CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT, made and entered into as of the 1st day of January,
2013 (the “Agreement”), by and between ARROW FINANCIAL CORPORATION, a New York
corporation (“AFC,” together with its subsidiaries and affiliates, the
“Company”), and RAYMOND F. O'CONOR, residing at 19 Carlyle Terrace, Saratoga
Springs, New York 12806 (“Adviser”).

RECITALS

WHEREAS, effective December 31, 2012, Adviser retired from service as a Senior
Vice President of AFC and as the Chief Executive Officer of Saratoga National
Bank and Trust Company, a subsidiary of AFC (the “Bank”); and

WHEREAS, in order to ensure a smooth transition, AFC desires to engage Adviser
to provide certain consulting services to AFC and its subsidiaries and
affiliates, and Adviser desires to provide such services, on the terms and
conditions set forth herein; and

WHEREAS, the parties intend that each will have certain rights and
responsibilities with respect to such arrangement for the duration of this
Agreement, all as more fully set forth below.

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 below),
Adviser shall hold himself available to render advice and assistance to the
Company, and shall render advice and assistance, with respect to the management
and operation of the business and affairs of the Company, as may be requested
from time to time by the Chief Executive Officer of AFC (“CEO”) or the Board of
Directors of AFC (the “Board”) (the “Services”). Adviser shall be required to
devote such time to the performance of the Services under this Agreement as may
be meaningful and appropriate under the circumstances and as agreed upon by the
parties (the “Basic Commitment”), provided that it is the understanding of the
parties hereto that: (i) the expenditure of such time by Adviser may be at
irregular intervals and on an ad hoc basis, depending on the Company's need and
Adviser's availability, (ii) under no circumstances shall Adviser be expected to
dedicate to the rendering of the Services during the term of this Agreement more
than thirty-five (35) hours in any business week or more than twenty percent
(20%) of his average level of services performed for the Company during the
thirty-six month period ending on December 31, 2012.

(b)Manner of Performing Services. In performing the Services, Adviser shall have
exclusive control over the manner in which he performs the Services, including,
without limitation, in the methods, procedures, strategies and equipment Adviser
utilizes in performing the Services, and in Adviser's determination of the
times, places and dates at which he performs the Services; provided, however,
that AFC shall have the right, exercised by the CEO, to establish reasonable
parameters for any of the foregoing.

(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
thereof, including serving on any committee of the board of directors thereof,
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 the 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 the
Services hereunder shall commence as of 12:01 a.m. on January 1, 2013, and shall
expire as of 11:59 p.m. on December 31, 2013 (the “Expiration Date”), unless
prior to such date (i) the parties agree to extend the term of this Agreement
(which shall be deemed an amendment of the Agreement), or (ii) the Agreement is
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 hereunder “for cause,” as defined below; (iii)
termination by either AFC or Adviser of this Agreement, for any reason or no
reason, upon not less than thirty (30) days' prior written notice to the other
party hereto; 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 (w) the obligation of AFC to pay to Adviser a pro rata portion of the
annual fee owed to Adviser under Section 5 through the date of such termination,
based on the number of days in such calendar year that shall have expired
through such date of termination and to reimburse Adviser for reimbursable
expenses incurred by Adviser under Section 5(b) through the date of such
termination, (x) the obligation of Adviser to keep certain matters confidential
and to return to AFC certain documents and information under Section 6, (y) the
obligation of Adviser to cooperate under Section 6(b), and (z) the obligation of
AFC to indemnify Adviser under Section 7. For purposes of this Agreement, AFC
may terminate this Agreement “for cause” as a result of any of the following:
(i) any willful misconduct by Adviser which is materially injurious to AFC or
its affiliates, monetarily or otherwise; (ii) any failure by Adviser
substantially to follow and perform any reasonable directions of the CEO or the
Board (other than failure resulting from disability or death), within thirty
(30) days after delivery to Adviser by the CEO or the Board of a written demand
for substantial performance, which written demand shall specifically identify
the manner in which the CEO or the Board believes that Adviser has not
substantially followed and performed such directions; (iii) any inability of
Adviser to perform any substantial portion of the Services, by reason of any
order of any regulatory authority or agency having jurisdiction over AFC or its
affiliates directly prohibiting such performance; or (iv) intentionally
providing false or misleading information to, or otherwise misleading, the CEO,
the Board or any committee thereof.

(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

2

--------------------------------------------------------------------------------

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 other available remedies at law or in equity as
the non-breaching party chooses.

4.Office Space; Equipment.

(a)Office Space. If so requested by Adviser, AFC will provide Adviser with
suitable office space at AFC's main offices or such other premises owned or
leased by AFC as may be mutually agreeable to the parties, for the purpose of
assisting Adviser to perform the Services, and AFC will make available to
Adviser at such premises, to the extent consistent with AFC's own need for and
demands on its personnel, such secretarial, clerical and other administrative
support and assistance as may be necessary or helpful to Adviser in performing
the Services, such support shall be provided consistent with AFC's then current
support programs and policies (e.g., support provided during normal business
hours).

(b)Equipment. AFC also will provide Advisor with suitable computer and other
equipment as may be mutually agreeable to the parties for the purpose of
assisting Adviser to perform the Services. Adviser acknowledges and agrees that
any equipment thus provided hereunder shall be used for business purposes in
connection with the performance of the Services. Adviser agrees that it is his
responsibility to ensure the proper use of the equipment and to care for the
equipment in a careful and reasonable manner and utilized in accordance with its
design. The equipment shall be used consistent with applicable Company
guidelines and policies, which guidelines and policies require separate
acknowledgement and execution (including, without limitation, the Remote Access
User Security Agreement). Title to the equipment shall at all times remain with
the Company. Upon the request of AFC or termination of this Agreement, Adviser
shall return the equipment to AFC in good condition, reasonable wear and tear
accepted, to a place designated by AFC. Support for the equipment shall be
provided consistent with the Company's then current support programs and
policies (e.g., help desk support provided during normal business hours). With
respect to any laptop computer provided to Adviser, Adviser understands and
agrees that he has no right or expectation of privacy or security in his use of
any such laptop or Internet usage.

5.Compensation; Expenses
 
(a)Basic Commitment. In return for Adviser's rendering Services in fulfillment
of his Basic Commitment hereunder, AFC shall pay to Adviser an annual cash fee
in the amount of Twenty Four Thousand Dollars ($24,000.00) as full consideration
hereunder, payable in twelve (12) equal installments on the last Wednesday of
each month in such year commencing in January 2013.

(b)Expenses. Subject to any limitations on Adviser's expenses as may be
established from time to time by the Board or the CEO, AFC will pay on behalf of
Adviser any reasonable expenses incurred by him in connection with the
performance of the Services, and will reimburse Adviser for any such expenses
previously paid by him, in each case, consistent with Company policy. The
reimbursement of any such expense that is includible in gross income for federal
income tax purposes shall be paid no later than the end of the calendar year
following the calendar year in which the expense was incurred.

(c)Other. This Agreement shall constitute a “Qualifying Services Contract” (as
defined in certain existing stock option award agreements held by Adviser on the
date of his termination of employment with the Company), and the Services
provided by Adviser shall constitute “substantial” services for purposes of the
policies of AFC and any such existing stock option awards. Such stock option
awards shall be governed in accordance with their respective terms. Adviser
shall serve hereunder as an independent contractor, not as an employee, and
shall not be entitled to receive from AFC or its subsidiaries or affiliates
employee benefits

3

--------------------------------------------------------------------------------

of any kind or nature whatsoever as a result of his performance of Services
hereunder; provided, however, that nothing in this Agreement will limit
Adviser's eligibility to receive benefits (e.g., vested pension benefits)
related exclusively to Adviser's prior service as an employee of the Company.
Adviser is responsible for all federal, state and local taxes, if any, which
accrue as a result of Adviser's performance of the Services hereunder. The
Company shall withhold U.S. income taxes on payment of compensation where
required under U.S. tax laws. Adviser agrees to comply with the “Arrow Financial
Corporation Business Code of Ethics,” the “Arrow Financial Corporation Financial
Code of Ethics,” and any successor codes, in connection with his performance
hereunder.

6.Confidentiality; Cooperation.

(a)Confidentiality. Except to the extent otherwise authorized by AFC, Adviser
agrees to keep confidential all information coming into his possession in
connection with the provision of Services that is not otherwise in the public
domain and that belongs or relates to or emanates from the Company
(“Confidential Information”). Nothing in this Agreement, however, shall prohibit
Adviser, with or without AFC's authorization, from producing documents,
providing testimony or otherwise participating or cooperating in any judicial or
administrative action, proceeding, investigation or other activity to the extent
he is advised in writing by legal counsel that such document production,
testimony, participation or cooperation is required under applicable law;
provided, however, that Adviser shall give AFC reasonable prior written notice
thereof unless Adviser is prohibited from doing so by such action, proceeding,
investigation or other activity. Upon expiration or termination of this
Agreement, Adviser shall return to AFC as soon as practicable thereafter, all
documents, files, records and data, including electronically stored or
transmitted data, and copies of the foregoing, in the possession or control of
Adviser, except to the extent that AFC shall specifically consent to non-return
of such materials, provided that return of such materials shall not relieve
Adviser of his obligation to keep confidential all Confidential Information
received at any time hereunder for as long as such information remains
confidential, i.e., is not known to the general public.

(b)Cooperation. Adviser agrees to make himself available to the Company and its
legal counsel to provide reasonable cooperation and assistance to the Company
with respect to areas and matters in which Adviser was involved in connection
with the provision of the Services, including any threatened or actual
investigation, regulatory matter and/or litigation concerning AFC or any of its
subsidiaries or affiliates, and to provide to the Company, if requested,
information and counsel relating to ongoing matters of interest to the Company.
The Company will take into consideration Adviser's personal and business
commitments, will give Adviser as much advance notice as is reasonably possible,
and ask that Adviser be available at such time or times as are reasonably
convenient to Adviser and the Company. The Company agrees to (i) pay Adviser a
reasonable hourly fee in connection with his cooperation under this Section 6(b)
and (ii) reimburse Adviser for the actual out-of-pocket expenses Adviser incurs
as a result of his complying with this provision, subject to Adviser's
submission to the Company of documentation substantiating such expenses as the
Company may reasonably require

7.Indemnification. AFC shall indemnify Adviser if he is made or threatened to be
made a party to any action, suit or proceeding (whether civil, criminal or
otherwise) by reason of the fact that Adviser is or was providing services to
the Company pursuant to this Agreement, against judgments, fines, amounts paid
in settlement and reasonable expenses (including attorneys' fees) incurred by
Adviser in connection with such action, suit or proceeding to the maximum extent
that would be permitted, and subject to any requirements that would apply, under
applicable law from time to time if Adviser were an employee (other than an
officer or director) of AFC, and subject to any further limits on such
indemnification under applicable law. The foregoing indemnification of Adviser
will not be affected by any provision of AFC's Certificate of Incorporation or
Bylaws or other corporate policy applicable to the Company's indemnification of
employees or others as may exist from time to time. In addition, AFC shall pay
all reasonable expenses (including

4

--------------------------------------------------------------------------------

attorneys' fees) incurred by Adviser in defending any such action, suit or
proceeding in advance of the final disposition thereof, upon receipt of an
undertaking by or on behalf of Adviser to repay any and all such amounts if it
shall ultimately be determined that he is not entitled to be indemnified with
respect thereto by AFC, in each case on or before the thirtieth (30th) day after
AFC's receipt of a bill for such expenses or notice of such reimbursable
expenses. Reimbursement of expenses will be paid not later than the last day of
the calendar year following the calendar year in which the expenses were
incurred. This indemnification shall not be exclusive of any rights of Adviser
to be indemnified by AFC, the Bank or any other AFC subsidiary in any other
capacity in which Adviser may serve from time to time, under applicable law or
the charter documents or bylaws of such entity, or under any other agreement
applicable to Adviser.

8.Noncompetition and Nonsolicitation.
 
(a)Noncompetition. Adviser shall not, at any time during the Services Period,
without the prior written approval of the CEO or the Board, directly or
indirectly, own, control, become an officer, employee, agent, partner or
director of, or serve as a consultant for (i) any depository institution not
directly or indirectly owned or controlled by AFC having assets of $100 million
or more that either is headquartered in the State of New York or accepts
deposits at any location in the State of New York, (ii) any holding company of
such institution, or (iii) any business enterprise operating out of one or more
physical locations in the State of New York that is in direct competition in any
significant line of business with AFC or any of its directly or indirectly owned
or controlled subsidiaries. For purposes of the preceding sentence, any directly
or indirectly owned or controlled subsidiary of AFC includes any subsidiary as
to which AFC directly or indirectly owns fifty percent (50%) or more of the
voting equity interests or controls fifty percent (50%) or more of the director
or trustee positions. The parties agree that the covenant set forth in this
Section 8(a) is reasonable with respect to duration, geographic area and scope.
In the event that any provision of such covenant is finally determined by any
court of competent jurisdiction to be void or unenforceable with respect to any
particular geographic area or as to any particular time period or any other
particular constraint, the covenant will be deemed to be automatically modified
without any further action on the part of AFC and Adviser so as to eliminate
therefrom the unenforceable constraint or its application in any manner in which
it was found to be unenforceable and, except as so modified, the covenant will
remain in full force and effect.

(b)Nonsolicitation. Adviser shall not, at any time during the Services Period,
(i) solicit any employee of the Company to leave the employment of the Company
or to accept any other employment or position, or (ii) assist any other person
in hiring any such employee, provided, however, that this Section 8(b) shall not
apply to any unsolicited contact with Adviser by an employee of the Company or
any potential employer of such employee, and shall not prevent Adviser from
responding to any such contact by providing personal references regarding such
employee to any such potential employer.

9.Entire Agreement; Amendment; Waiver. This Agreement cancels and supersedes all
previous agreements or understandings between the parties relating to the
subject matter hereof, and embodies the entire agreement and understanding of
the parties with respect to the subject matter hereof, and shall not be amended,
modified or supplemented in any respect except by a subsequent written
instrument executed by the parties. The performance of or compliance with any
covenant given herein or the satisfaction of any condition to the obligations of
either party hereunder may be waived by the party to whom such covenant is given
or whom such condition is intended to benefit, except to the extent any such
condition is required by law; provided, however, that, no waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof, nor shall any such waiver constitute a continuing
waiver.

10.Assignment; Successors; Binding Agreement. This Agreement, or any monies due
hereunder, may not be assigned by Adviser without the prior written consent of
AFC. This Agreement shall be binding

5

--------------------------------------------------------------------------------

upon and inure to the benefit of Adviser and his heirs and representatives and
AFC and its successors and assigns.

11.Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which shall
constitute one agreement which is binding upon the parties hereto,
notwithstanding that both parties hereto are not signatories to the same
counterpart.
  
12.Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

13.Governing Law. This Agreement shall be governed in all respects, including as
to validity, interpretation and effect, by the internal laws of the State of New
York, without giving effect to the conflict of laws rules thereof.
Notwithstanding anything contained herein to the contrary, any payments to
Adviser by AFC, whether pursuant to this Agreement or otherwise, are subject to
and conditioned upon compliance of such payments with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and any regulations
promulgated thereunder.

14.Notices. Any communication required or permitted to be given to a party under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally or by private
courier, or five (5) calendar days after mailing if mailed, postage prepaid, by
registered or certified mail, return receipt requested, addressed to such party
at the address listed below or at such other address as either party may by
written notice subsequently specify to the other party:

If to Adviser:    

Mr. Raymond F. O'Conor
19 Carlyle Terrace
Saratoga Springs, New York 12806

If to AFC:    
Arrow Financial Corporation
250 Glen Street
Glens Falls, New York 12801
Attention: Chief Executive Officer

With a copy to:    
Thompson Coburn LLP
Attn: Thomas B. Kinsock, Esq.
One U.S. Bank Plaza, 34th Floor
St. Louis, MO 63101

15.Survival. Any provision of this Agreement which, by its express terms or in
practical effect, contemplates performance after the expiration of the Services
Period or termination of this Agreement shall survive the expiration of the
Services Period or termination of this Agreement.

16.Section 409A Compliance. The parties intend that all provisions of this
Agreement comply with the requirements of Internal Revenue Code Section 409A to
the extent applicable. No provision of this Agreement shall be operative to the
extent that it will result in the imposition of the additional tax described

6

--------------------------------------------------------------------------------

in Code Section 409A(a)(1)(B)(i)(II) and the parties agree to revise this
Agreement as necessary to comply with Section 409A and fulfill the purpose of
the voided provision. Nothing in this Agreement shall be interpreted to permit
accelerated payment of nonqualified deferred compensation, as defined in Section
409A, or any other payment in violation of the requirements of Section 409A. The
parties intend that, for purposes of Section 409A only, the Adviser has incurred
a separation from services with the Company, as defined in Code Section 409A and
the Treasury Regulations under Code Section 409A, as of December 31, 2012. With
respect to reimbursements that constitute taxable income to Adviser, no such
reimbursements or expenses eligible for reimbursement in any calendar year shall
in any way affect the expenses eligible for reimbursement in any other calendar
year and Adviser's right to reimbursement shall not be subject to liquidation in
exchange for any other benefit.

[signature page follows]

7

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Agreement or caused this
Agreement to be executed by their duly authorized representatives, as of the
date and year first above written.

ARROW FINANCIAL CORPORATION

By: ______________________________________

Name: Thomas J. Murphy
Title: President and CEO

“ADVISER”

__________________________________________
Raymond F. O'Conor

8