|
EMPLOYMENT AGREEMENT
(As Amended 6/28/00)
AGREEMENT made as of the 1st day of January, 2008 , (“Agreement”) among
ARROW FINANCIAL CORPORATION, a New York corporation with its
principal place of business at 250 Glen Street, Glens Falls, New
York 12801 ("Arrow"), its wholly-owned subsidiary, GLENS FALLS
NATIONAL BANK AND TRUST COMPANY, a national banking association
with its principal place of business at 250 Glen Street, Glens
Falls, New York 12801 (the "Bank"), and THOMAS L. HOY ,
residing at 25 Pershing Road, Queensbury, New York 12804 (the
"Executive").
Recitals
WHEREAS, Arrow and the Bank, consider the maintenance of a
competent and experienced executive management team to be essential
to the long-term success of Arrow and the Bank; and
WHEREAS, in this regard, Arrow and the Bank have determined that it
is in the best interests of each that the Executive continue to
serve as Chairman, President and Chief Executive
Officer of Arrow and the Bank, pursuant to a written employment
agreement; and
WHEREAS, Arrow and the Bank have agreed with the Executive that the
pre-existing employment agreement between the Executive and each of
them should be replaced by this Agreement.
NOW, THEREFORE, in furtherance of the interests described above and
in consideration of the respective covenants and agreements herein
contained, the parties hereto agree as follows:
1.
Employment
Arrow and the Bank agree to employ the Executive and the Executive
agrees to continue to serve as Chairman, President and Chief
Executive Officer of Arrow and the Bank during the term of this
Agreement.
2 .
Term
1
(a)
The term of this Agreement shall commence on the date hereof and,
unless the Executive becomes a Retired Early Employee under
Paragraph 6 of this Agreement or such employment is earlier
terminated as provided in Paragraph 7 of this Agreement, employment
under this Employment Agreement shall terminate on December
31, 2010 , or such earlier
date on which the Executive’s retirement (including early
retirement if the Executive so elects) becomes effective under any
retirement plan of Arrow then in effect.
Page 2
(b)
Annual Review . On or before December 31 of each year
during the term of this agreement, the Board of Directors of Arrow
(the “Arrow Board”), or the committee of the Arrow
Board, if any, duly authorized to make determinations regarding
executives and the terms of their employment (the
“Committee”), will consider and vote upon a proposal to
extend to the Executive an offer to replace this Agreement with a
new employment agreement (the “Replacement Agreement”)
commencing January 1 of the ensuing year. The Replacement
Agreement will be for a new term of three years, will provide for a
base annual salary for the Executive at commencement of the
Replacement Agreement at least equal to the base annual salary of
the Executive as of December 31 of the year just completed (the
“Preceding Year-End”), will provide for other benefits
having an aggregate value to the Executive at least equal to the
aggregate value of the other benefits provided to the Executive as
of the Preceding Year-End, and will contain other terms and
conditions relating to the Executive’s position and duties,
place of performance, rights upon a change of control of Arrow or
the Bank or a change of authority of the Executive, and rights in
connection with any early termination of the employment of the
Executive that are, in each such instance, at least as favorable to
the Executive as the terms and conditions relating to such matters
under this Agreement and generally shall be as favorable to the
Executive as is this Agreement, as of the Preceding Year-End.
If the Arrow Board or the Committee shall vote to offer such
a Replacement Agreement to the Executive and the Executive shall
accept, this Agreement shall terminate as of December 31 of the
year of such offer and acceptance and the Replacement Agreement
shall take effect as of January 1 of the ensuing year.
If the Arrow Board or the Committee shall elect not to offer such a
Replacement Agreement to the Executive or the Executive, having
been offered such a Replacement Agreement, shall elect not to
accept such Replacement Agreement, this Agreement and the
employment of the Executive hereunder shall continue in full force
and effect from the date of such election until the termination of
this Agreement in accordance with its terms (such period to be
referred to hereinafter as the “Winding-Down Period”),
and the rights and obligations of each of the parties hereunder
shall continue unchanged during the Winding-Down Period except as
may be specifically provided otherwise in this Agreement.
3.
Position and Duties
The Executive shall continue to serve as Chairman, President and
Chief Executive Officer of Arrow and the Bank and shall have
duties, responsibilities, and authority as normally attend such
positions or as may reasonably be assigned to the Executive from
time to time by the Arrow Board or the Board of Directors of the
Bank (the "Bank Board"). The Executive shall devote
substantially all his working time and efforts to the business and
affairs of Arrow and the Bank, provided however, that the Executive
may, with the approval of the Arrow Board, serve as a director or
officer of any non-competing business or engage in any other
activity, including but not limited to,
charitable or community activity, to the extent that they do not
inhibit the performance of his duties hereunder.
4.
Place of Performance
In connection with the Executive's employment hereunder, the
Executive shall be based at the principal executive offices of the
Bank, except for required travel on business. The Executive
shall not be required to change his residence from the area in
which he now resides. The Bank shall furnish the Executive
with office space, stenographic assistance, and such other
facilities and services as shall be suitable to the Executive's
position and adequate for the performance of his duties
hereunder.
5.
Compensation
(a)
Salary . Upon commencement of this Agreement, the base
annual salary of the Executive should be $ 388,500.00 , payable by the Bank in equal
bi-weekly installments or at such other intervals as shall be
agreed upon by the parties. In addition, the Executive shall
receive from the Bank or Arrow such annual bonus, if any, as may be
determined by the Arrow Board or the Committee. The
Executive's base annual salary may be increased from time to time
in accordance with the normal business practices of Arrow and the
Bank as determined by the Arrow Board or the Committee, and, if so
increased, such base annual salary shall not thereafter during the
Executive's employment under this Agreement be decreased and the
obligation of the Bank hereunder to pay the Executive's base annual
salary shall thereafter relate to such increased base annual
salary. Compensation of the Executive by base annual salary
payments shall not prevent the Executive from participating in any
other compensation or benefit plan of Arrow or the Bank in which he
is entitled to participate and participation in any such other
compensation or benefit plan shall not in any way limit or reduce
the obligation of the Bank to pay the Executive's base annual
salary hereunder.
(b)
Other Benefits . In addition to the compensation
provided for in subparagraph (a) above, the Executive shall be
entitled during the term of his employment under this Agreement (i)
to participate in any and all employee benefit programs or stock
purchase programs of Arrow or the Bank now or hereafter in effect
and open to participation by qualifying employees of Arrow or the
Bank generally, including but not limited to the retirement plan,
supplemental retirement plan, employee stock purchase plan and
employee stock ownership plan of Arrow or the Bank, and (ii) to
enjoy certain personal benefits provided by Arrow or the Bank,
including but not limited to:
(A)
life insurance on the life of the Executive, at no cost to the
Executive, under a group plan maintained by Arrow;
(B) life insurance on the life of the Executive, at no cost
to the Executive,
in the form of a $500,000 Extra Ordinary Life Insurance Policy;
(C)
disability insurance for the Executive, at no cost to the
Executive, under a group plan maintained by Arrow;
(D)
comprehensive medical and dental insurance under a group plan
provided by Arrow, with the Executive to pay only those amounts
required to be paid thereunder by covered employees generally under
the cost-sharing arrangements in effect from time to time under
such plan;
(E)
reimbursement in full of all business, travel and entertainment
expenses incurred by the Executive in performing his duties
hereunder; and
(F)
fully paid vacation during each calendar year in accordance with
the vacation policies of Arrow in effect from time to time.
Arrow shall not make any material changes in any of the personal
benefits itemized above adversely affecting the Executive unless
such change occurs pursuant to a program applicable to all
executive officers of Arrow and the adverse effect on the Executive
is not proportionately greater than the adverse effect of the
change on any other executive officer of Arrow previously enjoying
such benefit.
6.
Change of Control or Change of Authority
(a)
Retired Early Employee . If a Change of Control or
Change of Authority (as such terms are defined in subparagraph 6(f)
below) occurs during the term of the Executive's employment under
this Employment Agreement, either the Executive, on the one hand,
or Arrow or the Bank, on the other, may elect by written notice,
given to the other party or parties, at any time within twelve (12)
months after such Change of Control or Change of Authority, to
terminate the employment of the Executive by Arrow and the Bank,
whereupon the Executive will become a "Retired Early Employee," and
will be entitled to receive such payments as are provided hereafter
in this Paragraph 6. Such election and the termination of the
Executive's employment shall become effective on the first day of
the second calendar month commencing after delivery of the notice
or on such earlier date as the Executive in his sole discretion may
specify (the "Effective Date").
(b)
Cash Payments . If the Executive should become a
Retired Early Employee hereunder, the Bank shall, during the period
commencing on the Effective Date and ending two years thereafter
(the "Pay-Out Period"), make equal monthly payments to the
Executive (which shall not be deemed base annual salary payments)
in an amount such that the present value of all such payments,
determined as of the Effective Date, equals two hundred ninety-nine
percent (299%) of the Base Amount, as such term is defined in
subparagraph 6(f) below. If at any time during the Pay-Out
Period the Arrow Board in its sole discretion shall determine, upon
application of the Retired Early Employee supported by substantial
evidence, that the Retired Early Employee is then under a severe
financial hardship resulting from (i) a sudden and unexpected
illness or accident of the Retired Early Employee or any of his
dependents (as defined in section 152(a) of the Internal Revenue
Code), (ii) loss of the Retired Early Employee's property due to
casualty, or (iii) other similar extraordinary and unforeseeable
circumstance arising as a result of events beyond the control of
the Retired Early Employee, the Bank shall make available to the
Retired Early Employee, in one (1) lump sum, an amount up to but
not greater than the present value of all monthly payments
remaining to be paid to him in the Pay-Out Period, calculated as of
the date of such determination by the Arrow Board, for the purpose
of relieving such severe financial hardship to the extent the same
has not been or may not be relieved by (xi) reimbursement or
compensation by insurance or otherwise, (xii) liquidation of the
Retired Early Employee's assets (to the extent such liquidation
would not itself cause severe financial hardship), or (xiii)
distributions from other benefit plans. If (a) the lump sum
amount thus made available is less than (b) the present value of
all such remaining monthly payments, the Bank shall continue to pay
to the Retired Early Employee monthly payments for the duration of
the Pay-Out Period, but from such date forward such monthly
payments will be in a reduced amount such that the present value of
all such reduced payments will equal the difference between (b) and
(a), above. The Retired Early Employee may elect to waive any
or all payments due him under this subparagraph.
(c)
Death of Retired Early Employee . If the Retired Early
Employee dies before receiving all monthly payments payable to him
under subparagraph 6(b), above, the Bank shall pay to the Retired
Early Employee's spouse, or if the Retired Early Employee leaves no
spouse, to the estate of the Retired Early Employee, one (1) lump
sum payment in an amount equal to the present value of all such
remaining unpaid monthly payments, determined as of the date of
death of the Retired Early Employee.
(d)
Indemnification of Executive . In the event a Change
of Control or Change of Authority occurs, Arrow and the Bank shall
indemnify the Executive for all legal fees and expenses
subsequently incurred by the Executive in seeking to obtain or
enforce any right or benefit provided under this Employment
Agreement, not limited to the rights and benefits provided under
this Paragraph 6 and whether or not the Executive has become a
Retired Early Employee hereunder, provided, however, that such
right to indemnification will not apply if and to the extent that a
court of competent jurisdiction shall determine that any such fees
and expenses have been incurred as a result of the Executive's bad
faith. Indemnification payments payable hereunder by Arrow or
the Bank shall be made not later than thirty (30) days after a
request for payment has been received from the Executive with such
evidence of indemnifiable fees and expenses as Arrow or the Bank
may reasonably request.
(e)
No Offset . Amounts payable to a Retired Early
Employee under this Paragraph 6 shall not be subject to any offset
or reduction for (i) any amounts owed or claimed to be owed by the
Retired Early Employee to Arrow or the Bank or their affiliates or
(ii) any amounts of compensation or income received or generated by
the Retired Early Employee as a result of any other employment or
self-employment of the Retired Early Employee during the Pay-Out
Period. The Retired Early Employee shall be under no
obligation to seek other employment or gainful pursuit during the
Pay-Out Period as a result of this Agreement, and shall be
prohibited from accepting cer
|
