EX-10.3






December 23, 2008



Mr. Peter G. Humphrey


President and Chief Executive Officer


Financial Institutions, Inc.


220 Liberty Street


P.O. Box 227


Warsaw, New York 14569



Dear Mr. Humphrey,



Financial Institutions, Inc. (the “Company”) anticipates entering into a Securities Purchase
Agreement (the “Participation Agreement”) with the United States Department of Treasury
(“Treasury”) that provides for the Company’s participation in the Treasury’s TARP Capital Purchase
Program (the “CPP”). If the Company does not participate or ceases at any time to participate in
the CPP, this letter shall be of no further force and effect.



For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	1)	 	No Golden Parachute Payments. The Company is prohibiting any golden
parachute payment to you during any “applicable tax year.” An “applicable tax year”
is any period during which (a) you are a senior executive officer, and (b) Treasury
holds an equity or debt position in the Company under the CPP.






	 	2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to you during a CPP Covered Period is subject to recovery or
“clawback” by the Company if the payments were based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.






	 	3)	 	Compensation Program Amendments. Each of the Company’s compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including
golden parachute, severance and employment agreements) either currently or
hereinafter in effect and including all amendments thereto (collectively, “Benefit
Plans”) with respect to you are hereby amended to the extent necessary to give
effect to provisions (l) and (2).






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






	 	•	 	The term “Company” includes any entities treated as a single employer with
the Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You
are also delivering a waiver pursuant to the Participation Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.






	 	•	 	The term “applicable tax year” shall be limited by, and interpreted in a
manner consistent with, 31 C.F.R. § 30.11, (as in effect on the Closing Date).






	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented
by guidance or regulation issued by the Department of the Treasury and as
published in the Federal Register on October 20, 2008.






	 	•	 	“Golden parachute payment” is used with same meaning as in Section
111(b)(2)(C) of EESA.






	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.






	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be
interpreted, administered and construed to, comply with Section 111 of EESA and
the guidance thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this letter)






	 	5)	 	Miscellaneous. To the extent not subject to federal law, this letter
will be governed by and construed in accordance with the laws of New York. This
letter may be executed in two or more counterparts, each of which will be deemed to
be an original. A signature transmitted by facsimile will be deemed an original
signature.





In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten the value
of the Company. To the extent any such review requires revisions to any Benefit Plan with respect
to you, you and the Company agree to negotiate such changes promptly and in good faith.



In addition to the foregoing and in consideration for the benefits you will receive as a
result of Company’s participation in the CPP, you agree to voluntarily waive any claim against the
United States or the Company for any changes to your compensation or benefits that are required to
comply with EESA. This waiver includes all claims you may have under the laws of the United States
or any state related to the requirements imposed by EESA, including without limitation a claim for
any compensation or other payments you would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on your employment relationship.



1



Please indicate your agreement by signing and returning this letter agreement.



Yours sincerely,



	 
	/s/ Ronald A. Miller
	Ronald A. Miller

	Executive Vice President and

	Chief Financial Officer,

	Financial Institutions, Inc.







Intending to be legally bound, I agree with


and accept the foregoing terms on the date set


forth below.



	 
	/s/ Peter G. Humphrey
	Peter G. Humphrey

	Date: December 23, 2008







2




December 23, 2008



Mr. Ronald A. Miller


Executive Vice President and



Chief Financial Officer



Financial Institutions, Inc.


220 Liberty Street


P.O. Box 227


Warsaw, New York 14569



Dear Mr. Miller,



Financial Institutions, Inc. (the “Company”) anticipates entering into a Securities Purchase
Agreement (the “Participation Agreement”) with the United States Department of Treasury
(“Treasury”) that provides for the Company’s participation in the Treasury’s TARP Capital Purchase
Program (the “CPP”). If the Company does not participate or ceases at any time to participate in
the CPP, this letter shall be of no further force and effect.



For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	1)	 	No Golden Parachute Payments. The Company is prohibiting any golden
parachute payment to you during any “applicable tax year.” An “applicable tax year”
is any period during which (a) you are a senior executive officer, and (b) Treasury
holds an equity or debt position in the Company under the CPP.






	 	2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to you during a CPP Covered Period is subject to recovery or
“clawback” by the Company if the payments were based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.






	 	3)	 	Compensation Program Amendments. Each of the Company’s compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including
golden parachute, severance and employment agreements) either currently or
hereinafter in effect and including all amendments thereto (collectively, “Benefit
Plans”) with respect to you are hereby amended to the extent necessary to give
effect to provisions (l) and (2).






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






	 	•	 	The term “Company” includes any entities treated as a single employer with
the Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You
are also delivering a waiver pursuant to the Participation Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.






	 	•	 	The term “applicable tax year” shall be limited by, and interpreted in a
manner consistent with, 31 C.F.R. § 30.11, (as in effect on the Closing Date).






	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented
by guidance or regulation issued by the Department of the Treasury and as
published in the Federal Register on October 20, 2008.






	 	•	 	“Golden parachute payment” is used with same meaning as in Section
111(b)(2)(C) of EESA.






	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.






	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be
interpreted, administered and construed to, comply with Section 111 of EESA and
the guidance thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this letter)






	 	7)	 	Miscellaneous. To the extent not subject to federal law, this letter
will be governed by and construed in accordance with the laws of New York. This
letter may be executed in two or more counterparts, each of which will be deemed to
be an original. A signature transmitted by facsimile will be deemed an original
signature.





In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten the value
of the Company. To the extent any such review requires revisions to any Benefit Plan with respect
to you, you and the Company agree to negotiate such changes promptly and in good faith.



In addition to the foregoing and in consideration for the benefits you will receive as a
result of Company’s participation in the CPP, you agree to voluntarily waive any claim against the
United States or the Company for any changes to your compensation or benefits that are required to
comply with EESA. This waiver includes all claims you may have under the laws of the United States
or any state related to the requirements imposed by EESA, including without limitation a claim for
any compensation or other payments you would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on your employment relationship.



3



Please indicate your agreement by signing and returning this letter agreement.



Yours sincerely,



	 
	/s/ Peter G. Humphrey
	Peter G. Humphrey

	President and Chief Executive Officer

	Financial Institutions, Inc.







Intending to be legally bound, I agree with


and accept the foregoing terms on the date set


forth below.



	 
	/s/ Ronald A. Miller
	Ronald A. Miller

	Date: December 23, 2008







4




December 23, 2008



Mr. James T. Rudgers


Executive Vice President and



Chief of Community Banking



Financial Institutions, Inc.


220 Liberty Street


P.O. Box 227


Warsaw, New York 14569



Dear Mr. Rudgers,



Financial Institutions, Inc. (the “Company”) anticipates entering into a Securities Purchase
Agreement (the “Participation Agreement”) with the United States Department of Treasury
(“Treasury”) that provides for the Company’s participation in the Treasury’s TARP Capital Purchase
Program (the “CPP”). If the Company does not participate or ceases at any time to participate in
the CPP, this letter shall be of no further force and effect.



For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	1)	 	No Golden Parachute Payments. The Company is prohibiting any golden
parachute payment to you during any “applicable tax year.” An “applicable tax year”
is any period during which (a) you are a senior executive officer, and (b) Treasury
holds an equity or debt position in the Company under the CPP.






	 	2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to you during a CPP Covered Period is subject to recovery or
“clawback” by the Company if the payments were based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.






	 	3)	 	Compensation Program Amendments. Each of the Company’s compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including
golden parachute, severance and employment agreements) either currently or
hereinafter in effect and including all amendments thereto (collectively, “Benefit
Plans”) with respect to you are hereby amended to the extent necessary to give
effect to provisions (l) and (2).






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






	 	•	 	The term “Company” includes any entities treated as a single employer with
the Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You
are also delivering a waiver pursuant to the Participation Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.






	 	•	 	The term “applicable tax year” shall be limited by, and interpreted in a
manner consistent with, 31 C.F.R. § 30.11, (as in effect on the Closing Date).






	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented
by guidance or regulation issued by the Department of the Treasury and as
published in the Federal Register on October 20, 2008.






	 	•	 	“Golden parachute payment” is used with same meaning as in Section
111(b)(2)(C) of EESA.






	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.






	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be
interpreted, administered and construed to, comply with Section 111 of EESA and
the guidance thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this letter)






	 	9)	 	Miscellaneous. To the extent not subject to federal law, this letter
will be governed by and construed in accordance with the laws of New York. This
letter may be executed in two or more counterparts, each of which will be deemed to
be an original. A signature transmitted by facsimile will be deemed an original
signature.





In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten the value
of the Company. To the extent any such review requires revisions to any Benefit Plan with respect
to you, you and the Company agree to negotiate such changes promptly and in good faith.



In addition to the foregoing and in consideration for the benefits you will receive as a
result of Company’s participation in the CPP, you agree to voluntarily waive any claim against the
United States or the Company for any changes to your compensation or benefits that are required to
comply with EESA. This waiver includes all claims you may have under the laws of the United States
or any state related to the requirements imposed by EESA, including without limitation a claim for
any compensation or other payments you would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on your employment relationship.



5



Please indicate your agreement by signing and returning this letter agreement.



Yours sincerely,



	 
	/s/ Peter G. Humphrey
	Peter G. Humphrey

	President and Chief Executive Officer

	Financial Institutions, Inc.







Intending to be legally bound, I agree with


and accept the foregoing terms on the date set


forth below.



	 
	/s/ James T. Rudgers
	James T. Rudgers

	Date: December 23, 2008







6




December 23, 2008



Mr. George D. Hagi


Executive Vice President and



Chief Risk Officer



Financial Institutions, Inc.


220 Liberty Street


P.O. Box 227


Warsaw, New York 14569



Dear Mr. Hagi,



Financial Institutions, Inc. (the “Company”) anticipates entering into a Securities Purchase
Agreement (the “Participation Agreement”) with the United States Department of Treasury
(“Treasury”) that provides for the Company’s participation in the Treasury’s TARP Capital Purchase
Program (the “CPP”). If the Company does not participate or ceases at any time to participate in
the CPP, this letter shall be of no further force and effect.



For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	1)	 	No Golden Parachute Payments. The Company is prohibiting any golden
parachute payment to you during any “applicable tax year.” An “applicable tax year”
is any period during which (a) you are a senior executive officer, and (b) Treasury
holds an equity or debt position in the Company under the CPP.






	 	2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to you during a CPP Covered Period is subject to recovery or
“clawback” by the Company if the payments were based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.






	 	3)	 	Compensation Program Amendments. Each of the Company’s compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including
golden parachute, severance and employment agreements) either currently or
hereinafter in effect and including all amendments thereto (collectively, “Benefit
Plans”) with respect to you are hereby amended to the extent necessary to give
effect to provisions (l) and (2).






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






	 	•	 	The term “Company” includes any entities treated as a single employer with
the Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You
are also delivering a waiver pursuant to the Participation Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.






	 	•	 	The term “applicable tax year” shall be limited by, and interpreted in a
manner consistent with, 31 C.F.R. § 30.11, (as in effect on the Closing Date).






	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented
by guidance or regulation issued by the Department of the Treasury and as
published in the Federal Register on October 20, 2008.






	 	•	 	“Golden parachute payment” is used with same meaning as in Section
111(b)(2)(C) of EESA.






	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.






	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be
interpreted, administered and construed to, comply with Section 111 of EESA and
the guidance thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this letter)






	 	11)	 	Miscellaneous. To the extent not subject to federal law, this letter
will be governed by and construed in accordance with the laws of New York. This
letter may be executed in two or more counterparts, each of which will be deemed to
be an original. A signature transmitted by facsimile will be deemed an original
signature.





In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten the value
of the Company. To the extent any such review requires revisions to any Benefit Plan with respect
to you, you and the Company agree to negotiate such changes promptly and in good faith.



In addition to the foregoing and in consideration for the benefits you will receive as a
result of Company’s participation in the CPP, you agree to voluntarily waive any claim against the
United States or the Company for any changes to your compensation or benefits that are required to
comply with EESA. This waiver includes all claims you may have under the laws of the United States
or any state related to the requirements imposed by EESA, including without limitation a claim for
any compensation or other payments you would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on your employment relationship.



7



Please indicate your agreement by signing and returning this letter agreement.



Yours sincerely,



	 
	/s/ Peter G. Humphrey
	Peter G. Humphrey

	President and Chief Executive Officer

	Financial Institutions, Inc.







Intending to be legally bound, I agree with


and accept the foregoing terms on the date set


forth below.



	 
	/s/ George D. Hagi
	George D. Hagi

	Date: December 23, 2008







8




December 23, 2008



Mr. Kevin B. Klotzbach


Senior Vice President and Treasurer


Financial Institutions, Inc.


220 Liberty Street


P.O. Box 227


Warsaw, New York 14569



Dear Mr. Klotzbach,



Financial Institutions, Inc. (the “Company”) anticipates entering into a Securities Purchase
Agreement (the “Participation Agreement”) with the United States Department of Treasury
(“Treasury”) that provides for the Company’s participation in the Treasury’s TARP Capital Purchase
Program (the “CPP”). If the Company does not participate or ceases at any time to participate in
the CPP, this letter shall be of no further force and effect.



For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	1)	 	No Golden Parachute Payments. The Company is prohibiting any golden
parachute payment to you during any “applicable tax year.” An “applicable tax year”
is any period during which (a) you are a senior executive officer, and (b) Treasury
holds an equity or debt position in the Company under the CPP.






	 	2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to you during a CPP Covered Period is subject to recovery or
“clawback” by the Company if the payments were based on materially inaccurate
financial statements or any other materially inaccurate performance metric criteria.






	 	3)	 	Compensation Program Amendments. Each of the Company’s compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including
golden parachute, severance and employment agreements) either currently or
hereinafter in effect and including all amendments thereto (collectively, “Benefit
Plans”) with respect to you are hereby amended to the extent necessary to give
effect to provisions (l) and (2).






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






	 	•	 	The term “Company” includes any entities treated as a single employer with
the Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You
are also delivering a waiver pursuant to the Participation Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.






	 	•	 	The term “applicable tax year” shall be limited by, and interpreted in a
manner consistent with, 31 C.F.R. § 30.11, (as in effect on the Closing Date).






	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented
by guidance or regulation issued by the Department of the Treasury and as
published in the Federal Register on October 20, 2008.






	 	•	 	“Golden parachute payment” is used with same meaning as in Section
111(b)(2)(C) of EESA.






	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.






	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be
interpreted, administered and construed to, comply with Section 111 of EESA and
the guidance thereunder (and, to the maximum extent consistent with the
preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this letter)






	 	13)	 	Miscellaneous. To the extent not subject to federal law, this letter
will be governed by and construed in accordance with the laws of New York. This
letter may be executed in two or more counterparts, each of which will be deemed to
be an original. A signature transmitted by facsimile will be deemed an original
signature.





In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten the value
of the Company. To the extent any such review requires revisions to any Benefit Plan with respect
to you, you and the Company agree to negotiate such changes promptly and in good faith.



In addition to the foregoing and in consideration for the benefits you will receive as a
result of Company’s participation in the CPP, you agree to voluntarily waive any claim against the
United States or the Company for any changes to your compensation or benefits that are required to
comply with EESA. This waiver includes all claims you may have under the laws of the United States
or any state related to the requirements imposed by EESA, including without limitation a claim for
any compensation or other payments you would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on your employment relationship.



9



Please indicate your agreement by signing and returning this letter agreement.



Yours sincerely,



	 
	/s/ Peter G. Humphrey
	Peter G. Humphrey

	President and Chief Executive Officer

	Financial Institutions, Inc.







Intending to be legally bound, I agree with


and accept the foregoing terms on the date set


forth below.



	 
	/s/ Kevin B. Klotzbach
	Kevin B. Klotzbach

	Date: December 23, 2008








10