EMPLOYMENT AGREEMENT











	AGREEMENT made as of the 1st day of January, 2000, ("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
JOHN J. MURPHY, residing at 33 Crownwood Lane, 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 Executive Vice President, Treasurer and
Chief Financial 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 Executive Vice President, Treasurer and Chief Financial Officer of Arrow and the
Bank during the term of this Agreement.





	2.  Term 





	     (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, 2002, 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.





	     (b)        Annual Review.  On or before December 31 of each subsequent year during
the term of this Agreement, the Board of Directors of Arrow (the "Arrow Board"), or any
committee of the Arrow Board 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 such year and the Replacement Agreement shall take effect as of January 1 of the
ensuing year.  If the Arrow Board or the Committee shall vote 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 shall continue in full force and effect and the rights and obligations of each of
the parties hereto shall not be changed or affected in any way.





	3.	Position and Duties





	The Executive shall continue to serve as Executive Vice President, Treasurer and Chief
Financial 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") or the Chief
Executive Officer of Arrow or the Bank.  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 or the Chief Executive Officer of Arrow,
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 $ 158,000.00, payable by the Bank (or if the Bank shall fail to
make payment, by Arrow) 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)	disability insurance for the Executive, at no cost to the Executive,
under a group plan maintained by Arrow;





			(C)	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;





			(D)	reimbursement in full of all business, travel and entertainment
expenses incurred by the Executive in performing his duties hereunder; and





			(E)	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 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 Section 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 Section 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 Duty to Seek Other Employment.  Amounts payable to any Retired
Early Employee under this Paragraph 6 shall not be reduced by the amount of any
compensation received by such Retired Early Employee from any other employer or
source during the Pay-Out Period, and no Retired Early Employee shall be under any
obligation to seek other employment or gainful pursuit during such Pay-Out Period as
a result of this Agreement.





		    (f)	Definitions.





			(i)  The "Base Amount" for purpose of this Paragraph 6 shall equal the
average annual compensation payable by the Bank to the Executive and includable by
the Executive in gross income for the most recent five (5) taxable years ending before
the date on which the Change of Control or Change of Authority occurred.





			(ii)  A "Change of Control" shall be deemed to have occurred if (A) any
individual corporation (other than Arrow), partnership, trust, association, pool,
syndicate, or any other entity or any group of persons acting in concert becomes the
beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
the result of any one or more securities transactions (including gifts and stock
repurchases but excluding transactions described in subdivision (B), following), of
securities of Arrow possessing twenty-five percent (25%) or more of the voting power
for the election of directors of such entity, (B) there shall be consummated any
consolidation, merger or stock-for-stock exchange involving Arrow or the securities
of Arrow in which the holders of voting securities of Arrow immediately prior to such
consummation own, as a group, immediately after such consummation, voting
securities of Arrow (or, if Arrow does not survive such transaction voting securities of
the corporation surviving such transaction) having less than fifty percent (50%) of the
total voting power in an election of directors of Arrow (or such other surviving
corporation), excluding securities received by any members of such group which
represent disproportionate percentage increases in their shareholdings vis-a-vis the
other members of such group, (C) "approved directors" shall constitute less than a
majority of the entire Arrow Board, with "approved directors" defined to mean the
members of the Arrow Board as of the date of this Agreement and any subsequently
elected members who shall be nominated or approved by a majority of the approved
directors on the Arrow Board prior to such election, or (D) there shall be
consummated any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions, excluding any transaction described in subdivision (B), above),
of all, or substantially all, of the assets of Arrow to a party which is not controlled by
or under common control with Arrow.





			(iii)  A "Change of Authority" shall be deemed to have occurred if the
Executive is assigned duties by Arrow which, in the reasonable opinion of the
Executive have materially less authority than those duties currently being performed by
him and otherwise described herein.








	7.	Early Termination of Employment





	The employment of the Executive hereunder by Arrow and the Bank may be terminated or
may terminate, other than as provided in Paragraph 2 of this Agreement or as permitted under
Paragraph 6 of this Agreement, under the circumstances set forth below.





		(a)	Termination for Cause.  Arrow may terminate the Executive's employment
under this Agreement prior to the normal expiration of its term for cause.  "Cause" shall
mean:





			(i)   any willful misconduct by the Executive which is materially injurious to
Arrow or the Bank, monetarily or otherwise;





			(ii)  any willful failure by the Executive to follow the reasonable directions
of the Arrow Board or the Bank Board or the Chief Executive Officer of Arrow or the
Bank; or





			(iii)  any failure by the Executive substantially to perform any reasonable
directions of the Arrow Board or the Bank Board or the Chief Executive Officer of
Arrow or the Bank (other than failure resulting from disability), within thirty (30) days
after delivery to the Executive by the respective Board or Chief Executive Officer of a
written demand for substantial performance, which written demand shall specifically
identify the manner in which the respective Board or Chief Executive Officer believes
that the Executive has not substantially performed.





	Notwithstanding the foregoing, the employment of the Executive hereunder shall not be
deemed to have been terminated for cause unless and until:



			(A)	reasonable notice is given to the Executive setting forth the reasons
Arrow intends to terminate the Executive for cause;





			(B)	an opportunity is provided for the Executive to be heard before the
Arrow Board and the Chief Executive Officer of Arrow, with counsel; and





			(C)	after such hearing or opportunity to be heard, written notice of final
termination for cause is delivered to the Executive, setting forth the specific reasons
therefor.





	Termination for cause by Arrow shall require the affirmative vote of at least two-thirds
(2/3) of the Arrow Board.  The Executive will not be entitled to any further compensation
for any period subsequent to the effective date of such termination, except for severance
pay, if any, in accordance with the then existing severance policies of Arrow; provided,
however, that any such termination for cause occurring after the Executive shall have
elected to become a Retired Early Employee under Paragraph 6 of this Agreement will not
affect the right of the Executive to receive all of the payments provided for therein.





		(b)	Termination Without Cause.  Arrow may terminate the Executive's
employment under this Agreement prior to the normal expiration of its term without cause
upon thirty (30) days' written notice.  Termination without cause by Arrow shall require
the affirmative vote of at least two-thirds (2/3) of the entire Arrow Board.  In the event of
termination without cause, the Bank shall pay to the Executive on the effective date of
such termination one (1) lump sum payment in an amount equal to the total amount of
base annual salary payments which would have been payable to the Executive during the
remaining portion of the calendar year in which such termination occurs and during the
two (2) ensuing calendar years had the Executive continued his employment under this
Agreement for the duration of the period.  For purposes of computing the amount of the
lump sum payment, it shall be assumed that the Executive's current base salary on the
effective date of termination would not have changed and no bonus would have been paid
to him during the period specified in the foregoing sentence.  Any such termination
without cause occurring after the Executive shall have elected to become a Retired Early
Employee under Paragraph 6 of this Agreement will not affect the right of the Executive
to receive all of the payments provided for therein.





		(c)	Termination for Disability.  If, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall not have performed his duties hereunder
on a full time basis for six (6) consecutive months, the Executive's employment under this
Agreement may be terminated by Arrow upon thirty (30) days' written notice.  Such
termination for disability shall require the affirmative vote of a majority of the entire
Arrow Board.  The Executive's compensation during any period of disability prior to the
effective date of such termination shall be the amounts normally payable to him in
accordance with his then current base annual salary, reduced by the sum of the amounts, if
any, paid to the Executive under disability benefit plans maintained by Arrow.  The
Executive shall not be entitled to any further compensation from the Bank for any period
subsequent to the effective date of such termination, except for severance pay in
accordance with then existing severance policies of Arrow; provided, however, that any
such termination for disability occurring after the Executive shall have elected to become a
Retired Early Employee under Paragraph 6 of this Agreement will not affect the right of
the Executive to receive all of the payments provided for therein.





		(d)	Termination for Breach by Employer.  In the event that Arrow or the Bank
shall have materially breached any provision of this Agreement and such breach shall not
have been cured within ten (10) days after delivery of written notice thereof to the
breaching party by the Executive, identifying the breach with reasonable particularity, the
Executive may cease to perform and may terminate this Agreement and his employment
with Arrow and the Bank hereunder, without thereby forfeiting any cause of action he may
have against the breaching party or parties as a result of such breach or otherwise.





		(e)	Consensual Termination.  All parties hereto may agree at any time to
terminate this Agreement and the Executive's employment hereunder upon such terms and
conditions as the parties may agree.








	8.	Competition Restriction





	In the event the Executive is terminated for cause under Paragraph 7 or improperly
terminates his own employment hereunder, then during the period beginning on the date of
termination of the Executive's employment and continuing for two (2) years after such date, the
Executive shall not, without the prior approval of the Arrow Board, certified to him by the
Secretary or Acting Secretary of Arrow, become an officer, employee, agent, partner or director
of any other business in substantial competition with the Bank, Arrow, or any other company or
bank affiliated with Arrow, including any branch or office of any of the foregoing.  Such
restriction shall apply to any such other business doing business in any county in the State of New
York in which Arrow, the Bank or any such other affiliated company or bank is then conducting
any material business or into which, to the knowledge of the Executive at the time of such
termination, any such entity has immediate plans to expand its activities in material respects.  The
provisions of this Paragraph 8 shall not apply in the event that the Executive becomes a Retired
Early Employee under Paragraph 6 or the Executive's employment terminates in accordance with
the first sentence of Paragraph 2.





	It is the intention of the parties to restrict the activities of the Executive under this
Paragraph 9 only to the extent necessary for the protection of the legitimate business interests of
Arrow, and the parties specifically covenant and agree that should any of the clauses or provisions
of the competition restriction set forth herein, under any set of circumstances, be held by a court
of competent jurisdiction to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, then and in that event, the court so holding may
reduce the business or territory to which such restriction pertains and/or the period of time during
which it operates, or effect any other change to the extent necessary to render such restriction
enforceable by said court.











	9.	Confidential Information





	The Executive specifically acknowledges that all information pertaining to the Bank and
Arrow received by him during the course of his employment hereunder which has been designated
confidential or otherwise has not been made publicly available, including, without limitation,
plans, strategies, projections, analyses, and information pertaining to customers or potential
customers, is the exclusive property of Arrow and the Executive covenants and agrees not to
disclose any of such information, without the express prior consent of the Arrow Board or the
Chief Executive Officer of Arrow, during his employment hereunder or after termination of such
employment, to anyone not employed or engaged by Arrow or a subsidiary thereof to render
services to it.  The Executive further covenants and agrees that he will not at any time use any
such information, without such express prior consent, for his own benefit or the benefit of any
party other than Arrow.  This Paragraph 9 shall survive termination of the Agreement.








	10.	Successors and Assigns; Assumption by Successors





	This Agreement is a personal services contract which may not be assigned by the Bank or
Arrow to, or assumed from the Bank or Arrow by, any other party without the prior consent of
the Executive.  All rights hereunder shall inure to the benefit of the parties hereto, their personal
or legal representatives, heirs, successors and assigns.  Arrow will require any successor (whether
direct or indirect, by purchase, assignment, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Arrow in any consensual transaction expressly to
assume this Agreement and to agree to perform hereunder in the same manner and to the same
extent that Arrow would be required to perform if no such succession had taken place.
References herein to "Arrow" or the "Bank" will be understood to refer to the successor or
successors of Arrow or the Bank, respectively.








	11.	Notices





	Any notice required or desired to be given hereunder shall be in writing and shall be
deemed given when delivered personally or sent by certified or registered mail, postage prepaid,
to the addresses of the other parties set forth in the first Paragraph of this Agreement, provided
that all notices to Arrow or the Bank shall be directed in each case to the Chief Executive Officer
thereof.








	12.	Waiver of Breach





	Waiver by any party of a breach of any provision shall not operate as or be construed a
waiver by such party of any subsequent breach hereof.








	13.	Invalidity





	The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions, which shall remain in full force and effect.








	14.	Entire Agreement; Written Modification; Termination





	This agreement contains the entire agreement among the parties concerning the
employment of the Executive by Arrow and the Bank.  No modification, amendment or waiver of
any provision hereof shall be effective unless in writing specifically referring hereto and signed by
the party against whom such provision as modified or amended or such waiver is sought to be
enforced.  This Agreement shall terminate as of the time the Bank makes the final payment which
it may be obligated to pay hereunder or provides the final benefit which it may be obligated to
provide hereunder, or, if later, as of the time the restriction on competition set forth in Paragraph
8 expires.








	15.	Counterparts





	This Agreement may be made and executed in counterparts, in which case all counterparts
shall be deemed to constitute one original document for all purposes.








	16.	Governing Law





	This Agreement is governed by and is to be construed and enforced in accordance with the
laws of the State of New York.








	17.	Authorization





	The Bank and Arrow represent and warrant that the execution of this Employment
Agreement has been duly authorized by resolution of their respective Boards.  This Paragraph 17
shall survive termination of the Agreement.





	IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Employment Agreement as of the day and year first above written.








						ARROW FINANCIAL CORPORATION








						By:  


						     Thomas L. Hoy, President and Chief


						     Executive Officer








						GLENS FALLS NATIONAL BANK AND TRUST
COMPANY








						By:  


						     Thomas L. Hoy, President and Chief


						     Executive Officer








						"EXECUTIVE"








						   


						John J. Murphy