Exhibit 10.2

PERFORMANCE STOCK UNIT AWARD AGREEMENT

Pursuant to the

FINANCIAL INSTITUTIONS, INC.

2015 LONG-TERM INCENTIVE PLAN

 

Name of Participant:

  Date of Grant:   Number of Restricted Stock Units:   Service Period:   The
three-year period beginning on [DATE] and ending on [DATE] Earned RSUs and
Vesting Schedule:   The Number of Restricted Stock Units set forth above shall
become Earned RSUs in accordance with the terms of this Agreement and based on
the achievement of the applicable Performance Goal(s) during the applicable
Performance Period(s) in accordance with Exhibit A.

This PERFORMANCE STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of
[DATE], is made between Financial Institutions, Inc. (the “Company”) and the
above-named individual (the “Participant”) to record the grant to the
Participant of a Performance Stock Unit Award (the “Award”) on the Date of Grant
set forth above pursuant to Section 6.5 and Section 6.6 of the Financial
Institutions, Inc. 2015 Long-Term Incentive Plan (the “Plan”). The Award is
intended to qualify as “performance-based compensation” under Code Section
162(m), and will be interpreted and administered accordingly. Capitalized terms
not defined in this Agreement shall have the meaning given to such terms under
the Plan.

The Company and the Participant hereby agree as follows:

Section 1. Grant of Restricted Stock Units. The Company hereby grants to the
Participant, as of the Date of Grant, subject to and in accordance with the
terms and conditions of the Plan and this Agreement, a Performance Stock Unit
Award for the Number of Restricted Stock Units set forth above (the “Restricted
Stock Units”).

Section 2. Achievement and Vesting of Restricted Stock Units. Subject to Section
4 below, and the achievement of the applicable Performance Goal(s) during the
applicable Performance Period (both as set forth on Exhibit A), provided that
the Participant provides substantial services and remains in continuous
employment with the Company or a Subsidiary through the end of the Service
Period set forth above, the Earned RSUs shall vest on the last day of the
Service Period. Except as otherwise provided by Section 4 below, if the
Participant ceases to provide substantial services or remain in continuous
employment with the Company or a Subsidiary for any reason before the completion
of the Service Period, the unvested Restricted Stock Units shall be immediately
forfeited. Notwithstanding the foregoing, before the Award will be earned and
paid, the Committee must determine and certify in accordance with the
requirements of Code Section 162(m) that the Performance Goal(s) and other
material terms of the Award have been satisfied, and if applicable, the level of
performance achieved.

Section 3. Timing and Form of Payout. Except as otherwise provided by Section 4
below and subject to Section 8 below, within 90 days following the last day of
the Service Period (the “Payment Date”), the vested Earned RSUs shall be paid to
the Participant by the Company delivering to the Participant a number of shares
of Common Stock equal to the number of vested Earned RSUs as of the Payment
Date. The Company may issue the shares of Common Stock either (a) in certificate
form or (b) in book entry form, registered in the name of the
Participant. Notwithstanding anything herein to the contrary, the Company shall
have no obligation to issue shares of Common Stock in payment of the Earned RSUs
unless such issuance and such payment shall comply with all relevant provisions
of law and the requirements of any Stock Exchange on which the shares of Common
Stock are traded.

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Section 4. Effects of Certain Events.

 

  (a) Change in Control. Subject to the terms of the Plan, if prior to the
completion of the Service Period set forth above there is a Change in Control:

 

  (i) if Replacement Awards are not provided to the Participant to replace
unvested Restricted Stock Units, then the number of the Participant’s Earned
RSUs shall be determined at the target level of performance, and such Earned
RSUs shall vest as of such date. If the Change in Control qualifies as a “change
in control” for purposes of Code Section 409A, then subject to Section 8 below,
such vested Earned RSUs shall be paid to the Participant within 90 days
following the Change in Control. Otherwise such vested Earned RSUs shall be paid
at the time specified under Section 3 above.

 

  (ii) if Replacement Awards are provided to the Participant to replace unvested
Restricted Stock Units, then in the event of the Participant’s Involuntary
Termination during the period of two (2) years immediately following the Change
in Control, the number of Earned Shares under such Replacement Awards shall be
determined at the target level of performance, and such Earned RSUs shall vest
as of the date of the Involuntary Termination, and subject to Section 8 below,
shall be paid to the Participant within 90 days following the Involuntary
Termination.

 

  (b) Death or Disability. If during the Service Period, the Participant’s
employment with the Company or a Subsidiary terminates due to death or
Disability, then the number of the Participant’s Earned RSUs shall be determined
at the target level of performance, and such Earned RSUs shall vest as of such
date, and subject to Section 8 below, shall be paid to the Participant or the
Participant’s legal representative in the event of the Disability of the
Participant, or in the event of the death of the Participant, to the legal
representative of the Participant’s estate, or if no legal representative has
been appointed, to the successor in interest determined under the Participant’s
will, on a pro-rata basis within 90 days following the Participant’s termination
of employment due to death or Disability. Unless Exhibit A provides otherwise,
the pro-rata portion of the Earned RSUs shall be determined in accordance with
Section 4(d) below.

 

  (c) Retirement. If a Participant terminates employment during the Service
Period due to Retirement, then the Award shall continue and a pro-rata number of
Earned RSUs shall vest and be paid at the time and form of payment specified by
Section 2 and Section 3 above, respectively, based on actual performance through
the end of the applicable Performance Period. Unless Exhibit A provides
otherwise, the pro-rata portion of the Earned RSUs shall be determined in
accordance with Section 4(d) below. “Retirement” shall mean the resignation or
voluntary termination of employment after attainment of age 65 and ten or more
years of service with the Company or a Subsidiary.

 

  (d) Determination of Pro-Rata Portion. Unless Exhibit A provides otherwise, in
the event of the death, Disability or a Retirement of a Participant, the
pro-rata portion of the Earned RSUs under Section 4(b) or Section 4(c), as
applicable, shall be determined separately for each portion of the Award that is
subject to a separate Performance Goal based on the Performance Period for the
portion of the Award that is subject to that separate Performance Goal. In the
event of a Participant’s death, Disability or Retirement prior to the completion
of the applicable Performance Period for a portion of the Award that is subject
to a given Performance Goal, the pro-rata portion of the Earned RSUs for such
portion of the Award shall be determined by multiplying the Earned RSUs for such
portion of the Award by a fraction, the numerator of which is the number of
completed months in the Performance Period during which the Participant was
employed by the Company or a Subsidiary, and the denominator of which is the
total number of months in the Performance Period for that portion of the Award.
In the event of a Participant’s Retirement after the completion of the
applicable Performance Period for a portion of the Award that is subject to a
given Performance Goal, the pro-rata portion of the Earned RSUs for such portion
of the Award shall be the full number of Earned RSUs for that portion of the
Award.

Section 5. Dividend Equivalents. No dividend equivalents shall accrue or be paid
to the Participant with respect to any Restricted Stock Units.

Section 6. Rights as Shareholder. In addition to the transfer and other
restrictions set forth elsewhere in this Agreement and in the Plan, the
Participant, as holder of the Restricted Stock Units, shall not possess any
rights of a holder

 

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of Common Stock (including voting and dividend rights) with respect to the
shares of Common Stock underlying such Restricted Stock Unit Award until such
time as the Restricted Stock Unit Award vests, is paid and the shares of Common
Stock are issued to the holder of the Restricted Stock Unit Award.

Section 7. No Transferability. The Restricted Stock Units may not be sold,
transferred, pledged, assigned, encumbered, or otherwise alienated or
hypothecated other than by will or the laws of descent and distribution. Earned
RSUs shall be payable only to the Participant during the Participant’s lifetime,
or in the event of the Disability of the Participant, to the Participant or the
legal representative of the Participant, or in the event of the death of the
Participant, to the legal representative of the Participant’s estate, or if no
legal representative has been appointed to the successor in interest determined
under the Participant’s will.

Section 8. Withholding Taxes. As a condition of and prior to the payout of any
Restricted Stock Units, the Company shall be entitled to require the Participant
to remit to the Company an amount sufficient to satisfy the amount of any
federal, state, or local taxes required to be withheld with respect to the
vesting and payout of the Earned RSUs, or any other taxable event related
thereto. The Committee may permit the Participant to make such payment in any
form or manner authorized by the Committee in its sole discretion, including,
but not limited to one or more of the forms specified below:

 

  (a) U.S. dollars by personal check, bank draft, or money order payable to the
Company, by money transfer or direct account debits;

 

  (b) Delivery to the Company of a number of shares of Common Stock having an
aggregate fair market value of not less than the minimum tax withholding
required for the Award;

 

  (c) Involvement of a stockbroker in accordance with the federal margin rules
set forth in Regulation T;

 

  (d) A cashless exercise if and to the extent permissible by applicable law; or

 

  (e) Any combination of the above forms and methods.

In the event the Participant fails to provide timely payment of all sums
required by the Company pursuant to this Section 8, the Company shall have the
right and option, but not obligation, to treat such failure as an election by
the Participant to provide all or any portion of such required payment by means
of tendering vested shares of Common Stock.

In the event that the Participant becomes subject to federal, state or local
taxes (e.g., social security or Medicare tax) on the Restricted Stock Units
before the date that the Restricted Stock Units are paid, the Company shall
accelerate the vesting and payment of, and shall withhold the number of shares
of Common Stock underlying the Restricted Stock Units (based on the Fair Market
Value on the date that the Restricted Stock Units become subject to such taxes)
necessary to satisfy the minimum amount of the taxes required to be withheld,
including the payment of any federal, state or local taxes (e.g., federal and
state income taxes) on the withheld shares pursuant to this paragraph.

Section 9. Adjustments. As provided by the Plan, in the event of any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, stock dividend, combination or exchange of shares, exchange for other
securities, reclassification, reorganization, recapitalization, or any other
increase or decrease in the number of outstanding shares of Common Stock
effected without consideration to the Company, the specified number of
Restricted Stock Units shall be proportionately adjusted to prevent dilution or
enlargement of the rights granted to, or available for, the Participant
hereunder. Furthermore, if and to the extent permissible for purposes of the
“performance-based compensation” exception under Code Section 162(m), the
Committee shall adjust the Performance Goal(s) to the extent (if any) it
determines that the adjustment is necessary or advisable to preserve the
intended incentives and benefits to reflect any material change in corporate
capitalization, any material corporate transaction (such as a reorganization,
combination, separation, merger, acquisition, or any combination of the
foregoing), or any complete or partial liquidation of the Company, or any other
similar special circumstances, including the issuance of a significant number of
shares of Common Stock.

Section 10. No Employment Rights. Nothing in the Plan or this Agreement confers
upon the Participant any right with respect to continuance of employment by the
Company or any of its Subsidiaries, or affects the right of the Company or any
of its Subsidiaries may have to terminate the Participant’s employment at any
time.

 

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Section 11. Coordination with Plan. The Participant hereby acknowledges receipt
of a copy of the Plan and agrees to be bound by all of the terms and provisions
thereof including any that may conflict with those contained in this Agreement.

Section 12. Notices. All notices to the Company shall be in writing and sent to
the Company’s Director of Human Resources at the Company’s offices. Notices to
the Participant shall be addressed to the Participant at the Participant’s
address as it appears on the Company’s records.

Section 13. Amendment. The Company may alter, amend or terminate this Agreement
only with the Participant’s consent, except as otherwise expressly provided by
the Plan or this Agreement.

Section 14. Governing Law. This Agreement shall be governed by the laws of the
State of New York to the extent not preempted by federal law, without reference
to principles of conflict of laws, and construed accordingly.

Section 15. Compensation Recovery Policy. Notwithstanding any other provision of
this Agreement to the contrary, any Restricted Stock Units granted and/or shares
of Common Stock issued hereunder, and/or any amount received with respect to any
sale of any such shares of Common Stock, shall be subject to potential
cancellation, recoupment, rescission, payback or other action in accordance with
the terms of the Company’s compensation recovery policy, if any, or any similar
policy that the Company may adopt from time to time (the “Policy”). The
Participant agrees and consents to the Company’s application, implementation and
enforcement of (i) the Policy that may apply to the Participant and (ii) any
provision of applicable law relating to cancellation, rescission, payback or
recoupment of compensation, including, but not limited to Section 10D of the
Exchange Act, and expressly agrees that the Company may take such actions as are
necessary to effectuate the Policy or applicable law without further consent or
action being required by the Participant. To the extent that the terms of this
Agreement and the Policy or any similar policy conflict, then the terms of such
policy shall prevail.

Section 16. Excise Tax Cap. In the event that a Participant becomes entitled to
any payment or benefit under this Agreement (such benefits together with any
other payments or benefits payable to the Participant under any other agreement
with the Participant, or plan or policy of the Company, are referred to in the
aggregate as the “Total Payments”), if all or any part of the Total Payments
will be subject to the tax imposed by Code Section 4999, or any similar tax that
may hereafter be imposed (the “Excise Tax”), then:

 

  (a) Within 30 days following the Participant’s termination of employment, the
Company will notify the Participant in writing: (1) whether the payments and
benefits under this Agreement, when added to any other payments and benefits
making up the Total Payments, exceed an amount equal to 299% of the
Participant’s “base amount” as defined in Code Section 280G(b)(3) (the “299%
Amount”); and (2) the amount that is equal to the 299% Amount.

 

  (b) The payments and benefits under this Agreement shall be reduced such that
the Total Payments do not exceed the 299% Amount, so that no portion of the
payments and benefits under this Agreement will be subject to the Excise Tax.
Any payment or benefit so reduced will be permanently forfeited and will not be
paid to the Participant.

 

  (c) The calculation of the 299% Amount and the determination of how much the
Participant’s payments and benefits must be reduced in order to avoid
application of the Excise Tax will be made by the Company’s public accounting
firm prior to the Participant’s termination of employment, which firm must be
reasonably acceptable to the Participant (the “Accounting Firm”). The Company
will cause the Accounting Firm to provide detailed supporting calculations of
its determinations to the Company and the Participant. Notice must be given to
the Accounting Firm within 15 business days after an event entitling the
Participant to a payment under this Agreement. All fees and expenses of the
Accounting Firm will be borne solely by the Company.

 

  (d) For purposes of making the reduction of amounts payable under this
Agreement, such amounts will be eliminated in compliance with the requirements
of Code Section 409A, to the extent applicable.

Section 17. Section 409A. This Agreement and the Restricted Stock Units
hereunder are intended to comply with Code Section 409A, and this Agreement
shall be administered and interpreted consistent with such intention.
Notwithstanding the foregoing, the Company makes no representations to the
Participant regarding the taxation of the

 

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Restricted Stock Units under this Agreement, including, but not limited to, the
tax effects of Code Section 409A, and the Participant shall be solely
responsible for the taxes imposed upon him or her with respect to the Restricted
Stock Units. References to “termination of employment” and similar terms used in
this Agreement mean, to the extent necessary to comply with Code Section 409A,
the date that the Participant first incurs a “separation from service” within
the meaning of Code Section 409A. Notwithstanding anything in this Agreement to
the contrary, if at the time of the Participant’s separation from service, the
Participant is a “specified employee” for purposes of Code Section 409A, and
payment under this Agreement as a result of such separation from service is
required by Code Section 409A to be delayed by six months, then the Company
shall make such payment on the day following the six-month anniversary of the
Participant’s separation from service to the extent required to comply with Code
Section 409A.

IN WITNESS WHEREOF, the Company and the Participant have caused this Agreement
to be executed on the date set forth opposite their respective signatures, but
effective as of the Date of Grant.

 

Dated:     

 

    For the Company:         By:  

 

        Name:     

 

        Title:  

 

  Dated:     

 

    PARTICIPANT:         By:  

 

        Name:     

 

 

 

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EXHIBIT A

PERFORMANCE PERIOD AND PERFORMANCE GOALS

Performance Period

The three-year period beginning on January 1, [YEAR] and ending on December 31,
[YEAR].

Performance Goals

XXX

Definitions.

XXX

Pro-Ration of Earned RSUs

XXX

 

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