ARROW FINANCIAL
CORPORATION
DIRECTORS DEFERRED COMPENSATION
PLAN
(Amendment and Restatement Effective
January 1, 2009)
Purpose
Arrow Financial Corporation (the
“Company”) adopted the Arrow Financial Corporation
Directors Deferred Compensation Plan (the “Plan”) to
provide non-employee Directors the opportunity to defer director
fees and to receive the benefit of additions to their deferrals.
Any deferrals under the Plan prior to January 1, 2005, and
additions thereon, will continue to be subject to the terms of the
Plan as in effect on October 3, 2004 and applicable law as in
effect prior to January 1, 2005. With respect to deferrals
under the Plan on and after January 1, 2005, such deferrals, and
the additions thereon, were administered in accordance with the
Company’s good faith interpretation of compliance with
Section 409A of the Code (as defined below), based on available
guidance and as may have been documented in draft plan documents,
forms, or communications. Effective January 1, 2009,
deferrals on or after January 1, 2005, and the additions thereon,
will be administered in accordance with the terms of this restated
Plan document, Section 409A and the final regulations thereunder.
Definitions
“Affiliate”
means any corporation or other business
entity that from time to time is, along with the Company, a member
of a controlled group of businesses, as defined in Sections 414(b)
and 414(c) of the Code, provided that the language “at least
50 percent” shall be used instead of “at least 80
percent” each place it appears in such test. A
corporation or other business entity is an Affiliate only while a
member of such group.
“Code” means
the Internal Revenue Code of 1986, as
amended.
“Company”
means Arrow Financial
Corporation.
“ Disability” means
the Director is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months.
“ ERISA ” the Employee
Retirement Income Security Act of 1974, as amended.
“Separation from
Service” means
separation from service as a Director with the Company and its
Affiliates, as the term “separation from service” is
defined in Code Section 409A and the regulations thereunder
(generally, a decrease in the performance of services to no more
than 20% of the average for the preceding 36-month period, and
disregarding leave of absences up to six months where there is a
reasonable expectation the Director will return).
Eligibility
Any non-employee Director of the Company
or a subsidiary of the Company may participate in the Plan.
It is intended that the amounts deferred under the Plan, and
accumulated interest thereon, will not be deemed taxable income to
the participating Director, and will not be deductible compensation
from the standpoint of the Company, until such amounts are actually
distributed.
Deferral Elections
Under the Plan, any participating
Director may elect in writing on or before December 31 of any
calendar year to defer receipt of all or any portion of the fees
receivable by such Director in the following calendar year for
serving on the Board of Directors of the Company or any subsidiary
thereof or on any Committee of any such Board. Once made, a
deferral election continues to be in effect for all ensuing
calendar years unless and until the participating Director, by
written notice, amends the election (to defer a greater or lesser
amount of compensation) or terminates the election or until such
person incurs a Separation from Service. An amendment or
termination of a deferral election will take effect only as of the
commencement of the ensuing calendar year.
Accounts
The Company maintains for each Director
participating in the Plan a separate Plan account. The
account is credited with the dollar amount of deferrals, together
with accrual of interest thereon from time to time at a rate equal
to the highest rate currently being paid on individual retirement
accounts by the Company’s subsidiary, Glens Falls National
Bank and Trust Company.
Time and Form of
Payment
When a participating Director incurs a
Separation from Service for any reason, deferred amounts and
accumulated interest thereon in the Director’s Plan account
will be distributed to such Director in a single lump sum or in
such number of equal annual installment payments not to exceed five
(5) years, as such Director shall have designated in his initial
deferral election under the Plan (or any
