AMENDED AND RESTATED CONSULTING
AGREEMENT
THIS AMENDED AND RESTATED CONSULTING
AGREEMENT, made and entered into as of the 29 th day of
December, 2008 (the “Agreement”), by and
between Arrow Financial Corporation, a New York corporation
(“AFC,” together with its subsidiaries and affiliates,
the “Company”), and John J. Murphy
(“Adviser”).
RECITALS
WHEREAS, effective December 31, 2006,
Adviser retired from service as the Chief Financial Officer of AFC
and it principal subsidiary, Glens Falls National Bank and Trust
Company (the “Bank”); and
WHEREAS, AFC and Adviser entered into a
Consulting Agreement dated as of January 1, 2007 (the
“Existing Agreement”) pursuant to which the Adviser
made himself available to provide to the Company advice,
consultation and assistance on an as-needed basis with respect to
financial reporting and other general matters of the Company, as
may be requested from time to time by the Chief Executive Officer
of AFC (“CEO”); and
WHEREAS, AFC and the Adviser hereby
desire to amend and restate the Existing Agreement in its entirety
effective January 1, 2009; and
WHEREAS, the parties intend that each
will have certain rights and responsibilities with respect to such
arrangement for the duration thereof, all as more fully set forth
below; and
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and agreements contained herein,
AFC and Adviser agree as follows:
1.
Services to be Furnished
.
(a)
Nature and Extent of
Services . During the
Services Period (as defined in Section 2, below), Adviser shall
hold himself available to render advice and assistance, and shall
render advice and assistance on financial and general corporate
matters, including by assisting in the preparation of routine
financial reports and advising on special projects, as may be
requested from time to time by the Chief Executive Officer of AFC.
Adviser shall be required to devote such time to the
performance of the services under this Agreement as may be
necessary and appropriate under the circumstances, provided that it
is the understanding of the parties hereto that (i) the total
amount of time expected to be dedicated by Adviser to the
performance of such services shall be not less than 375 hours on an
annualized basis (“Basic Commitment”) which the parties
agree represents more than 20 percent of Adviser’s average
level of service performed during the immediately preceding
36-month period, (ii) the expenditure of such time by Adviser may
be at irregular intervals and on an ad hoc basis, depending on the
Company’s needs and Adviser’s availability, (iii) under
no circumstances shall Adviser be expected to dedicate more than
thirty-five (35) hours in any business week to the rendering of
such services, and (iv) the expenditure by Adviser in any calendar
year of a number of hours significantly in excess of the Basic
Commitment in rendering services hereunder (any such excess
expenditure, an “Additional Commitment”) shall not be
required unless AFC and Adviser shall mutually agree on the terms
and conditions of such Additional Commitment, including the fees to
be paid to Adviser therefor, subject to the provisions of Section
5(b).
(b)
Manner of Performing
Services . In performing
services hereunder, Adviser shall have exclusive control over the
manner in which he performs such services, including, without
limitation, in selecting, supervising and compensating any service
providers other than the Company that Adviser may retain to assist
him in performing such services; in the methods, procedures,
strategies and equipment Adviser utilizes in performing such
services; and in Adviser’s determination of the times, places
and dates at which he performs such services; provided ,
however , that AFC shall have the right, exercised by its
Chief Executive Officer, to establish reasonable parameters for any
of the foregoing, including limitations of the amounts and types of
expenses incurred by Adviser that AFC will be obligated to
reimburse.
(c)
Other Services and Duties of
Adviser . Any services
rendered by Adviser to AFC, the Bank or any other AFC subsidiaries
as a result of serving as a director, shall not be affected by or
subject to this Agreement and any time spent by Adviser in
rendering such services as a director shall not be included as
hours expended by Adviser in the performance of services hereunder.
Adviser shall receive compensation for service as a director
consistent with the compensation received by other non-employee
directors.
(d)
New York Residence Not
Required . At no point
during the Services Period shall Adviser be required to maintain
residence in the State of New York.
2.
Term . The term of this Agreement and the obligation
of Adviser to render services hereunder shall commence as of 12:01
a.m. on January 1, 2009, and shall expire as of 11:59 p.m. on
December 31, 2009 (the “Expiration Date”), unless prior
to such date the parties agree to extend the term of this Agreement
or the Agreement is earlier terminated, as provided in Section 3.
The term of this Agreement shall be referred to as the
“Services Period.”
3.
Termination .
(a)
Automatic Termination; Rights of
Parties to Terminate .
This Agreement and the Services Period will terminate prior
to the Expiration Date upon the occurrence of any the following:
(i) the death or disability of Adviser; (ii) termination by
AFC of Adviser’s services under this Agreement “for
cause,” as defined in Section 3(c) below, by action of a
majority of the entire Board; (iii) termination by Adviser of this
Agreement, for any reason or no reason, upon not less than thirty
(30) days’ written notice to AFC; or (iv) the mutual
agreement of AFC and Adviser to terminate this Agreement, as of any
date. In the event of any termination under the preceding
sentence, neither AFC nor Adviser shall have any continuing
obligation or liability to the other party under this Agreement
after the date of termination, other than (x) the obligation of AFC
to pay to Adviser the fees owed to Adviser under Section 5 through
the date of such termination and to reimburse Adviser for
reimbursable expenses incurred by Adviser under Section 4(b)
through the date of such termination, (y) the obligation of Adviser
to keep certain matters confidential and to return to the Company
certain documents and information under Section 6, and (z) the
obligation of AFC to indemnify Adviser under Section 7. For
purposes of this Agreement, AFC may terminate Adviser’s
services hereunder “for cause” as a result of any of
the following, after notice thereof to Adviser and an opportunity
for a hearing before the full Board, if so requested by Adviser:
(i) Adviser’s willful dishonesty, fraud or
misconduct in the performance of his services for the Company under
this Agreement or in any other capacity in which he may serve the
Company from time to time; (ii) Adviser’s conviction of
a felony or other crime involving moral turpitude; or (iii) the
issuance by a regulatory agency having jurisdiction over AFC or the
Bank of an enforcement order or directive requiring termination of
this Agreement.
(b)
Termination Due to Material Breach of
Agreement . In addition
to the foregoing, if either party is in material breach of this
Agreement, including in the case of AFC by reason of its failure to
pay Adviser any fees or reimbursable expenses due and owing
hereunder on or before the date such fees or expenses are payable
or reimbursable, the non-breaching party (but not the breaching
party) may terminate this Agreement upon written notice to the
breaching party specifying the nature of the breach and the
non-breaching party’s intention to terminate, provided that
if such breach is curable within a reasonable period after the date
of such notice (not to exceed in any case thirty (30) days after
receipt of such notice), the non-breaching party will have no right
to terminate this Agreement if the breach is in fact cured within
such period. Notwithstanding the foregoing, if Adviser
notifies AFC of AFC’s breach of this Agreement by reason of
its nonpayment of fees or expenses owed to Adviser, such breach
will be deemed cured if and only if the amounts owed are paid to
and received by Adviser within ten (10) days of AFC’s receipt
of such notice. Termination of this Agreement by either party
due to material breach hereof by the other party in accordance with
the preceding sentence shall not eliminate or limit the liability
of the breaching party to the non-breaching party hereunder or
under any other provision of law or the common law, and the
non-breaching party may sue the breaching party for damages
or
