exv4w4





Exhibit
4.4




FINANCIAL INSTITUTIONS, INC.




2009 MANAGEMENT STOCK INCENTIVE PLAN



     1. BACKGROUND AND PURPOSE



     Financial Institutions, Inc. (the “Company”) hereby establishes the Financial Institutions,
Inc. 2009 Management Stock Incentive Plan (the “Plan”). The purpose of this Plan is to enable the
Company and its subsidiaries to attract and retain key employees and provide them with an incentive
to maintain and enhance the Company’s long-term performance record. It is intended that this
purpose will best be achieved by granting eligible key employees incentive stock options (“ISOs”),
non-qualified stock options (“NQSOs”), and restricted stock grants, individually or in combination,
under this Plan pursuant to the rules set forth in Sections 83, 162(m), 421 and 422 of the Internal
Revenue Code, as amended from time to time.



     2. ADMINISTRATION



     The Plan shall be administered by the Company’s Compensation Committee (the “Committee”).
This Committee shall consist of at least two members of the Company’s Board of Directors all of
whom shall, unless the Board determines otherwise, be “outside directors” as this term is defined
in Code Section 162(m) and regulations thereunder and “non-employee directors” as this term is used
in Rule 16b-3, or any successor provision, promulgated pursuant to the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Subject to the provisions of the Plan, the Committee shall
possess the authority, in its discretion, (a) to determine the employees of the Company to whom,
and the time or times at which, ISOs and/or NQSOs (ISOs and NQSOs are collectively referred to as
“options”), and restricted stock grants (all three types of grants are collectively referred to as
“awards”) shall be granted; (b) to determine at the time of grant whether an award will be an ISO,
a NQSO, a restricted stock grant or a combination of these awards and the number of shares to be
subject to each award; (c) to prescribe the form of the award agreements and any appropriate terms
and conditions applicable to the awards and to make any amendments to such agreements or awards;
(d) to interpret the Plan; (e) to make and amend rules and regulations relating to the Plan; and
(f) to make all other determinations necessary or advisable for the administration of the Plan.
The Committee’s determinations shall be conclusive and binding. No member of the Committee shall
be liable for any action taken or decision made in good faith relating to the Plan or any award
granted hereunder.



     3. ELIGIBLE EMPLOYEES



     Awards may be granted under the Plan only to employees of the Company and its subsidiaries
(which shall include all corporations of which at least fifty percent of the voting stock is owned
by the Company directly or through one or more corporations at least fifty percent of the voting
stock of which is so owned) who have the capability of making a substantial contribution to the
success of the Company.



     4. SHARES AVAILABLE



     The total number of shares of the Company’s Common Stock (par value of $.01 per share)
available in the aggregate for awards under this Plan shall not exceed 690,000 shares. Of









 



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those 690,000 shares, not more than 500,000 shares of Common Stock shall be available for ISO
awards during the term of the Plan. For purposes of calculating the number of shares of Common
Stock available under the Plan, each share of Common Stock granted pursuant to a restricted stock
award shall count as 1.64 shares of Common Stock. Shares to be granted may be authorized and
unissued shares or may be treasury shares.




     The total number of shares covered by all awards granted under this Plan to any one
participant in any one calendar year may not exceed 300,000. The Committee may issue awards in any
combination it may choose provided that the total number of shares under all such awards to any one
participant does not exceed the annual 300,000 individual aggregate limit.



     If an award expires, terminates or is canceled without being exercised or becoming vested, new
awards may thereafter be granted under the Plan covering such shares unless Rule 16b-3 provides
otherwise. No award may be granted more than 10 years after the effective date of the Plan.



     5. TERMS AND CONDITIONS OF ISOS



     Each ISO granted under the Plan shall be evidenced by an ISO option agreement in such form as
the Committee shall approve from time to time, which agreement shall conform with this Plan and
contain the following terms and conditions:



          (a) Exercise Price. The exercise price under each option shall equal the fair market
value of the Common Stock at the time such option is granted, or, if there was no trading in such
stock on the date of such grant, the closing price on the last preceding day on which there was
such trading. If an option is granted to an officer or employee who at the time of grant owns
stock possessing more than ten percent of the total combined voting power of all classes of stock
of the Company (a “10-percent Shareholder”), the purchase price shall be at least 110 percent of
the fair market value of the stock subject to the option.




          (b) Duration of Option. Each option by its terms shall not be exercisable after the
expiration of ten years from the date such option is granted. In the case of an option granted to
a 10-percent Shareholder, the option by its terms shall not be exercisable after the expiration of
five years from the date such option is granted.




          (c) Options Nontransferable. Each option by its terms shall not be transferable by
the participant otherwise than by will or the laws of descent and distribution and shall be
exercisable, during the participant’s lifetime, only by the participant, the participant’s guardian
or the participant’s legal representative. To the extent required for the option grant and/or
exercise to be exempt under Rule 16b-3, options (or the shares of Common Stock underlying the
options) must be held by the participant for at least six months following the date of grant.




          (d) Exercise Terms. Each option granted under the Plan shall become exercisable
pursuant to a vesting schedule established by the Committee at the time an option is granted.
Options may be partially exercised from time to time during the period extending from the time they
first become exercisable until the tenth anniversary (fifth anniversary for a 10-percent
Shareholder) of the date of grant. The Committee may impose such other terms and conditions on the
exercise of options as it deems appropriate to serve the purposes for which this Plan has been
established.










 



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          (e) Maximum Value of ISO Shares. No ISO shall be granted to an employee under this
Plan or any other ISO plan of the Company or its subsidiaries to purchase shares as to which the
aggregate fair market value (determined as of the date of grant) of the Common Stock which first
become exercisable by the employee in any calendar year exceeds $100,000.




          (f) Payment of Exercise Price. An option shall be exercised upon written notice to
the Company accompanied by payment in full for the shares being acquired. The payment shall be
made in cash, by check or, if the option agreement so permits, by delivery of shares of Common
Stock of the Company beneficially owned by the participant, duly assigned to the Company with the
assignment guaranteed by a bank, trust company or member firm of the New York Stock Exchange, or by
a combination of the foregoing. Any such shares so delivered shall be deemed to have a value per
share equal to the fair market value of the shares on such date. For this purpose, fair market
value shall equal the closing price of the Company’s Common Stock on the listing exchange on the
date the option is exercised, or, if there was no trading in such stock on the date of such
exercise, the closing price on the last preceding day on which there was such trading.




     6. TERMS AND CONDITIONS FOR NQSOS



     Each NQSO granted under the Plan shall be evidenced by a NQSO option agreement in such form as
the Committee shall approve from time to time, which agreement shall conform to this Plan and
contain the same terms and conditions as the ISO option agreement except that the 10-percent
Shareholder restrictions in Sections 5(a) and 5(b) and the maximum value of share rules of Section
5(e) shall not apply to NQSO grants. To the extent an option initially designated as an ISO
exceeds the value limit of Section 5(e), it shall be deemed a NQSO and shall otherwise remain in
full force and effect.



     7. TERMS AND CONDITIONS OF RESTRICTED STOCK GRANTS



     The Committee may, evidenced by such written agreement as the Committee shall from time to
time prescribe, grant to an eligible employee a specified number of shares of the Company’s Common
Stock which shall vest only after the attainment of the relevant restrictions described in Section
7(b) below (“restricted stock”). Such restricted stock shall have an appropriate restrictive
legend affixed thereto. A restricted stock grant shall be neither an option nor a sale, but shall
be subject to the following conditions and restrictions:



          (a) Restricted stock may not be sold or otherwise transferred by the participant until
ownership vests, provided however, to the extent required for the restricted stock grant to be
exempt under Rule 16b-3, the restricted stock must be held by the participant for at least six
months following the date of vesting.




          (b) Ownership shall vest only following satisfaction of one or more of the following criteria
as the Committee may prescribe:





	 	(1)	 	the passage of two years, or such longer period
of time as the Committee in its discretion may provide, from the date
of grant.
	 
	 	(2)	 	the attainment of performance-based goals
established by the Committee as of the date of grant. If the
participant’s compensation is subject to the $1 million cap of Code
Section 162(m), the










 



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	 	 	 	Committee may establish such performance goals based on one or more of
the following performance measures:






	 	•	 	total shareholder return
	 
	 	•	 	earnings per share
	 
	 	•	 	efficiency ratio
	 
	 	•	 	net charge offs
	 
	 	•	 	cash flow growth and/or
	 
	 	•	 	return on equity.






	 	 	 	Performance measures may be established on a corporate, divisional,
business unit or consolidated basis and measured absolutely or relative
to the Company’s peers. If the participant’s compensation is not
intended to qualify as performance based compensation within the
meaning of Code Section 162(m), the Committee may establish the
performance goal on the basis of the preceding performance measures or
any other measure it may from time to time deem appropriate in its
discretion.
	 
	 	(3)	 	any other conditions the Committee may
prescribe, including a non-compete requirement.





          (c) Unless the Committee determines otherwise, the Committee shall grant and administer all
performance-based awards under (b)(2) above with the intent of meeting the criteria of Code Section
162(m) for performance-based compensation with respect to participants whose compensation is
subject to Code Section 162(m). To this end, the outcome of all targeted goals shall be
substantially uncertain on the date of grant; the goals shall be established no later than 90 days
following the commencement of service to which the goals relate; the minimum period for attaining
each performance goal shall be one year; and the Committee shall certify at the conclusion of the
performance period whether the performance-based goals have been attained. Such certification may
be made by noting the attainment of the goals in the minutes of the Committee’s meetings.




          (d) Except as otherwise determined by the Committee, all rights and title to restricted stock
granted to a participant under the Plan shall terminate and be forfeited to the Company upon
failure to fulfill all conditions and restrictions applicable to such restricted stock.




          (e) Except for the restrictions set forth in this Plan and those specified by the Committee in
any restricted stock agreement, a holder of restricted stock shall possess all the rights of a
holder of the Company’s Common Stock (including voting and dividend rights); provided, however,
that prior to vesting the certificates representing such shares of restricted stock shall be held
by the Company for the benefit of the participant and the participant shall deliver to the Company
a stock power executed in blank covering such shares. As the shares vest, certificates
representing such shares shall be released to the participant. The Committee shall have the
discretion to determine at the time of the restricted stock grant (as memorialized in the
restricted stock agreement with the participant) whether dividends payable on the participant’s
unvested shares shall be (i) paid to the participant or (ii) reinvested in additional shares of
restricted stock. If dividends on unvested shares are reinvested in additional shares of
restricted










 



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stock, all dividends payable on the unvested shares shall be reinvested in the Company’s Common
Stock, treated as restricted stock until the underlying restricted shares vest, and, upon such
vesting, released to the participant. If the underlying shares do not vest, all shares purchased
with the reinvested dividends shall be forfeited.




          (f) All other provisions of the Plan not inconsistent with this section shall apply to
restricted stock or the holder thereof, as appropriate, unless otherwise determined by the
Committee.




     8. GENERAL RESTRICTION ON ISSUANCE OF STOCK CERTIFICATES



     The Company shall not be required to deliver any certificate upon the grant, vesting or
exercise of any award or option until it has been furnished with such opinion, representation or
other document as it may reasonably deem necessary to ensure compliance with any law or regulation
of the Securities and Exchange Commission or any other governmental authority having jurisdiction
under this Plan. Certificates delivered upon such grant or exercise may bear a legend restricting
transfer absent such compliance. Each award shall be subject to the requirement that, if at any
time the Committee shall determine, in its discretion, that the listing, registration or
qualification of the shares subject to such award upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such awards or the issue or
purchase of shares thereunder, such awards may not vest or be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee in the exercise of its reasonable judgment.



     9. IMPACT OF TERMINATION OF EMPLOYMENT



          (a) Options. If the employment of a participant terminates by reason of the
participant’s disability or death, any option may be exercised, in the case of disability, by the
participant or, in the case of death, the participant’s designated beneficiary (or personal
representative if there is no designated beneficiary) at any time prior to the earlier of the
expiration date of the option or the expiration of one year after the date of disability or death,
but only if, and to the extent that the participant was entitled to exercise the option at the date
of disability or death. If the employment of a participant terminates on account of retirement,
all of the participant’s outstanding options shall become immediately vested and these options
together with previously vested but unexercised options may be exercised prior to the earlier of
the expiration date of the option or the expiration of 13 months from the date of retirement. For
this purpose, “retirement” means any termination of employment on or after a participant is
entitled to receive an early retirement benefit under any defined benefit pension plan maintained
by the Company or an affiliate in which the participant has any accrued benefit. If the
participant does not have an accrued benefit in any such plan, “retirement” means the participant’s
termination of employment on or after he has reached age 55. Upon termination of the participant’s
employment for any reason other than retirement, disability or death, all nonvested options held by
the participant shall be forfeited and any options that are vested on the date of termination may
be exercised prior to the earlier of the expiration date of the option or the expiration of 90 days
from the date of termination. An option that remains exercisable after the expiration of three
months from termination of employment shall be treated as a NQSO after three months even if it
would have been treated as an ISO if exercised within three months of termination. Notwithstanding
the foregoing, an option may not be exercised after retirement if the Committee reasonably











 





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determines that the termination of employment of such participant resulted from willful acts,
or failure to act, by the participant detrimental to the Company or any of its subsidiaries.




          (b) Restricted Stock Grants.





	 	(1)	 	Passage of Time Vesting. If a
participant has been awarded restricted stock whose vesting is
conditioned solely on the passage of time, any termination of
employment for any reason, shall result in the forfeiture of all
restricted stock awards that were not vested prior to the termination
of employment except as otherwise provided by the Committee.
	 
	 	(2)	 	Performance-Based Vesting. If a
participant has been awarded restricted stock whose vesting is based
solely on the attainment of performance-based goals or partly on the
attainment of performance-based goals and partly on the passage of
time, any termination of employment except death, disability or
retirement on or after age 62 (or early retirement after age 55) shall
result in the forfeiture of all restricted stock awards that were not
vested prior to the termination of employment. A participant who
terminates employment on account of death, disability or retirement
may, if the performance-based criteria are eventually attained, be
awarded (or, in the event of death, the participant’s designated
beneficiary or personal representative if there is no designated
beneficiary shall be awarded) up to a pro rata portion of the
restricted shares based on the participant’s length of service as of
his or her termination of employment over the length of the award
period ending on the date the performance-based criteria are satisfied
(or the passage of time would have been satisfied, if later, for an
award based in part on performance goals and in part on the passage of
time). The Committee shall have the discretion whether to grant a full
pro rata portion of the restricted shares, a lesser portion or no
 shares at all under this subsection (b)(ii).





          (c) Acts Not Constituting Termination of Employment. Unless otherwise determined by
the Committee, an authorized leave of absence shall not constitute a termination of employment for
purposes of this Plan. In addition, participants who transfer employment within the Financial
Institutions group of companies shall not be considered to have terminated employment. Any such
transferred participants shall remain eligible to exercise previously granted options and to vest
in restricted stock awards in accordance with their terms as if no termination occurred and shall
be eligible to receive additional awards pursuant to the terms of employment with their new
employer.




     Notwithstanding the forgoing, the Committee may adopt different rules than set forth above to
apply to a participant’s stock option awards or restricted stock grants when a participant’s
employment terminates, including, without limitation, forfeiting options that are not vested when
the participant’s employment terminates. Such rules shall be set forth in the participant’s award
agreement.










 



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     10. ADJUSTMENT OF SHARES



     In the event of any change in the Common Stock of the Company by reason of any stock dividend,
stock split, recapitalization, reorganization, merger, consolidation, split-up, combination, or
exchange of shares, or rights offering to purchase Common Stock at a price substantially below fair
market value, or of any similar change affecting the Common Stock, the number and kind of shares
authorized under Section 4, the number and kind of shares which thereafter are subject to an award
under the Plan and the number and kind of unexercised options and unvested shares set forth in
awards under outstanding agreements and the price per share shall be adjusted automatically
consistent with such change to prevent substantial dilution or enlargement of the rights granted
to, or available for, participants in the Plan.



     11. WITHHOLDING TAXES



     Whenever the Company proposes or is required to issue or transfer shares of Common Stock under
the Plan, or whenever restricted stock vests, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal, state and/or local
income and employment withholding tax requirements prior to the delivery of any certificate or
certificates for such shares or to take any other appropriate action to satisfy such withholding
requirements. Notwithstanding the foregoing, subject to such rules as the Committee may promulgate
and compliance with any requirements under Rule 16b-3, the recipient may satisfy such obligation in
whole or in part by electing to have the Company withhold shares of Common Stock from the shares to
which the recipient is otherwise entitled.



     12. NO EMPLOYMENT RIGHTS



     The Plan and any awards granted under the Plan shall not confer upon any participant any right
with respect to continuance as an employee of the Company or any subsidiary, nor shall they
interfere in any way with the right of the Company or any subsidiary to terminate the participant’s
position as an employee at any time.



     13. RIGHTS AS A SHAREHOLDER



     The recipient of any option under the Plan shall have no rights as a shareholder with respect
thereto unless and until certificates for the underlying shares of Common Stock are issued to the
recipient. The recipient of a restricted stock grant shall have all rights of a shareholder except
as otherwise limited by the terms of this Plan.



     14. AMENDMENT AND DISCONTINUANCE



     This Plan may be amended, modified or terminated by the Committee or by the shareholders of
the Company, except that the Committee may not, without approval of the shareholders, adopt a Plan
amendment to materially increase the benefits accruing to participants under the Plan, increase the
maximum number of shares as to which awards may be granted under the Plan, change the basis for
making performance-based awards for participants whose compensation is subject to Section 162(m),
change the minimum exercise price of options, change the class of eligible persons, extend the
period for which awards may be granted or exercised, or withdraw the authority to administer the
Plan from the Committee or a committee of the Committee consisting solely of outside directors
unless the Board determines that inside directors may serve on the Committee. Notwithstanding the
foregoing, to the extent permitted by law, the Committee may amend the Plan without the approval of
shareholders, to the extent it deems necessary to cause the Plan to comply with Securities and
Exchange Commission Rule









 



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16b-3 or any successor rule, as it may be amended from time to time. Except as required by
law, no amendment, modification, or termination of the Plan may, without the written consent of a
participant to whom any award shall theretofore have been granted, adversely affect the rights of
such participant under such award.




     15. CHANGE IN CONTROL



          (a) Notwithstanding other provisions of the Plan, in the event of a change in control of the
Company (as defined in subsection (c) below), all of a participant’s restricted stock awards shall
become immediately vested to the same extent as if all restrictions had been satisfied and all
options shall become immediately vested and exercisable, unless directed otherwise by a resolution
of the Committee adopted prior to and specifically relating to the occurrence of such change in
control.




          (b) In the event of a change in control each participant holding an exercisable option (i)
shall have the right at any time thereafter during the term of such option to exercise the option
in full notwithstanding any limitation or restriction in any option agreement or in the Plan, and
(ii) may, subject to Committee approval and after written notice to the Company within 60 days
after the change in control, or, if the participant is an officer subject to Section 16 of the
Exchange Act and to the extent required to exempt the transaction under Rule 16b-3, during the
period beginning on the third business day and ending on the twelfth business day following the
first release for publication by the Company after such change of control of a quarterly or annual
summary statement of earnings, which release occurs at least six months following grant of the
option, whichever period is longer, receive, in exchange for the surrender of the option or any
portion thereof to the extent the option is then exercisable in accordance with clause (i), an
amount of cash equal to the difference between the fair market value (as determined by the
Committee) on the date of surrender of the Common Stock covered by the option or portion thereof
which is so surrendered and the option price of such Common Stock under the option.




          (c) For purposes of this section, “change in control” means:





	 	(1)	 	there shall be consummated
	 
	 	 	 	(i) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which any
 shares of the Company’s common stock are to be converted into cash,
securities or other property, provided that the consolidation or merger
is not with a corporation which was a wholly-owned subsidiary of the
Company immediately before the consolidation or merger; or
	 
	 	 	 	 (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the
assets of the Company; or
	 
	 	(2)	 	the shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company; or
	 
	 	(3)	 	any person (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) shall become the beneficial owner
(within the










 



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	 	 	 	meaning of Rule 13d-3 under the Exchange Act), directly or indirectly,
of 20% or more of the Company’s then outstanding common stock, provided
that such person shall not be a wholly-owned subsidiary of the Company
immediately before it becomes such 20% beneficial owner; or
	 
	 	(4)	 	individuals who constitute the Company’s Board
of Directors on the date hereof (the “Incumbent Board”) cease for any
reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be, for purposes of this clause (4), considered as though such
person were a member of the Incumbent Board.





     16. EFFECTIVE DATE



     The effective date of the Plan shall be the date this Plan is approved by the affirmative vote
of the owners of a majority of the Company’s outstanding shares of Common Stock.



     17. DEFINITIONS



     Any terms or provisions used herein which are defined in Sections 83, 162(m), 421, or 422 of
the Internal Revenue Code as amended, or the regulations thereunder or corresponding provisions of
subsequent laws and regulations in effect at the time awards are made hereunder, shall have the
meanings as therein defined.



     18. 409A



     All awards granted under this Plan are intended to be exempt from the requirements of Section
409A of the Internal Revenue Code of 1986, as amended, and the terms of such awards shall be
applied and interpreted in accordance with that intent.



     19. GOVERNING LAW



     To the extent not inconsistent with the provisions of the Internal Revenue Code that relate to
awards, this Plan and any award agreement adopted pursuant to it shall be construed under the laws
of the State of New York.



	 	 	 	 	 
	 	FINANCIAL INSTITUTIONS, INC.

 	 
	Dated: May 6, 2009 	By:  	/s/ Peter G. Humphrey
 	 
	 	Title: President 	 






	 	 	 	 	 


Date of Shareholder Approval: May 6, 2009