, or in exchange of any of the Collateral.
8. ADDITIONAL DUTIES OF PLEDGOR AND RIGHTS OF THE BANK.
     a. Compliance with Securities Laws.
          i. Pledgor has not acquired or transferred any of the Collateral in
any manner that would result in a violation of any applicable law, including
without limitation federal and state securities laws. Pledgor shall execute and
deliver or file each form and other writing (including without limitation any
application for exemption or notice of proposed sale pursuant to any securities
laws) and take each other action (including without limitation making public any
non-public material adverse information with respect to the issuer of any
Security), that the Bank deems necessary or desirable to permit the sale or
other disposition of any portion of the Collateral with or without registration.
Pledgor shall upon the request of the Bank cause the Collateral to be registered
and take each other action including, without limitation, compliance with all
applicable “blue sky” and other securities laws and regulations to permit
transfer or registration of those items of the Collateral in each jurisdiction
which the Bank shall select; and Pledgor shall execute and deliver in form and
substance satisfactory to the Bank its indemnity of each underwriter of such
Security against all of its liabilities, costs and expenses in connection with
the transfer, including attorneys’ fees and disbursements.
          ii. Pledgor acknowledges that compliance with the Securities Act of
1933, as amended, the rules and regulations thereunder (collectively, the “Act”)
may impose limitations on the right of the Bank to sell or otherwise dispose of
securities included in the Collateral. For this reason, Pledgor hereby
authorizes the Bank to sell any securities included in the Collateral in such
manner and to such person as would, in the sole discretion of the Bank, help to
ensure the prompt transfer or sale of such securities and shall not require any
of such securities to be registered or qualified under any applicable securities
law. Without limiting the generality of the foregoing, in any such event the
Bank in its sole discretion may (i) proceed to make a private sale
notwithstanding that a registration statement for the purpose of registering any
of such securities could be or shall have been filed under the Act;
(ii) approach and negotiate with a single possible purchaser to effect such
sale; (iii) restrict such sale to a purchaser who will represent and agree that
such purchaser is purchasing for its own account, for investment and not with a
view to the distribution or sale of any of such securities; or (iv) require that
any sale hereunder (including a sale at auction) be conducted subject to
restrictions (A) as to the financial sophistication and ability of any person
permitted to bid or purchase at sale, (B) as to the content of legends to be
placed upon any certificates representing the securities sold in such sale,
including restrictions on future transfer thereof, (C) as to the representations
required to be made by each person bidding or purchasing at such sale relating
to that person’s access to financial information about Pledgor or any issuer of
any of such securities, such person’s intentions as to the holding of any of
such securities so sold for investment, for its own account, and not

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with a view to the distribution thereof, and (D) as to such other matters as the
Bank may, in its sole discretion, deem necessary or appropriate in order that
such sale (notwithstanding any failure so to register) may be effected in
compliance with the UCC and other laws affecting the enforcement of creditors’
rights under the Act and all applicable state securities laws. Pledgor
understands that a sale under the above circumstances may yield a substantially
lower price for such securities than would otherwise be obtainable if the same
were registered and sold in the open market, and Pledgor shall not attempt to
hold the Bank responsible for sale of any of such securities at an inadequate
price even if the Bank accepts the first offer received or if only one potential
purchaser appears or bids at any such sale. If the Bank shall sell any
securities included in the Collateral at a sale, the Bank shall have the right
to rely upon the advice and opinion of any qualified appraiser, investment
banker or broker as to the commercially reasonable price obtainable on the sale
thereof but shall not be obligated to obtain such advice or opinion. Pledgor
acknowledges that, notwithstanding the legal availability of a private sale or a
sale subject to restrictions of the character described above, the Bank may, in
its sole discretion, elect to seek registration of any securities included in
the Collateral under the Act (or any applicable state securities laws). Pledgor
hereby assigns to the Bank any registration rights or similar rights Pledgor may
have from time to time with respect to any securities included in the
Collateral.
     b. Substitution of Collateral. Prior to an Event of Default, Pledgor may
request the Bank in writing to liquidate an item of the Collateral held by the
Bank and use the Proceeds thereof to purchase substitute items of the
Collateral. If the Bank grants such request, the items purchased with the
Proceeds shall constitute part of the Collateral without the need for any
additional notice or action by the Bank or Pledgor.
     c. Subsequent Changes Affecting Collateral. Pledgor acknowledges that it
has made its own arrangements for keeping informed of changes or potential
changes affecting the Collateral including, but not limited to, conversions,
subscriptions, exchanges, reorganizations, dividends, tender offers, mergers,
consolidations, maturity of bonds or other financial assets and shareholder
meetings. Pledgor agrees that the Bank has no responsibility to inform Pledgor
of such matters or to take any action with respect thereto even if any of the
Collateral has been registered in the name of the Bank or its agent or nominee.
     d. Tax Reporting. All items of income, gain, expense and loss recognized in
any Brokerage Account or any Collateral in the possession of the Bank shall be
reported to the Internal Revenue Service and all state and local taxing
authorities under the name and taxpayer identification number of Pledgor.
     e. Right to Cure. The Bank has the right, but not the obligation, to
perform at Pledgor’s expense any of Pledgor’s obligations with respect to the
Collateral under this Agreement. Further, at its option, the Bank may pay and
discharge taxes, liens, securities interest or other encumbrances on or adverse
claim against the Collateral and Pledgor agrees to reimburse the Bank for any
payment made or any expenses incurred (including attorneys’ fees) by the Bank
pursuant to the foregoing.
9. DEFAULT.
     a. Remedies Upon Default. At any time, and from time to time, after the
occurrence or existence of any Event of Default the Bank may take one or more of
the following remedies:
          i. Loan Agreements. The Bank shall be entitled to the remedies set
forth in Section 7.2 of the Revolving Credit Agreement and Section 7.2 of the
Term Loan Agreement.
          ii. Sale of Collateral.
               (1) The Bank may, in its sole discretion, transfer and realize
upon its interest in any portion of the Collateral by public or private sale or
otherwise, without notice to Pledgor including, without limitation, (i) deliver
a notice under any Control Agreement to an Institution for the sale or other
disposition of the financial assets in a Brokerage Account, (ii) remove any
financial asset in a Brokerage Account and register such asset in the Bank’s
name or the name of the Bank’s Institution or nominee or any other nominee;
(iii) exchange certificates representing any of the Collateral for certificates
of larger or smaller denominations; (iv) collect, including by legal action, any
notes, checks or other instruments for the payment of money included in the
Collateral and compromise or settle with any obligor of any such instrument.
               (2) If notice of the time and place of any public sale of any of
the Collateral or the time after which any private sale or other intended
disposition thereof is required by the UCC, Pledgor acknowledges that five
(5) days advance notice shall constitute reasonable notice. The Bank shall not
be obligated to make any sale of any of the Collateral regardless of notice of
sale having been given. The Bank may adjourn any public or private sale from
time to time by announcing at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
               (3) If, under the UCC, the Bank may purchase any portion of the
Collateral, it may in payment of any part of the purchase price thereof, cancel
any part of the Obligations.
               (4) If any portion of the Collateral is sold on credit or for
future delivery, it need not be retained by the Bank until the purchase price is
paid and the Bank shall incur no liability if the purchaser fails to take up or
pay for such portion of the Collateral. In case of any such failure, such
portion of the Collateral may be sold again.
               (5) Pledgor shall execute and deliver to the purchasers of any
portion of the Collateral all instruments and other documents necessary or
proper to sell, convey and transfer title to such portion of the Collateral and,
if approval of any sale of such portion of the Collateral by any governmental
body or officer is required, Pledgor shall prepare or cooperate fully in the
preparation of and cause to be filed with such governmental body or officer all
necessary or proper applications, reports, registration statements and forms and
do all other things necessary or proper to expeditiously obtain such approval.
          iii. Set-off. The Bank shall have the right but not the obligation to
set off against the Obligations any amount owing by the Bank or any of its
Affiliates in any capacity to any Pledgor in any capacity. Such set-off shall be
deemed to have been exercised immediately at the time the Bank or such Affiliate
elect to do so.
          iv. Termination of Commitments. Any commitment of the Bank to grant
any financial accommodation to Pledgor (or Borrower, if not same) shall
terminate.
     b. Application of Proceeds. Any cash held by the Bank as part of the
Collateral and all cash Proceeds of any sale of, collection from or other
realization upon any portion of the Collateral may, in the sole discretion of
the Bank, be held by the Bank as collateral for, or then or at any time be
applied, after payment of the Bank’s Costs (defined below), in whole or in part
against, the Obligations or any part thereof in such order as the Bank may
elect, in its sole discretion. Any surplus of such cash or cash Proceeds held by
the Bank and remaining after the Bank’s Costs and the Obligations have been
indefeasibly paid in full shall be paid over to Pledgor or to whomever may be
lawfully entitled to receive such surplus.
     c. Consent to Change Collateral to Book-Entry or Uncertificated Form.
Pledgor authorizes the Bank and each Institution to take, at Pledgor’s expense,
all steps necessary to change to appropriate form each certificated item of the
Collateral which is eligible for safekeeping in uncertificated form, to be
maintained in a Brokerage Account subject to a Control Agreement (if held with
an Institution) or to be held by the Bank (subject to the delivery requirements
in Section 2(d) hereof). Pledgor understands that there may be some delay and
expense in release of uncertificated items of the Collateral if Pledgor requires
its reissue in certificated form and that change to book-entry form for U.S.
Treasury securities may not be reversible.

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     d. Registered Holder of Collateral. Pledgor authorizes the Bank to transfer
any of the Collateral into its own name or that of its nominee so that the Bank
or its nominee may appear on record as the sole owner thereof; provided,
however, notwithstanding such a transfer, the Bank shall refrain from exercising
its rights under Section 9 hereof until the occurrence of an Event of Default.
10. STANDARD OF CARE. Other than the exercise of reasonable care in the custody
of the Collateral in the Bank’s physical possession, the Bank shall have no
responsibility or duty with respect to any of the Collateral or any matter or
proceeding arising out of or relating thereto and shall have no liability to
Pledgor (or Borrower, if not same) arising from any failure or delay by the
Bank. The Bank shall be deemed to have exercised reasonable care in the custody
and preservation of any portion of the Collateral which is in its possession if
the Bank affords such portion of the Collateral treatment substantially equal to
the treatment that the Bank accords its own assets of a similar nature;
provided, however, that the Bank shall have no duty to sell or convert any of
the Collateral whose market value is declining. In no event shall the Bank be
obligated to (a) preserve any right or remedy of Pledgor against any party with
respect to any of the Collateral; (b) ascertain any maturity, call, exchange,
conversion, redemption, offer, tender or similar matter relating to any of the
Collateral or provide notice of any such matter to Pledgor; or (c) provide to
Pledgor any communication received by the Bank or its nominee. Pledgor
acknowledges that Pledgor is not looking to the Bank to provide it with
investment advice.
11. COSTS AND EXPENSES; INDEMNITY.
     a. Bank Costs. Pledgor agrees to pay on demand all costs and expenses
incurred by the Bank in enforcing this Agreement, in realizing upon or
protecting any of the Collateral (including preserving the value of any of the
Collateral) and in enforcing and collecting any of the Obligations or any
guaranty thereof, including, without limitation, if the Bank retains counsel for
advice, suit, appeal, insolvency or other proceedings under the Federal
Bankruptcy Code or otherwise, or for any of the above purposes, the actual
attorneys’ fees incurred by the Bank (collectively “Bank Costs”). Payment of all
Bank Costs is secured by the Collateral. Bank Costs shall accrue interest at the
highest legal rate from the date of demand until payment is received by the
Bank.
     b. Indemnity. Pledgor shall indemnify the Bank and its directors, officers
and employees, agents and attorneys against, and hold them harmless from, all
liabilities, costs or expenses, including attorneys’ fees, incurred by any of
them under the corporate or securities laws applicable to holding, registering
or selling any of the Collateral, except for liability, costs or expenses
arising out of the recklessness or willful misconduct of the Bank.
12. MISCELLANEOUS.
     a. Remedies Cumulative; Non-Waiver. The Bank shall have all of the rights
and remedies of a secured party under the UCC and other applicable law as well
as those specified by agreement with Pledgor or Borrower. All rights and
remedies of the Bank are cumulative, and no right or remedy shall be exclusive
of any other right or remedy. No single, partial or delayed exercise by the Bank
of any right or remedy shall preclude full and timely exercise at any time of
any right or remedy of the Bank without notice. No course of dealing or other
conduct, no oral agreement or representation made by the Bank, and no usage of
trade, shall operate as a waiver of any right or remedy of the Bank. No waiver
of any right or remedy of the Bank shall be effective unless made specifically
in writing by the Bank.
     b. Construction This Agreement and any agreement executed in connection
herewith contains the entire agreement between the Bank and Pledgor with respect
to the Collateral, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. Pledgor expressly
disclaims any reliance on any oral representation of the Bank with respect to
the subject matter of this Agreement or otherwise. No change in this Agreement
shall be effective unless made in a writing duly executed by the Bank. This
Agreement is a binding obligation enforceable against Pledgor and its successors
and assigns and shall inure to the benefit of the Bank and its successors and
assigns. Each provision of this Agreement shall be interpreted as consistent
with existing law and shall be deemed amended to the extent necessary to comply
with any conflicting law. If a court deems any provision invalid, the remainder
of this Agreement shall remain in effect. Pledgor agrees that, in any legal
proceeding, a copy of this Agreement kept in the course of the Bank’s business
may be admitted into evidence as an original. Unless the context otherwise
clearly requires, references to plural includes the singular and references to
the singular include the plural and “or” has the inclusive meaning represented
by the phrase “and/or”. Section headings are for convenience only. Neuter
pronouns shall be construed as masculine or feminine, and singular forms as
plural, as appropriate.
     c. Guaranty of Obligations. Solely to the extent required by applicable law
to make the Collateral available for payment of the Obligations, Pledgor
guarantees the payment of the Obligations, without set-off, counterclaim or
other deduction and without limitation as to amount.
     d. Waiver of Subrogation. Pledgor hereby waives any claim, right or remedy
which Pledgor may now have or hereafter acquire against Borrower that arises
hereunder or from the performance by Pledgor hereunder including, without
limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, contribution or participation in any claim, right
or remedy of the Bank against Borrower or any security which the Bank now has or
hereafter acquires, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise.
     e. Notices. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Pledgor (at
its address on the Bank’s records) or to the Bank (at the address on page one
and separately to the Bank officer responsible for Borrower’s relationship with
the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Pledgor and the Bank.
     f. Joint and Several Liability. If there is more than one Pledgor, each of
them shall be jointly and severally liable pursuant to this Agreement and the
term “Pledgor” shall include each as well as all of them.
     g. Governing Law and Jurisdiction. This Agreement has been delivered to and
accepted by the Bank and will be deemed to be made in the State of New York.
Except as otherwise provided under federal law, this Agreement will be
interpreted in accordance with the laws of the State of New York excluding its
conflict of laws rules. PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN ERIE COUNTY, NEW YORK; PROVIDED
THAT NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY
ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST
BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER
WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION.
Pledgor acknowledges and agrees that the venue provided above is the most
convenient forum for both the Bank and Pledgor. Pledgor waives any objection to
venue and any objection based on a more convenient forum in any action
instituted under this Agreement.
     h. Waiver of Jury Trial. Pledgor and The Bank hereby knowingly,
voluntarily, and intentionally waive any right to trial by jury Pledgor and The
Bank may have in any action or proceeding, in law or in equity, in connection
with this Agreement or the transactions related hereto. Pledgor represents and
warrants that no representative or agent of The Bank has represented, expressly
or otherwise, that The Bank will not, in the event of litigation, seek to
enforce this Jury Trial Waiver. Pledgor acknowledges that The Bank has been
induced to enter into this Agreement by, among other things, the provisions of
this section.

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13. TIN CERTIFICATION. Under penalties of perjury, Pledgor certifies that:
(1) the taxpayer number set forth below is Pledgor’s correct social security or
employer identification number (or I am waiting for a number to be issued to
me); and (2) Pledgor is not subject to backup withholding because (a) Pledgor is
exempt from backup withholding; (b) Pledgor has not been notified by the
Internal Revenue Service (aIRS@) that it is subject to backup withholding as a
result of a failure to report all interest or dividends; or (c) the IRS has
notified Pledgor that it is no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS: Pledgor must cross out item (2) if it has been
notified by the IRS that Pledgor is currently subject to backup withholding
because of under-reporting interest or dividends on Pledgor’s tax return.
(Please check here o only if you are subject to backup withholding.)
The IRS does not require your consent to any provision of this document other
than the certifications required to avoid backup withholding.
14. RELEASE OF SECURITY INTEREST, TERMINATION OF PLEDGE. Notwithstanding any
other provision of this Agreement, the Revolving Credit Agreement or the Term
Loan Agreement, the Bank agrees to release the Collateral from the security
interest granted hereunder, and terminate this Agreement in writing, upon the
concurrent satisfaction of all of the following conditions:

  a.   Capitalization. The Pledgor and its subsidiaries, are in compliance with
the capital ratios required by Section 6.8 of the Term Loan Agreement;     b.  
Net Income. The consolidated net income of the Pledgor, calculated in accordance
with Section 6.10 (A) of the Term Loan Agreement, for the previous four fiscal
quarters of the Pledgor, shall not be less than Twenty Million Dollars
($20,000,000.00);     c.   Nonperforming Assets to Total Loans and Other Real
Estate Ratio. The Pledgor’s Nonperforming Assets to Total Loans and Other Real
Estate Ratio, calculated in accordance with Section 6.7 of the Term Loan
Agreement, does not exceed 2.0%;     d.   Regulatory Enforcement. Neither
Pledgor nor any of its subsidiaries is the subject of any pending or, to
Pledgor’s or any of its subsidiaries knowledge, threatened, regulatory
enforcement action, proceeding or investigation; and     e.   Other Default. No
other default under this Agreement exists.

15. REINSTATEMENT OF SECURITY INTEREST AND PLEDGE. In the event that, after the
release of the security interest granted hereunder and the termination of this
Agreement pursuant to Section 14 hereof, Pledgor shall, at any time during the
effective period of the Term Loan Agreement, fail to satisfy the conditions
contained in Section 14 (a) or Section 14(d) hereof, Pledgor covenants and
agrees that it shall promptly execute another pledge of securities, in
substantially the same form as this Agreement and acceptable to the Bank, once
again subjecting the Collateral to a security interest and pledge in favor of
the Bank. At Pledgor’s expense, Pledgor shall do such further acts and execute
and deliver to the Bank all such additional conveyances, financing statements,
certificates, stock or bond powers, instruments, legal opinions and other
assurances as the Bank may from time to time request or require to protect,
assure or enforce its interests, rights and remedies under this Section 15. The
provisions of this Section 15 shall survive any termination of this Agreement.
Dated:
                                                                                

              TAX ID/SS #
                                                                                
  FINANCIAL INSTITUTIONS, INC.         PLEDGOR    
 
           
 
  By:        
 
     
 
   
 
                Name: Ronald A. Miller
 
   
 
                Its: Senior Vice President & CFO
 
   

ACKNOWLEDGMENT

     
STATE OF NEW YORK)
   
 
  : SS.
COUNTY OF WYOMING)
   

     On the                      day of                     , in the year 20
___, before me, the undersigned, a Notary Public in and for said State,
personally appeared Ronald A. Miller , personally known to me or proved to me on
the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.

         
 
 
 
Notary Public    

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FINANCIAL INSTITUTIONS, INC.
PLEDGE OF SECURITIES
SCHEDULE A
DESCRIPTION OF PLEDGED SECURITIES

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EXHIBIT E
FINANCIAL INSTITUTIONS, INC. REPORT OF CHIEF FINANCIAL OFFICER
     Financial Institutions, Inc. (the “Borrower”) hereby certifies that:
     This Report is furnished pursuant to Section 5.1(c) of the Term Loan Credit
Agreement dated as of December 15, 2003, as amended from time to time, and
Section 5.1(c) of the Revolving Credit Agreement dated as of December 15, 2003,
as amended from time to time (collectively, the “Credit Agreements”) between the
Borrower and MANUFACTURERS AND TRADERS TRUST COMPANY. Unless otherwise defined
herein, the terms used in this Report have the meanings given to them in the
Credit Agreements.
     As required by Section 5.1(a) and (b) of the Credit Agreements, the
Consolidated financial statements of the Borrower for the [year/quarter] ended
                    , 200___(the “Financial Statements”), prepared in accordance
with generally accepted accounting principles consistently applied, accompany
this Report. The Financial Statements present fairly the Consolidated financial
position of the Borrower as at the date thereof and the Consolidated results of
operations of the Borrower for the period covered thereby (subject only to
normal recurring year-end adjustments which will not in the aggregate be
material in amount).
     The figures set forth in Schedule A for determining compliance by the
Borrower with the financial covenants contained in Sections 6.7, 6.9 and 6.10 of
the Credit Agreements are true and complete as of the date hereof.
     As of the date hereof, Borrower and its Material Subsidiaries, including
any other federally-insured depository institution that was acquired after
December 15, 2003 and prior to the Maturity Date, have total “Risk-Based Capital
Ratios”, “Tier I Risk-Based Capital Ratios”, and “Leverage Ratios”, as defined
in applicable FDIC regulations, as required by Section 6.8 of the Credit
Agreements.
     The activities of the Borrower and its Subsidiaries during the period
covered by the Financial Statements have been reviewed by me as Borrower’s Chief
Financial Officer or by employees or agents of Borrower under my immediate
supervision. Based on such review, to my best knowledge and belief, and as of
the date of this Report, no Default has occurred. *

                      WITNESS my hand this ___ day of                    
200___.    
 
                        FINANCIAL INSTITUTIONS, INC.    
 
               
 
      By:        
 
         
 
    Chief Financial Officer    

 

*   If a Default has occurred, this paragraph is to be modified with an
appropriate statement as to the nature thereof, the period of existence thereof
and what action the Borrower has taken, is taking, or proposes to take with
respect thereto.

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SCHEDULE A
to
EXHIBIT E
AFFIRMATIVE (FINANCIAL) COVENANTS
Nonperforming Assets to Total Loans and Other Real Estate Ratio (Section 6.7)

                          MAXIMUM PERMITTED:   5.0 %              
 
                        ACTUAL:                
 
                       
 
  (i)   Non accrual and other loans and leases past due 90 days or more and
still accruing   $                                 
 
                       
 
  (ii)   Other real estate owned   $                                 
 
                       
 
  (iii)   Nonperforming Assets:                
 
      line (i) plus line(ii)           $                     
 
                       
 
  (iv)   Total Loans           $                     
 
                       
 
  (v)   Other real estate owned           $                     
 
                       
 
  (vi)   Nonperforming Assets to Total Loans                
 
      and Other Real Estate Ratio:                         [line (iii) divided
by (line (iv) plus line (v)] times 100             %

     
Minimum Tangible Common Equity (Section 6.9)
   
 
   
REQUIRED:
  09/30/05 — 12/31/05   $100,000,000
 
  01/01/06 — 12/31/06   $104,000,000
 
  01/01/07 — 13/31/07   $108,000,000
 
  and then similar increases thereafter

ACTUAL:

                     
 
  (i)   Consolidated stockholders’ equity           $                     
 
                   
 
  (ii)   Consolidated stockholders’ preferred equity           $
                    

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  (iii)   Consolidated goodwill and intangibles            
 
                   
 
  (iv)   Total Tangible Common Equity:            
 
      line (i) minus line (ii) minus line (iii)           $                     

             
Debt Service Coverage Ratio (Section 6.10)
           
 
           
MINIMUM PERMITTED:
      09/30/05   1.25 : 1.00
 
  12/31/05 —   09/30/06   1.75 : 1.00     12/31/06 and thereafter   1.35 : 1.00

ACTUAL:

                     
 
  (i)   Consolidated net income on            
 
      Rolling-Four Quarter Basis*           $                     
 
                   
 
  (ii)   Total principal payable by Borrower
during next four fiscal quarters           $                     
 
                   
 
  (iii)   Total interest accruing on total
principal payable by Borrower
during next four quarters           $                     
 
                   
 
  (iv)   Debt Service Coverage Ratio:            
 
      line (i) divided by [line (ii) plus line (iii)]                :
      1.00

 

*   The measurements for 9/30/05, 12/31/05 and 3/31/06 shall exclude Borrower’s
second quarter 2005 loss of $11,965,000.00

     WITNESS my hand this ___day of                     , 20___.

                  FINANCIAL INSTITUTIONS, INC.    
 
           
 
  By:        
 
     
 
     Chief Financial Officer    

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