Document:

exhibit104.htm

    
      	
               
      

            	 

    

    

    Exhibit 10.4

    
      

      CHANGE-IN-CONTROL
AGREEMENT

    

    

    THIS IS A CHANGE-IN-CONTROL AGREEMENT
(the “Agreement”), dated as
of July 28, 2008 (the “Effective Date”),
between West Pharmaceutical, Services, Inc., a Pennsylvania corporation, (the
“Company”) and
Matthew T. Mullarkey
(“Executive”).

     

    Background

     

    The Board of Directors of the Company
and the Compensation Committee of the Board have determined that it is in the
best interests of the Company and its shareholders for the Company to make the
following arrangements with Executive.  These arrangements provide for
compensation in the event Executive should leave the employment of the Company
under the circumstances described in this Agreement.

     

    Agreement

     

    In
consideration of Executive’s assuming the position of Chief Operating Officer,
and the mutual covenants and agreements herein, and intending to be legally
bound, the Company and Executive agree as follows:

     

    
      	
              1.  

            	
              Definitions.  As
      used in this Agreement, the following terms will have the meanings set
      forth below:

            

    

     

    
      	
              (a)  

            	
              An
      “Affiliate” of
      any Person means any Person directly or indirectly controlling, controlled
      by or under common control with such
Person.

            

    

     

    
      	
              (b)  

            	
              “Change in
      Control” means a change in control of a nature that would be
      required to be reported in response to Item 1 of a Current Report on Form
      8-K as in effect on the date of this Agreement pursuant to Section 13 or
      15(d) of the Securities Exchange Act of 1934, as amended, (the “Act”),
      provided, that, without limitation, a Change in Control shall be deemed to
      have occurred if:

            

    

     

    
      	
              (i)  

            	
              Any
      Person, other than:

            

    

     

    
      	
              (1)  

            	
              the
      Company,

            

    

     

    
      	
              (2)  

            	
              any
      Person who on the date hereof is a director or officer of the Company,
      or

            

    

     

    
      	
              (3)  

            	
              a
      trustee or fiduciary holding securities under an employee benefit plan of
      the Company,

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    is or
becomes the “beneficial owner,” (as defined in Rule 13-d3 under the Act),
directly or indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s then outstanding securities;
or

     

    
      	
              (ii)  

            	
              During
      any period of two consecutive years during the term of this Agreement,
      individuals who at the beginning of such period constitute the Board of
      Directors of the Company cease for any reason to constitute at least a
      majority thereof, unless the election of each director who was not a
      director at the beginning of such period has been approved in advance by
      directors representing at least two-thirds of the directors then in office
      who were directors at the beginning of the period;
  or

            

    

     

    
      	
              (iii)  

            	
              The
      shareholders of the Company approve: (A) a plan of complete liquidation of
      the Company; or (B) an agreement for the sale or disposition of all or
      substantially all of the Company’s assets; or (C) a merger, consolidation,
      or reorganization of the Company with or involving any other corporation,
      other
      than a merger, consolidation, or reorganization (collectively, a “Transaction”),
      that would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity), at least 50% of the combined voting power of the voting
      securities of the Company (or the surviving entity, or an entity which as
      a result of the Transaction owns the Company or all or substantially all
      of the Company’s assets either directly or through one or more
      subsidiaries) outstanding immediately after the
    Transaction.

            

    

     

    
      	
              (c)  

            	
              “Code” means the
      Internal Revenue Code of 1986, as
amended.

            

    

     

    
      	
              (d)  

            	
              The
      “Company’s
      Business” means: (i) the manufacture and sale of stoppers,
      closures, containers, medical-device components and assemblies made from
      elastomers, metal and plastic for the health-care and consumer-products
      industries, and (ii) any other business conducted by the Company or any of
      its Subsidiaries or Affiliates during the term of this Agreement and in
      which Executive has have been actively
involved.

            

    

     

    
      	
              (e)  

            	
              “Constructive
      Termination” means the occurrence of any of the following
      events:

            

    

     

    
      	
              (i)  

            	
              The
      Company requires Executive to assume any duties inconsistent with, or the
      Company makes a significant diminution or reduction in the nature or scope
      of Executive’s authority or duties from, those assigned to or held by
      Executive on the Effective Date;

            

    

     

    
      	
              (ii)  

            	
              A
      material reduction in Executive’s annual salary or incentive compensation
      opportunities;

            

    

     

    
      	
              (iii)  

            	
              A
      relocation of Executive’s site of employment to a location more than 50
      miles from Executive’s site of employment on the Effective
      Date;

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              (iv)  

            	
              The
      Company fails to provide Executive with substantially the same fringe
      benefits that were provided to Executive as of the Effective Date, or with
      a package of fringe benefits that, although one or more of such benefits
      may vary from those in effect as of the Effective Date, is substantially
      at least as beneficial to Executive in all material respects as such
      fringe benefits taken as a whole;
or

            

    

     

    
      	
              (v)  

            	
              A
      successor of the Company does not assume the Company’s obligations under
      this Agreement, expressly or as a matter of
law.

            

    

     

    
      	
               
      

            	
              Notwithstanding
      the foregoing, no Constructive Termination will be deemed to have occurred
      under any of the following
circumstances:

            

    

     

    
      	
              (1)  

            	
              Executive
      will have consented in writing or given a written waiver to the occurrence
      of any of the events enumerated in clauses (i) through (v)
      above;

            

    

     

    
      	
              (2)  

            	
              Executive
      will have failed to give the Company written notice stating Executive’s
      intention to claim Constructive Termination and the basis for that claim
      at least 10 days in advance of the effective date of Executive’s
      resignation; or

            

    

     

    
      	
              (3)  

            	
              The
      event constituting a Constructive Termination has been cured by the
      Company prior to the effective date of Executive’s
      resignation.

            

    

     

    
      	
              (f)  

            	
              "Payment"
      means

            

    

     

    
      	
              (i)  

            	
              any
      amount due or paid to Executive under this
  Agreement,

            

    

     

    
      	
              (ii)  

            	
              any
      amount that is due or paid to Executive under any plan, program or
      arrangement of the Company and any of its Subsidiaries,
  and

            

    

     

    
      	
              (iii)  

            	
              any
      amount or benefit that is due or payable to Executive under this Agreement
      or under any plan, program or arrangement of the Company and any of its
      Subsidiaries not otherwise covered under clause (i) or (ii) hereof which
      must reasonably be taken into account under section 280G of the Code and
      the Regulations in determining the amount of the "parachute payments"
      received by Executive, including any amounts which  must be
      taken into account under the Code and Regulations as a result of
      (1)  the acceleration of the vesting of any option, restricted
      stock or other equity award granted under any equity plan of the Company
      or otherwise, (2) the acceleration of the time at which any payment or
      benefit is receivable by Executive or (3) any contingent severance or
      other amounts that are payable to
Executive.

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	
              (g)  

            	
              "Person” means
      an individual, a corporation, a partnership, an association, a trust or
      other entity or organization.

            

    

     

    
      	
              (h)  

            	
              "Regulations"
      means the proposed, temporary and final regulations under section 280G of
      Code or any successor provision
thereto.

            

    

     

    
      	
              (i)  

            	
              “Restrictive
      Period” means the period of time that commences on the Effective
      Date hereof and ends on the first anniversary of the Termination
      Date.

            

    

     

    
      	
              (j)  

            	
              “Retirement
      Plan” means the West Pharmaceutical Services, Inc. Employees’
      Retirement Plan and any successor plan
thereto.

            

    

     

    
      	
              (k)  

            	
              “Savings/Deferred Comp
      Plan” means The Company’s 401(k) Plan, The Company’s Non-Qualified
      Deferred Compensation Plan for Designated Employees and any successor
      plans or other similar plans established from time to time that may allow
      executive officers to defer taxation of
  compensation.

            

    

     

    
      	
              (l)  

            	
              “Subsidiary” has
      the meaning ascribed to the term by section 425(f) of the
      Code.

            

    

     

    
      	
              (m)  

            	
              “Termination
      Date” is the date on which Executive ceases to be employed by the
      Company or any of its Subsidiaries or Affiliates for any
      reason.

            

    

     

    
      	
              2.  

            	
              Termination
      Following a Change in
Control.

            

    

     

    
      	
              (a)  

            	
              Executive
      will be entitled to the benefits specified in Section 3 (Benefits
      Payable Upon Termination of Employment)
  if,

            

    

     

    
      	
              (i)  

            	
              at
      any time within two years after a Change in Control has occurred,
      Executive’s employment by the Company is
  terminated:

            

    

     

    
      	
              (1)  

            	
              by
      the Company, other than by reason of death, disability, continuous willful
      misconduct to the detriment of the Company, or retirement at Executive’s
      normal retirement date under the Retirement Plan,
  or

            

    

     

    
      	
              (2)  

            	
              as
      a result of Executive’s resignation at any time following Executive’s
      Constructive Termination; or

            

    

     

    
      	
              (ii)  

            	
              Executive
      resigns for any reason within 30 days following the first anniversary of a
      Change in Control.

            

    

     

    Except as
otherwise set forth in Section 2(b), Executive will not be entitled to the
benefits specified in Section 3 hereof if Executive’s employment terminates for
any other reason or if, at any time thereafter, Executive is in breach of any of
Executive’s obligations under this Agreement.

     

    
      	
              (b)  

            	
              If
      the Company executes an agreement, the consummation of which would result
      in the occurrence of a Change in Control, then, with respect to a
      termination

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      	
              (i)  

            	
              by
      the Company, other than by reason of death, disability, continuous willful
      misconduct to the detriment of the Company, or retirement at Executive’s
      normal retirement date under the Retirement Plan,
  or

            

    

     

    
      	
              (ii)  

            	
              as
      a result of Executive’s resignation at any time following Executive’s
      Constructive Termination occurring after the date of such agreement (and,
      if such agreement expires or is terminated prior to consummation, prior to
      the expiration or termination of such
  agreement),

            

    

     

    a Change
in Control shall be deemed to have occurred as of the date of the execution of
such agreement and Executive will be entitled to the severance compensation
specified in Section 3 hereof.

     

    
      	
              3.  

            	
              Benefits
      Payable Upon Termination of Employment.  Upon termination
      of employment as set forth in Section 2 (Termination
      Following a Change in Control), Executive will be entitled to the
      following benefits:

            

    

     

    
      	
              (a)  

            	
              Severance
      Compensation.  Executive will be entitled to severance
      compensation in an amount equal to three times the sum
  of

            

    

     

    
      	
              (i)  

            	
              Executive’s
      highest annual base salary rate in effect during the year of the
      termination of Executive’s employment,
plus

            

    

     

    (ii) the
aggregate amount of the annual bonuses paid or payable toExecutive for the three
fiscal years immediately preceding aChange in Control divided by the number of
fiscal years as towhich such bonuses were paid or payable;

     

    provided, however,
that if at any time before the third anniversary of the Termination Date,
Executive either (x) elects retirement under the Retirement Plan, or (y) reaches
normal retirement age under the Retirement Plan if Executive had remained
employed by the Company, Executive’s severance compensation under this Section
3(a) will be reduced by an amount equal to the product obtained by multiplying
such severance compensation by a fraction the numerator of which is the number
of days elapsed from the Termination Date until the date on which either of the
events described in clauses (x) or (y) first occurs, and the denominator of
which is 1095.

     

    
      	
               
      

            	
              The
      severance compensation paid hereunder will not be reduced to the extent of
      any other compensation for Executive’s services that Executive receives or
      is entitled to receive from any other employment consistent with the terms
      of this Agreement.

            

    

     

    
      	
              (b)  

            	
              Equivalent of Vested
      Savings/Deferred Comp Plan Benefit. The Company will pay
      to Executive the difference, if any,
between

            

    

     

    
      	
              (i)  

            	
              the
      benefit Executive would be entitled to receive under the Savings/Deferred
      Comp Plan if the Company’s contributions to the Savings/Deferred Comp Plan
      were fully vested upon the termination of Executive’s employment,
      and

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      	
              (ii)  

            	
              the
      benefit Executive is entitled to receive under the terms of the
      Savings/Deferred Comp Plan upon termination of Executive’s
      employment.

            

    

     

    
      	
               
      

            	
              Any
      such benefit will be payable at such time and in such manner as benefits
      are payable to Executive under the Savings/Deferred Comp
    Plan.

            

    

     

    
      	
              (c)  

            	
              Unvested Equity
      Awards.  All stock options, other equity-based awards and
      shares of the Company’s stock granted or awarded to Executive pursuant to
      any Company compensation or benefit plan or arrangement, but which are
      unvested, will vest immediately upon termination of Executive’s
      employment. The provisions of this Section 3(c) will supersede the terms
      of any such grant or award made to Executive under any such plan or
      arrangement to the extent there is an inconsistency between the
      two.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Employee and Executive
      Benefits. Executive will be
      entitled to a continuation of all hospital, major medical, medical,
      dental, life and other insurance benefits not otherwise addressed in this
      Agreement in the same manner and amount to which Executive was entitled on
      the date of a Change in Control or on the date of Constructive Termination
      of Executive’s employment (whichever benefits are more favorable to
      Executive) until the earlier of

            

    

     

    
      	
              (i)  

            	
              a
      period of 36 months after termination of Executive’s
      employment,

            

    

     

    
      	
              (ii)  

            	
              Executive’s
      retirement under the Retirement Plan,
or

            

    

     

    
      	
              (iii)  

            	
              Executive’s
      eligibility for similar benefits with a new
  employer.

            

    

     

    
      	
               
      

            	
              Assistance
      in finding new employment will be made available to Executive by the
      Company if Executive so requests. Upon termination of Executive’s
      employment, Company cars must be returned to the
  Company.

            

    

     

    4.           Additional
Payments.

     

    
      	
              (a)  

            	
              Gross-Up
      Payment.  Notwithstanding anything herein to the
      contrary, if it is determined that any Payment would be subject to the
      excise tax imposed by section 4999 of the Code or any interest or
      penalties with respect to such excise tax (such excise tax, together with
      any interest or penalties thereon, is herein referred to as an "Excise Tax"),
      then Executive shall be entitled to an additional payment (a "Gross-Up
      Payment") in an amount that will place Executive in the same
      after-tax economic position that Executive would have enjoyed if the
      Excise Tax had not applied to the
Payment.

            

    

     

    
      	
              (b)  

            	
              Determination of
      Gross-Up Payment.  Subject to the provisions of Section
      4(c), all determinations required under this Section 4, including whether
      a Gross-Up Payment is required, the amount of the Payments constituting
      excess parachute payments, and the amount of the Gross-Up Payment, shall
      be made by the accounting firm that was the Company's independent auditors
      immediately prior to the Change in Control (or, in default thereof, an
      accounting firm mutually agreed upon by the Company and Executive) (the
      "Accounting
      Firm"), which shall provide detailed supporting calculations both
      to Executive and the Company within fifteen days of the Change in Control,
      the Termination Date or any other date reasonably requested by Executive
      or the Company on which a determination under this Section 4 is necessary
      or advisable.  If the Accounting Firm determines that no Excise
      Tax is payable by Executive, the Company shall cause the Accounting Firm
      to provide Executive with an opinion that the Accounting Firm has
      substantial authority under the Code and Regulations not to report an
      Excise Tax on Executive's federal income tax return.  Any
      determination by the Accounting Firm shall be binding upon Executive and
      the Company.  If the initial Gross-Up Payment is insufficient to
      cover the amount of the Excise Tax that is ultimately determined to be
      owing by Executive with respect to any Payment (hereinafter an "Underpayment"),
      the Company, after exhausting its remedies under Section 4(c) below, shall
      pay to Executive an additional Gross-Up Payment in respect of the
      Underpayment.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      	
              (c)  

            	
              Timing of
      Payment.  The Company shall pay to Executive the initial
      Gross-Up Payment or any required Underpayment (i) if the Executive is a
      “specified employee” within the meaning of Section 409A of the Code, on
      the later of (A) the date that is at least six months after the date of
      the Executive’s termination of employment or (B) the fifth business day
      following the receipt by Executive and the Company of the Accounting
      Firm's determination, or (ii) if the Executive is not a “specified
      employee” within the meaning of Section 409A the fifth business day
      following the receipt by Executive and the Company of the Accounting
      Firm’s determination.  Notwithstanding anything herein to the
      contrary, any Gross-Up Payment or Underpayment must be paid on or before
      the end of the Executive’s taxable year following the taxable year in
      which the applicable Excise Tax is
payable.

            

    

     

    
      	
              (d)  

            	
              Procedures.  Executive
      shall notify the Company in writing of any claim by the Internal Revenue
      Service that, if successful, would require the payment by the Company of a
      Gross-Up Payment.  Such notice shall be given as soon as
      practicable after Executive knows of such claim and shall apprise the
      Company of the nature of the claim and the date on which the claim is
      requested to be paid.  Executive agrees not to pay the claim
      until the expiration of the thirty-day period following the date on which
      Executive notifies the Company, or such shorter period ending on the date
      the Taxes with respect to such claim are due (the "Notice
      Period").  If the Company notifies Executive in writing prior to
      the expiration of the Notice Period that it desires to contest the claim,
      Executive shall:  (i) give the Company any information
      reasonably requested by the Company relating to the claim; (ii) take such
      action in connection with the claim as the Company may reasonably request,
      including accepting legal representation with respect to such claim by an
      attorney reasonably selected by the Company and reasonably acceptable to
      Executive; (iii) cooperate with the Company in good faith in contesting
      the claim; and (iv) permit the Company to participate in any proceedings
      relating to the claim.  Executive shall permit the Company to
      control all proceedings related to the claim and, at its option, permit
      the Company to pursue or forgo any and all administrative appeals,
      proceedings, hearings, and conferences with the taxing authority in
      respect of such claim.  If requested by the Company, Executive
      agrees either to pay the tax claimed and sue for a refund or contest the
      claim in any permissible manner and to prosecute such contest to a
      determination  before any administrative tribunal, in a court of
      initial jurisdiction and in one or more appellate courts as the Company
      shall determine; provided, however, that, if the
      Company directs Executive to pay such claim and pursue a refund, the
      Company shall advance the amount of such payment to Executive on an
      after-tax and interest-free basis (the "Advance").  The
      Company's control of the contest related to the claim shall be limited to
      the issues related to the Gross-Up Payment and Executive shall be entitled
      to settle or contest, as the case may be, any other issues raised by the
      Internal Revenue Service or other taxing authority.  If the
      Company does not notify Executive in writing prior to the end of the
      Notice Period of its desire to contest the claim, the Company shall pay to
      Executive an additional Gross-Up Payment in respect of the excess
      parachute payments that are the subject of the claim, and Executive agrees
      to pay the amount of the Excise Tax that is the subject of the claim to
      the applicable taxing authority in accordance with applicable
      law.  The Advance, any additional Gross-Up Payments and the
      reimbursement of any related costs, expenses or taxes payable under this
      Section 4(d) and/or Section 4(f) shall be made on or before the end of the
      Executive’s taxable year following the taxable year in which any
      additional taxes are payable by the Executive or if no additional taxes
      are payable the Executive’s taxable year following the taxable year in
      which the audit or litigation is
closed.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      	
              (e)  

            	
              Repayments.  If,
      after receipt by Executive of an Advance, Executive becomes entitled to a
      refund with respect to the claim to which such Advance relates, Executive
      shall pay the Company the amount of the refund (together with any interest
      paid or credited thereon after Taxes applicable thereto).  If,
      after receipt by Executive of an Advance, a determination is made that
      Executive shall not be entitled to any refund with respect to the claim
      and the Company does not promptly notify Executive of its intent to
      contest the denial of refund, then the amount of the Advance shall not be
      required to be repaid by Executive and the amount thereof shall offset the
      amount of the additional Gross-Up Payment then owing to
      Executive.

            

    

     

    
      	
              (f)  

            	
              Further
      Assurances.  The Company shall indemnify Executive and
      hold Executive harmless, on an after-tax basis, from any costs, expenses,
      penalties, fines, interest or other liabilities ("Losses") incurred by
      Executive with respect to the exercise by the Company of any of its rights
      under this Section 4, including any Losses related to the Company's
      decision to contest a claim or any imputed income to Executive resulting
      from any Advance or action taken on Executive's behalf by the Company
      hereunder.  Subject to the last sentence of Section 4(d), the
      Company shall pay all legal fees and expenses incurred under this Section
      4 and shall promptly reimburse Executive, or cause the Trust to reimburse
      Executive, for the reasonable expenses incurred by Executive in connection
      with any actions taken by the Company or required to be taken by Executive
      hereunder.  The Company shall also pay all of the fees and
      expenses of the Accounting Firm, including the fees and expenses related
      to the opinion referred to in Section
4(b).

            

    

     

    5.           Payment of
Severance Compensation.

     

    The
severance compensation set forth in Section 3 (a) will be payable in 36 equal
monthly installments commencing on the first day of the month following the
month in which Executive’s employment terminates.  Notwithstanding the
foregoing, in the event that the Executive is a “specified employee” within the
meaning of Code section 409A, the first six monthly installments shall be paid
in a lump sum on the first day of the month following or coincident with the
date that is six months following the Executive’s termination of employment and
all remaining monthly installments shall be paid monthly.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      	
              6.

            	
              Non-Disclosure
      and Confidentiality.  In addition to the covenants
      contained herein, and as additional consideration, Executive agrees that
      he will execute and comply with the terms of the Confidentiality Agreement
      with West Pharmaceutical Services, Inc. and its Subsidiaries attached
      hereto as Exhibit
      A.

            

    

     

    
      	
              7.

            	
              Legal
      Fees.  The Company will pay all legal fees and expenses
      which Executive may incur as a result of the Company’s contesting the
      validity or enforceability of this
Agreement.

            

    

     

    
      	
              8.

            	
              Payments
      Final.  In the event of a termination of Executive’s
      employment under the circumstances described in this Agreement, the
      arrangements provided for by this Agreement, and any other agreement
      between the Company and Executive in effect at that time and by any other
      applicable plan of the Company in which Executive then participates, will
      constitute the entire obligation of the Company to Executive, and
      performance of that obligation will constitute full settlement of any
      claim that Executive might otherwise assert against the Company on account
      of such termination. The Company’s obligation to pay Executive under this
      Agreement will be absolute and unconditional and will not be affected by
      any circumstance, including any set-off, counterclaim, defense or other
      rights the Company may have against Executive or anyone else as long as
      Executive is not in beach of Executive’s obligations under this
      Agreement.

            

    

     

    9.           Non-Competition.

     

    
      	
              (a)  

            	
              During
      the Restrictive Period, Executive will not, and will not permit any of
      Executive’s Affiliates, or any other Person, directly or indirectly,
      to:

            

    

     

    
      	
              i)  

            	
              engage
      in competition with, or acquire a direct or indirect interest or an option
      to acquire such an interest in any Person engaged in competition with, the
      Company’s Business in the United States (other than an interest of not
      more than 5 percent of the outstanding stock of any publicly traded
      company);

            

    

     

    
      	
              ii)  

            	
              serve
      as a director, officer, employee or consultant of, or furnish information
      to, or otherwise facilitate the efforts of, any Person engaged in
      competition with the Company’s Business in the United
    States;

            

    

     

    
      	
              iii)  

            	
              solicit,
      employ, interfere with or attempt to entice away from the Company any
      employee who has been employed by the Company or a Subsidiary in an
      executive or supervisory capacity in connection with the conduct of the
      Company’s Business within one year prior to such solicitation, employment,
      interference or enticement; or

            

    

     

    
      	
              iv)  

            	
              approach,
      solicit or deal with in competition with the Company or any Subsidiary any
      Person which at any time during the 12 months immediately preceding the
      Termination Date:

            

    

     

    
      	
              (1)  

            	
              was
      a customer, client, supplier, agent or distributor of the Company or any
      Subsidiary;

            

    

     

    
      	
              (2)  

            	
              was
      a customer, client, supplier, agent or distributor of the Company or any
      Subsidiary with whom employees reporting to or under the direct control of
      Executive had personal contact on behalf of the Company or any Subsidiary;
      or

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      	
              (3)  

            	
              was
      a Person with whom Executive had regular, substantial or a series of
      business dealings on behalf of the Company or any Subsidiary (whether or
      not a customer, client, supplier, agent or distributor of the Company or
      any Subsidiary).

            

    

     

    
      	
              (c)  

            	
              For
      the avoidance of doubt, Executive agrees that the phrase “Person engaged
      in competition with the Company’s Business” as used in this Section
      includes, the companies listed on Exhibit B to this
      Agreement, and their Affiliates and
  Subsidiaries.

            

    

     

    
      	
              10.

            	
              Vesting in
      the Event of a Change in Control.  In the event of a
      Change in Control, all stock options, equity-based awards and shares of
      the Company's stock granted or awarded to Executive pursuant to any
      Company compensation or benefit plan or arrangement, but which are
      unvested at that time, will vest immediately upon such Change in
      Control.  The provisions of this Section 10 will supersede the
      terms of any such grant or award made to Executive under any such plan or
      arrangement to the extent there is an inconsistency between the
      two.

            

    

     

    
      	
              11.

            	
              Duration of
      Agreement.  This Agreement shall commence on the
      Effective Date and shall continue until terminated as provided in this
      Section. This Agreement may be terminated only under the following
      circumstances:

            

    

     

    
      	
              (i)  

            	
              At
      any time by the mutual written consent of Executive and the Company;
      and

            

    

     

    
      	
              (ii)  

            	
              By
      the Company at the end of each successive two-year periods commencing on
      the date of this Agreement by giving Executive written notice at least one
      year in advance of such termination, except that such termination and
      written notice will not be effective unless Executive will be employed by
      the Company on the Termination
Date.

            

    

     

    12.           Miscellaneous.

     

    
      	
              (a)  

            	
              In
      consideration for the benefit of having the protection afforded by this
      Agreement, Executive agrees that the provisions of Section 6 (Non-Disclosure
      and Confidentiality) and Section 9 (Non-Competition) of this Agreement
      apply to Executive, and Executive will be bound by them, whether or not a
      Change in Control occurs or Executive actually receives the benefits
      specified in Section 3 hereof.

            

    

     

    
      	
              (b)  

            	
              This
      Agreement will be binding upon and inure to the benefit of Executive,
      Executive’s personal representatives and heirs and the Company and any
      successor of the Company, but neither this Agreement nor any rights
      arising hereunder may be assigned or pledged by
  Executive.

            

    

     

    
      	
              (c)  

            	
              Executive
      acknowledges that a breach of the covenants contained in Section 6 (Non-Disclosure
      and Confidentiality) and Section 9 (Non-Competition)
      will cause the Company immediate and irreparable harm for which the
      Company’s remedies at law (such as money damages) will be inadequate. The
      Company shall have the right, in addition to any other rights it may have,
      to obtain an injunction to restrain any breach or threatened breach of
      such Sections. The Company may contact any Person with or for whom
      Executive works after Executive’s employment by the Company ends and may
      send that Person a copy of this
Agreement.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
      	
              (d)  

            	
              Should
      any provision of this Agreement be adjudged to any extent invalid by any
      competent tribunal, that provision will be deemed modified to the extent
      necessary to make it enforceable.  The invalidity or
      unenforceability of any provision hereof or Exhibit hereto shall in no way
      affect the validity or enforceability of any other provision
      hereof.

            

    

     

    
      	
              (e)  

            	
              This
      Agreement will be governed and construed in accordance with the laws of
      the Commonwealth of Pennsylvania.

            

    

     

    
      	
              (f)  

            	
              This
      Agreement constitutes the entire agreement and understanding between the
      Company and Executive with respect to the subject matter hereof and merges
      and supersedes all prior discussions, agreements and understandings
      between the Company and Executive with respect to such
      matters.

            

    

     

    
      	
              (g)  

            	
              This
      Agreement may be executed in one or more counterparts, which together
      shall constitute a single
agreement.

            

    

     

    

     

    [SIGNATURE
PAGE FOLLOWS]

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties have
duly executed this Agreement as of the date first written above.

     

    

    WEST PHARMACEUTICAL SERVICES,
INC.

    

    

    

    

    /s/ M.
Mullarkey                                                      By: /s/ D. E.
Morel                                                      

    Matthew
T.
Mullarkey                                                           Donald
E. Morel, Jr. Ph.D.

       Chief Executive
Officer

    
      
        
          

          

           

        

         

      

      
        12

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    Confidentiality
Agreement With

    West
Pharmaceutical Services, Inc. and Subsidiaries

    _________________________________________

    

    In consideration of my employment by
West Pharmaceutical Services, Incorporated, The Tech Group or any of each of
their subsidiaries or affiliates (the “Company”), and intending to be legally
bound, I, Matthew T.
Mullarkey, agree as follows:

    

    1. INVENTIONS
COMPANY PROPERTY.  In this Agreement the term “Inventions”
includes inventions, ideas, techniques, methods, developments, improvements and
all other forms of intellectual property.  All rights in Inventions
which I conceive, make or obtain either alone or with others during my
employment by the Company (both before and after the date of this Agreement) and
within six months after my employment ends, are and shall be the property of the
Company except as set forth in Section 2 of this Agreement.

    

    2.  INVENTIONS
EXCLUDED.  This Agreement does not apply to Inventions which
the Company determines in its sole discretion to be unrelated to any matter of
actual or potential interest to the Company unless they are conceived, made or
obtained in the course of my employment or with the use of the time, material or
facilities of the Company.  This agreement also does not apply to
Inventions conceived, made or obtained by me before my employment by the
Company.  As a matter of record, I include at the end of this
Agreement a list of such prior Inventions.

    

    3. DISCLOSURE
AND PROTECTION OF INVENTIONS.  I will make full and prompt
disclosure to the Company of all Inventions which are defined by Section 1 to be
the Company’s property.  At the Company’s request and expense but
without additional compensation to me, I will at any time take such actions as
the Company reasonably considers necessary to obtain or preserve the Company’s
rights in such Inventions.  These actions may include, but are not
necessarily limited to, signing and delivering applications, assignments and
other papers and testifying in legal proceedings.

    

    4.  CONFIDENTIAL
INFORMATION.  I will not, during or after my employment with
the Company, use for myself or others, or disclose to others, any formulae,
trade secrets, know-how, Inventions which are the Company’s property, data
provided to the Company by clients, customers, or licensors, including
Inventions owned by Third Parties (as defined below), or other confidential
matters of the Company or its affiliates unless authorized in writing to do so
by the Company.  I understand that (a) the Company keeps these matters
confidential and secret, (b) these confidential matters would be of great value
to competitors, and (c) if these confidential matters were known to the
Company’s competitor’s, the Company would be harmed.  As used in this
agreement, “confidential matters of the Company” includes all information of a
technical, commercial or other nature and any other information not made
available to the general public, including, but not limited to information
covered by a confidentiality agreement.

    

    5.  THIRD
PARTIES. You understand that, in dealing with existing and potential
customers, clients, licensees, licensors, suppliers, contracting parties and
other third parties with which the Company has business relations or potential
business relations (“Third Parties”), the Company frequently receives
confidential and proprietary information and materials from these Third Parties
subject to the Company's understanding that the Company will maintain the
confidentiality of such information and the Company requires its employees and
consultants to do so.  You agree to treat all such information and
materials as confidential information subject to this Agreement.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    6.  PAPERS.  All
correspondence, memoranda, notes, records, reports, drawings, lists,
photographs, plans and other papers and items received or made by me in
connection with my employment with the Company shall be the property of the
Company.  I will deliver all copies of such materials to the Company
upon request of the Company and, even if it does not request, when my employment
by the Company ends.

    

    7.  ENFORCEMENT.   I
acknowledge that a breach of this agreement will cause the Company immediate and
irreparable harm for which the Company’s remedies at law (such as money damages)
will be inadequate.  The Company shall have the right, in addition to
any other rights it may have, to obtain an injunction to restrain any breach or
threatened breach of this Agreement.  Should any provision of this
agreement be adjudged to any extent invalid by any competent tribunal, that
provision would be deemed modified to the extent necessary to make it
enforceable.   The Company may contact any person with or for
whom I work after my employment by the Company ends and may send that person a
copy of this agreement.  If suit is brought to enforce this Agreement,
the party which substantially prevails on the merits is entitled to recover as
an element of costs of suit, and not as damages, reasonable attorneys' fees and
expenses and all expert witnesses' fees and expenses incurred by the prevailing
party.

    

    8.  BINDING
EFFECT; SEVERABILITY.  My undertakings hereunder will bind me
and my heirs and legal representatives regardless of (a) the duration of my
employment by the Company, (b) any change in my duties or the nature of my
employment, (c) the reasons for manner of termination of my employment, and (d)
the amount of my compensation.  The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or enforceability of
any other provision hereof.

    

    9.  MISCELLANEOUS.  This
agreement (a) shall in no way bind me or the Company to a specific term of
employment, (b) supersede any prior understandings and constitutes the entire
understanding between the Company and me about the subject matter covered by
this agreement, (c) may be modified or varied only in writing signed by the
Company and me, (d) will inure to the benefit of the successors and assigns of
the Company, and (e) will be governed by Pennsylvania law.

    

    

    

    

    MATTHEW T. MULLARKEY

    

    

    /s/ M.
Mullarkey                                                                           

    

    

    Dated: 
July 28,
2008

    

    List below or on a separate page all
previous Inventions referred to in Section 3 above (if none please so
indicate).

    

    US
Patents and Applications for three versions of armoring systems including
Affixable Armor Tiles, Mounting Systems, and Explosively Formed Projectile
Defeat Systems.

    
      
        
          

          

           

        

         

      

      
        14

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    Companies Engaged in
Competition with the Company

    

    3-M Drug
Delivery Systems Division

    AAI
Development Services

    ABC
Laboratories, Inc.

    Akron
Rubber Development Laboratory, Inc.

    American
Stelmi Corporation (Stelmi)

    B. Braun
Medical Inc.

    Baxa
Corporation

    Baxter
International Inc.

    Becton,
Dickinson and Company (BD)

    Bioject
Medical Technologies Inc.

    Bioscreen
Testing Services, Inc.

    Bodycote
Materials Testing, Inc.

    Cardinal
Health Pharmaceutical Development

    Cardinal
Health, Inc./ALARIS Medical Systems

    Carmel
Pharma, Inc.

    Catalent
Pharma Solutions, Inc.

    Chemic
Laboratories, Inc

    Chemir
Analytical Services

    Ciba
Specialty Chemicals Corp.

    Citech

    CODAN US
Corporation

    Columbia
Analytical Services, Inc.

    
      	
               
      

            	
              Cyanta
      Analytical Laboratories (subsidiary of
Chemir)

            

    

    Duoject
Medical Systems Inc (Canada Company)

    
      	
               
      

            	
              Fisher
      Clinical Services (part of Thermo Fisher Scientific,
  Inc)

            

    

    Galbraith
Laboratories, Inc.

    Gerresheimer
Glass, Inc.

    Halkey-Roberts
Corporation

    Helvoet
Pharma USA

    Hospira,
Inc.

    ICU
Medical, Inc.

    Intertek/Quantitative
Technologies Inc (QTI)

    Irvine
Pharmaceutical Services, Inc.

    Itran-Tompkins
Rubber Corporation

    Kokoku
Rubber, Inc.

    Lancaster
Laboratories, Inc. (acquired by Fisher )

    Lexington
Rubber Group, Inc.

    Maptech

    Medi-Dose,
Inc./ EPS, Inc.

    Metrics,
Inc.

    Microbac
Laboratories, Inc.

    Nektar
Therapeutics

    Nelson
Laboratories, Inc.

    North
American Science Associates, Inc (NAMSA)

    Pharmalytica
Services, LLC

    Polymer
Solutions Incorporated

    PPD
Incorporated

    Quality
Control Laboratory (QC Lab)

    Radius (A
Nypro Company)

    RJ Lee
Group, Inc.

    SCHOTT
North America, Inc.

    SGS
Northview Laboratories

    Sterigenics
International, Inc. (SteriPro Labs)

    Synomics
Pharmaceutical Services LLC

    The
Plasticoid Company

    Toxikon
Corporation

    Whitehouse
Analytical Laboratories, LLC

     

    
      
        
          
            

            

             

          

           

        

        
          15.

EXHIBIT 10.1

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT, made and entered into as of the 1st day of July 1, 2008 (the  “Agreement”), by and between Arrow Financial Corporation, a New York corporation (“AFC,” together with its subsidiaries and affiliates, the “Company”), and John C Van Leeuwen (“Adviser”).

RECITALS

WHEREAS, effective June 30, 2008, Adviser retired from service as the Chief Credit Officer of AFC and it principal subsidiary, Glens Falls National Bank and Trust  Company (the “Bank”); and

WHEREAS, AFC wishes to enter into an arrangement with Adviser pursuant to which Adviser, following his resignation, will make himself available to provide to the Company advice, consultation and assistance on an as-needed basis with respect to loan and credit administration and other related loan matters of the Company, as may be requested from time-to-time by the Chief Executive Officer of AFC (“CEO”); and

WHEREAS, Adviser is willing to make himself available to render such services to the Company pursuant to and in accordance with the terms of this Agreement; 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;

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 credit, loan and other related matters, including by assisting in the review of routine credit and loan reports and advising on credit and loan 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 360 hours on an annualized basis (“Basic Commitment”), (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 therefore, 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)

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.

1.

Term.  The term of this Agreement and the obligation of Adviser to render services hereunder shall commence as of 12:01 a.m. on July 1, 2008, and shall expire as of 11:59 p.m. on December 31, 2008 (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.” 

2.

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

2.

Office Space; Expenses.

(a)

Office Space; Support Staff.  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 the Company as may be mutually agreeable to the parties, for the purpose of assisting Adviser to perform services hereunder, and AFC will make available to Adviser at such premises, to the extent consistent with the Company’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 such services.

(b)

Expenses.  Subject to any limitations on Adviser’s expenses as may be established from time-to-time by the Chief Executive Officer of AFC under Section 1, AFC will pay on behalf of Adviser any reasonable expenses incurred by him in connection with services rendered by him hereunder, and will reimburse Adviser for any such expenses previously paid by him, 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.

5.

Fees. 

 

(a)

Basic Commitment.  In return for Adviser’s rendering services in fulfillment of his Basic Commitment hereunder, AFC shall pay to Adviser cash in the amount of $1,000 per month payable monthly on the last Wednesday of each month.

(b)

Additional Commitment.  To the extent that AFC and Adviser may reach agreement on Adviser’s rendering additional services hereunder during the term of this agreement as part of an Additional Commitment by Adviser, AFC shall pay to Adviser consideration in cash or such other form or forms, monthly or such other time or times, and in such amount or amounts, as the parties may agree, provided that if the parties agree on an Additional Commitment by Adviser but do not otherwise specify the form, timing or amount of fees payable by AFC to Adviser thereunder, the additional fees thus payable by AFC to Adviser will be paid in the same form, at the same time or times, and based on the same hourly rate, as is then in effect for fees payable by AFC to Adviser under the latter’s Basic Commitment.  For this purpose, the hourly rate payable to Adviser from time-to-time under the Basic Commitment shall equal the annualized amount of cash then payable under the Basic Commitment divided by the minimum annualized hours to which the Basic Commitment then relates. 

2.

Confidentiality.  Except to the extent otherwise authorized by AFC, Adviser agrees to keep confidential, and to require all additional parties rendering services under Adviser’s direction hereunder (“Adviser’s Assistants”) to keep confidential, all information coming into his or their possession in connection with the provision of services under this Agreement that is not otherwise in the public domain and that belongs or relates to or emanates from the Company (“Confidential Company Information”).  Nothing in this Agreement, however, shall prohibit Adviser or such other parties, 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 or they are advised in writing by legal counsel that such document production, testimony, participation or cooperation is required under applicable law.  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 or Adviser’s Assistants, 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 or Adviser’s Assistants of their obligation to keep confidential all Confidential Company Information received by them at any time hereunder for as long as such information remains confidential, i.e., is not known to the general public.

3.

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 or Adviser’s testator or intestate 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 as any in fact pertain 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 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.  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.

4.

Noncompetition and Nonsolicitation. 

(a)

Noncompetition.  Adviser shall not, at any time during the Services Period, without the prior written approval of the Chief Executive Officer of AFC, 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.

2.

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.

3.

Successors; Binding Agreement.  This Agreement shall be binding upon and inure to the benefit of Adviser and his heirs and representatives and AFC and its successors and assigns.

4.

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.

  

5.

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.

6.

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 herein contained to the contrary herein, 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.

7.

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 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:

John C. Van Leeuwen

7 Wellington Drive

Saratoga Springs, NY 12866

copy to:

________________________ 

________________________

If to AFC:

Arrow Financial Corporation 

250 Glen Street 

Glens Falls, New York 12801

Attention:  Chief Executive Officer

copy to:

Thompson Coburn LLP 

Attn:  Thomas B. Kinsock, Esq.

One U.S. Bank Plaza, 34th Floor

St. Louis, MO  63102

8.

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.

9.

409A Savings Clause.  The parties intend that any amounts payable under this Agreement comply with Section 409A of the Internal Revenue Code or 1986, as amended (“Code”), including regulations and guidance hereunder, so as not to subject Adviser to the payment of any additional taxes, penalties or interest imposed under Section 409A with respect to amounts paid under this Agreement or any other agreement or arrangement between the parties.  The parties agree to amend this Agreement to the extent necessary to bring this Agreement into compliance with Code Section 409A as it may be interpreted by any regulations, guidance or amendments to Section 409A issued or adopted after the date of this Agreement.

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 L. Hoy

Title: Chairman, President and CEO

“ADVISER”

__________________________________________

John C. Van Leeuwen

 

Endnotes

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