Document:

Exhibit 101

		

			 

		

		

			     Exhibit 10.1

		

		
			ASSET PURCHASE AGREEMENT
		

		
			This Asset Purchase Agreement (this “Agreement”), dated as of January 29, 2019, is entered into between Legendary BBQ, Inc., Cornerstar BBQ, Inc., Razorback BBQ, Inc., Larkridge BBQ Inc., Mesa Mall BBQ, Inc., and Quebec Square BBQ, Inc., jointly and severally,  (the “Seller”) and Famous Dave’s RIBS, Inc., a Minnesota corporation (“Buyer”).
		

		
			 
		

		
			RECITALS
		

		
			WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the rights of Seller to the Purchased Assets (as defined herein), subject to the terms and conditions set forth herein;
		

		
			NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
		

			
	
			
				ARTICLE I
			

Purchase and Sale

			
	
			
				 Section 1.01
			Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in the assets set forth on ‎Section 1.01 of the disclosure schedules (“Disclosure Schedules”) attached hereto (the “Scheduled Assets”).  In addition, Buyer shall purchase from Seller all current and useful unexpired inventory (including liquor inventory,  food and food supplies, beverages, condiments, paper supplies, cleaning supplies, uniforms, smallwares and other operating supplies) of Seller held for use or sale by Seller as of the Closing in connection with the operation of the Famous Dave’s® restaurants located at 15725 East Briarwood Circle, Aurora, CO 88016, 8330 Razorback Drive, Colorado Springs, CO 80920, 16539 N. Washington Street, Thornton, CO 80020, 7557 E. 36th Ave., Denver, CO 80238, and 2440 Hwy 6 & 50, Grand Junction, CO 81505 (collectively, “Restaurant Inventory”) and all cash drawer amounts remaining in the Famous Dave’s restaurants located at 15725 East Briarwood Circle, Aurora, CO 88016, 8330 Razorback Drive, Colorado Springs, CO 80920, 16539 N. Washington Street, Thornton, CO 80020, 7557 E. 36th Ave., Denver, CO 80238, and 2440 Hwy 6 & 50, Grand Junction, CO 81505 as of Closing (the “Purchased Cash,” and together with the Scheduled Assets and the Restaurant Inventory, the “Purchased Assets”).  Seller is conveying the Purchased Assets to Buyer and Buyer is purchasing the Purchased Assets free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“Encumbrance”).  

			
	
			
				 Section 1.02
			Assumption of Liabilities. Except for the gift card liability for the restaurants, which amount shall be as reported by Givex/SVS (the “Assumed Liability”), Buyer shall not assume any liabilities or obligations of Seller of any kind, whether known or unknown, contingent, matured or otherwise, whether currently existing or hereinafter created  (“Excluded Liability”).

			
	
			
				 Section 1.03
			Purchase Price. The aggregate purchase price for the Purchased Assets shall be $4,100,000.00 plus the assumption by Buyer of the Assumed Liability, plus an amount equal to the book value of the Restaurant Inventory, as reflected on Seller’s most recent unaudited financial statement as of the Closing Date.  Buyer shall pay Seller for Restaurant Inventory and the Purchased Cash within 10 days of the Closing Date.  Buyer shall pay Seller the other elements of the Purchase Price as of Closing. The Buyer reserves the right to withhold any amount of the Purchase Price to satisfy any amounts outstanding from the Seller to the Buyer or Buyer’s Parent, as defined below, prior to Closing. However, the Buyer cannot withhold more than $350,000.00 in amounts outstanding for unpaid royalties to Buyer’s Parent.    

		
			 
		

		
			

		 

 

		

			
	
			
				 (a)
			Upon execution of this Agreement, the Seller shall provide the Buyer in writing, as set forth in Exhibit A to this Agreement, all obligations and liabilities of amounts due by the Buyer or shall become due between the date of this Agreement and the Closing, which shall, be paid by the Buyer directly to the 3rd parties unless it is legally not available, which are required to carry on the business without interruption until Closing. This amount shall be deducted from the Purchase Price delivered to the Seller in Section 2.02(b)(i). Bill Ferguson shall personally guaranty, as set forth in Exhibit B hereto, any amounts we pay pursuant to this section.

			
	
			
				 Section 1.04
			Allocation of Purchase Price. Seller and Buyer agree to allocate the Purchase Price among the Purchased Assets for all purposes (including tax and financial accounting) as agreed by their respective accountants, negotiating in good faith on their behalf.  Buyer and Seller shall file all tax returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation and each party shall execute and timely file a Form 8594 consistent with the Purchase Price allocation, after exchanging mutually acceptable drafts of such form (and any equivalent state, municipal, county, local, foreign, or other tax forms).

			
	
			
				 Section 1.05
			Withholding Tax. Buyer shall be entitled to deduct and withhold from the Purchase Price all taxes that Buyer may be required to deduct and withhold under any applicable tax law. All such withheld amounts shall be treated as delivered to Seller hereunder.

			
	
			
				 Section 1.06
			Prorations.  Rent paid by Seller, pursuant to the Leases being assigned by this Agreement, for the month in which the Closing occurs shall be prorated and Seller shall be entitled to reimbursement of that portion of the month following at Closing.  

			
	
			
				ARTICLE II
			
Closing

			
	
			
				 Section 2.01
			Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on February 19,  2019, or as soon as legally available thereafter for the Buyer to run the restaurants in the same manner as the Seller (the “Closing Date”), by electronic exchange of signed documents. The consummation of the transactions contemplated by this Agreement shall be deemed to occur at 12:01 a.m. on the Closing Date.

			
	
			
				 Section 2.02
			Closing Deliverables. 

			
	
			
				 (a)
			At the Closing,  Seller shall deliver to Buyer the following:

			
	
			
				 (i)
			a bill of sale in form and substance satisfactory to Buyer and duly executed by Seller, transferring the Purchased Assets to Buyer;

			
	
			
				 (ii)
			if available at the time of Closing, or as soon as practical after Closing,  an Assignment and Assumption of Lease in form and substance satisfactory to Buyer (the “Assignment and Assumption of Lease”) and duly executed by Seller;

			
	
			
				 (iii)
			copies of all consents, approvals, waivers and authorizations referred to in ‎Section 3.02 of the Disclosure Schedules;

			
	
			
				 (iv)
			a certificate pursuant to Treasury Regulations Section 1.1445-2(b) that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code duly executed by Seller;

		
			

		 

 

		

			
	
			
				 (v)
			tax clearance certificates from the taxing authorities in the jurisdictions that impose taxes on Seller or where Seller has a duty to file tax returns in connection with the transactions contemplated by this Agreement and evidence of the payment in full or other satisfaction of any taxes owed by Seller in those jurisdictions;

			
	
			
				 (vi)
			a certificate of the Secretary or Assistant Secretary (or equivalent officer or manager) of Seller certifying as to (A) the resolutions of the members of Seller, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and (B) the names and signatures of the officers or managers of Seller authorized to sign this Agreement and the documents to be delivered hereunder; and

			
	
			
				 (vii)
			such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement.

			
	
			
				 (b)
			At the Closing,  Buyer shall deliver to Seller the following:

			
	
			
				 (i)
			the amount of the Purchase Price payable at Closing by wire of immediately available funds to an account designated by the Seller minus (1)  any amounts which will be delivered to vendors of the Seller or to the Seller for any amounts due or necessary to carry on the business between the date of this Agreement and the Closing as set forth in 1.03(a) or; (2) any amounts the Seller owes to the Buyer except for unpaid royalties to the Buyer’s Parent, which unpaid royalties will not exceed $350,000.00;

			
	
			
				 (ii)
			if available at the time of Closing, the Assignment and Assumption of Lease duly executed by Buyer;

			
	
			
				 (iii)
			a release of any liability or obligations under the franchise agreement entered into between Famous Dave’s of America, Inc., the (“Buyer’s Parent”), and Seller; and

			
	
			
				 (iv)
			copies of all consents and authorizations referred to in ‎Section 4.02 of the Disclosure Schedules.

			
	
			
				ARTICLE III
			
Representations and warranties of seller

		
			Seller represents and warrants to Buyer that the statements contained in this ‎ARTICLE III are true and correct as of the date hereof. For purposes of this ‎ARTICLE III,  “Seller’s knowledge,” “knowledge of Seller” and any similar phrases shall mean the actual or constructive knowledge of any member of Seller, after due inquiry.
		

			
	
			
				 Section 3.01
			Organization and Authority of Seller;  Enforceability. Each Seller is a corporation company duly organized, validly existing and in good standing under the laws of the state of Colorado.  Seller has full power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance by Seller of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Seller.  This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms.

		
			

		 

 

		

			
	
			
				 Section 3.02
			No Conflicts;  Consents. Except as set forth in Section 3.02 of the Disclosure Schedules, the execution, delivery and performance by Seller of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the certificate of incorporation, by-laws or other organizational documents of Seller;  (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller or the Purchased Assets;  (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which Seller is a party or to which any of the Purchased Assets are subject; or (d) result in the creation or imposition of any Encumbrance on the Purchased Assets. No consent, approval, waiver or authorization is required to be obtained by Seller from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby.

			
	
			
				 Section 3.03
			Title to Purchased Assets. Seller owns and has good title to the Purchased Assets, free and clear of Encumbrances.  Prior to Closing, the Buyer shall have the ability to inspect the physical character of the Purchased Assets.  THE SELLER EXPRESSLY WARRANTS THAT AT THE TIME OF CLOSING, THE PURCHASED ASSETS ARE FREE AND CLEAR OF ENCUMBRANCES. The Purchased Assets will be conveyed in “AS IS, WHERE IS” condition, with all defects, latent or patent.  THE BUYER EXPRESSLY AGREES THAT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS AGREEMENT, AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT.

			
	
			
				 Section 3.04
			Permits. ‎Section 3.04 of the Disclosure Schedules lists all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained from governmental authorities included in the Purchased Assets (the “Transferred Permits”). The Transferred Permits are valid and in full force and effect. All fees and charges with respect to such Transferred Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Transferred Permit.

			
	
			
				 Section 3.05
			Non-foreign Status. Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

			
	
			
				 Section 3.06
			Compliance With Laws Seller has complied, and is now complying, with all applicable federal, state and local laws and regulations applicable to ownership and use of the Purchased Assets.

			
	
			
				 Section 3.07
			Legal Proceedings. There is no claim, action, suit, proceeding or governmental investigation (“Action”) of any nature pending or, to Seller’s knowledge, threatened against or by Seller (a) relating to or affecting the Purchased Assets;  or (b) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

			
	
			
				 Section 3.08
			Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller.

			
	
			
				 Section 3.09
			Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. The Seller shall assist the Buyer in any remaining documentation or audit requirements the Buyer may request. 

		
			

		 

 

		

		
			 
		

			
	
			
				 Section 3.10
			General Release and Covenant Not to Sue. 

			
	
			
				 (a)
			The Seller, their successors and the current and former owners, shareholders, directors, officers, employees, agents, attorneys, representatives, and insurers of said corporations, firms, associations, partnerships, and entities, and their guardians, successors, assigns, heirs, executors, and administrators hereby IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES Famous Dave’s of America, Inc. and the Buyer from any and all claims, complaints, grievances, liabilities, obligations, promises, agreements, damages, causes of action, rights, debts, demands, controversies, costs, losses, and expenses(including attorneys' fees and expenses) whatsoever other than any arising under this Agreement or Famous Dave’s of America, Inc. under the respective franchise agreements, under any municipal, local, state, or federal law, common or statutory, including, but in no way limited to, claims arising under the Agreement or the franchise agreements for any actions or omissions whatsoever, whether known or unknown and whether connected with the franchise agreements or which existed or may have existed prior to, or contemporaneously with, the execution of this Agreement.

			
	
			
				 (b)
			Buyer’s Parent, their successors and the current and former owners, shareholders, directors, officers, employees, agents, attorneys, representatives, and insurers of said corporations, firms, associations, partnerships, and entities, and their guardians, successors, assigns, heirs, executors, and administrators hereby IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES the Seller from any and all claims, complaints, grievances, liabilities, obligations, promises, agreements, damages, causes of action, rights, debts, demands, controversies, costs, losses, and expenses(including attorneys' fees and expenses) that arise under the respective franchise agreements. 

			
	
			
				ARTICLE IV
			
Representations and warranties of buyer

		
			Buyer represents and warrants to Seller that the statements contained in this ‎ARTICLE IV are true and correct as of the date hereof. For purposes of this ‎ARTICLE IV,  “Buyer’s knowledge,” “knowledge of Buyer” and any similar phrases shall mean the actual knowledge of any officer of Buyer,  with no duty of inquiry.
		

			
	
			
				 Section 4.01
			Organization and Authority of Buyer; Enforceability. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of Minnesota.  Buyer has full corporate power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Buyer.  This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.

			
	
			
				 Section 4.02
			No Conflicts;  Consents. Except as set forth in Section 4.02 of the Disclosure Schedules, the execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the certificate of incorporation, by-laws or other organizational documents of Buyer; or (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buyer. No consent, approval, waiver or authorization is required to be obtained by Buyer from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby.

		
			

		 

 

		

			
	
			
				 Section 4.03
			Legal Proceedings. There is no Action of any nature pending or, to Buyer’s knowledge, threatened against or by Buyer that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

			
	
			
				 Section 4.04
			Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

			
	
			
				ARTICLE V
			

Covenants

			
	
			
				 Section 5.01
			Public Announcements. Unless otherwise required by applicable law or stock exchange requirements, neither party shall make any public announcements regarding this Agreement or the transactions contemplated hereby without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed).

			
	
			
				 Section 5.02
			Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer.

			
	
			
				 Section 5.03
			Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the documents to be delivered hereunder shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any tax return or other document with respect to such taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

			
	
			
				 Section 5.04
			Further Assurances; Transfer of Intoxicating Beverage Inventory. 

			
	
			
				 (a)
			Following the Closing, each of the parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the documents to be delivered hereunder.

			
	
			
				 (b)
			On the date on which Buyer receives a liquor license for the sale of intoxicating beverages at each of the premises known at 15725 East Briarwood Circle, Aurora, CO 88016, 8330 Razorback Drive, Colorado Springs, CO 80920, 16539 N. Washington Street, Thornton, CO 80020, 7557 E. 36th Ave., Denver, CO 80238, and 2440 Hwy 6 & 50, Grand Junction, CO 81505, which is anticipated to be February 19, 2019, Seller shall deliver to Buyer a Bill of Sale for all inventory of Liquor Inventory located at or intended to be used at such premises, and as of the date of conveyance, the Liquor Inventory shall be considered Purchased Assets hereunder. 

			
	
			
				 Section 5.05
			Non-Compete with Buyer. As consideration for entering into this Agreement, Seller and Bill Ferguson personally, shall agree to enter into a restrictive covenants in a form acceptable to Buyer, agreeing not to: (i) compete with Famous Dave’s© Restaurant for a period of three years after the closing within five miles of any current Famous Dave’s© Restaurant, on their own account or as an employee, principal, agent, independent contractor, consultant, affiliate, licensee, partner officer, director or owner of any other person, firm, Entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any full or quick service Barbecue-Style Restaurant which is located within five miles of the Sellers, within five miles of any other Famous Dave's© Restaurant, or within any exclusive area granted by Famous Dave's or any affiliate of Famous Dave's pursuant to a Development Agreement or other territorial agreement  following the closing by not opening a restaurant that resembles a barbeque themed restaurant with offerings that include, but not limited to, smoked pork ribs, smoked brisket, corn muffins and barbeque beans, and (ii) hire or solicit any employee of the Business or encourage any such employee to leave such employment for a period of one year following the closing.

		
			

		 

 

		

		
			 
		

			
	
			
				 Section 5.06
			Mutual Non-Disparagement. Subject to applicable law, each of the parties covenants and agrees that neither it nor any of its respective agents, subsidiaries, affiliates, successors, assigns, officers, key employees or directors, will in any way publicly disparage, call into disrepute, defame, slander or otherwise criticize the other parties or such other parties' subsidiaries, affiliates, successors, assigns, officers (including any current officer of a party or a parties' subsidiaries who no longer serves in such capacity following the execution of this Agreement), directors (including any current director of a party or a parties' subsidiaries who no longer serves in such capacity following the execution of this Agreement), employees, shareholders, agents, attorneys or representatives, or any of their products or services, in any manner that would damage the business or reputation of such other parties, their products or services or their subsidiaries, affiliates, successors, assigns, officers (or former officers), directors (or former directors), employees, shareholders, agents, attorneys or representatives.

			
	
			
				ARTICLE VI
			

Indemnification

			
	
			
				 Section 6.01
			Survival. All representations, warranties, covenants and agreements contained herein and all related rights to indemnification shall survive the Closing as follows: (i)  with respect to any claim by the Seller or Buyer against the other party based on a claim made or action brought by a third party, for the same period as the applicable statute of limitations with respect to such claim or action; and (ii) with respect to any claim by the Seller or Buyer against the other party not based on such a claim or action, for a period of six (6) months, provided further that either parties’ liability for all claim(s) made by the other party shall be limited to the sum of $1,000,000.00 and shall be based on Buyer’s actual loss(es) within such six (6) month period.

			
	
			
				 Section 6.02
			Indemnification By Seller. Seller shall, jointly and severally, defend, indemnify and hold harmless Buyer, its affiliates and their respective stockholders, directors, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including attorneys’ fees and disbursements, arising from or relating to:

			
	
			
				 (a)
			any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or any document to be delivered hereunder;

			
	
			
				 (b)
			any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement or any document to be delivered hereunder; or

			
	
			
				 (c)
			any Excluded Asset or Excluded Liability.

			
	
			
				 Section 6.03
			Indemnification By Buyer. Buyer shall defend, indemnify and hold harmless Seller, its affiliates and their respective stockholders, directors, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including attorneys’ fees and disbursements, arising from or relating to:

			
	
			
				 (a)
			any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document to be delivered hereunder; 

			
	
			
				 (b)
			any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any document to be delivered hereunder;  

			
	
			
				 (c)
			the Assumed Liability; or

		
			

		 

 

		

			
	
			
				 (d)
			ownership or use of the Purchased Assets by the Buyer arising after the Closing.

			
	
			
				 Section 6.04
			Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the “Indemnified Party”) shall promptly provide written notice of such claim to the other party (the “Indemnifying Party”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld or delayed).

			
	
			
				 Section 6.05
			Tax Treatment of Indemnification Payments. All indemnification payments made by Seller under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by law.

			
	
			
				 Section 6.06
			Effect of Investigation. Buyer’s right to indemnification or other remedy based on the representations, warranties, covenants and agreements of Seller contained herein will not be affected by any investigation conducted by Buyer with respect to, or any knowledge acquired by Buyer at any time, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or agreement.

			
	
			
				 Section 6.07
			Cumulative Remedies. The rights and remedies provided in this ‎ARTICLE VI are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.

			
	
			
				ARTICLE VII
			

Miscellaneous

			
	
			
				 Section 7.01
			Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.

			
	
			
				 Section 7.02
			Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this ‎Section 7.02):

		
			 
		

		
			 
		

		

		 

 

	
					
						

					
						If to Seller:

					
					
						 Legendary BBQ, Inc.

					
						Cornerstar BBQ, Inc.

					
						Razorback BBQ, Inc.

					
						Larkridge BBQ, Inc.

					
						Mesa Mall BBQ, Inc.

					
						Quebec Square BBQ, Inc.

					
						Attn: Bill Ferguson

					
						45 Inverness Drive East 
Englewood, CO 80112

					
						 

					
						 

				
	
					
						If to Buyer:

					
					
						FAMOUS DAVE’S RIBS, INC.

					
						12701 Whitewater Drive, Suite 190

					
						Minnetonka, MN 55343

					
						Facsimile:(952) 294-1301

					
						Attention:Corporate Counsel

				
	
					
						 

					
					
						 

				

			
	
			
				 Section 7.03
			Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

			
	
			
				 Section 7.04
			Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

			
	
			
				 Section 7.05
			Entire Agreement. This Agreement and the documents to be delivered hereunder constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and the documents to be delivered hereunder, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

			
	
			
				 Section 7.06
			Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

			
	
			
				 Section 7.07
			No Third-party Beneficiaries. Except as provided in ‎ARTICLE VI, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

			
	
			
				 Section 7.08
			Amendment and Modification. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto.

			
	
			
				 Section 7.09
			Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in 

		 

 

	respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

			
	
			
				 Section 7.10
			Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota without giving effect to any choice or conflict of law provision or rule (whether of the State of Minnesota or any other jurisdiction).

			
	
			
				 Section 7.11
			Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of Minnesota in each case located in the city of Minneapolis and county of Hennepin,  and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

			
	
			
				 Section 7.12
			Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

			
	
			
				 Section 7.13
			Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

			
	
			
				 Section 7.14
			Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

		
			[signature page follows]
		

		
			
		

		
			

		 

 

		

		
			IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Legendary BBQ, Inc.

				
	
					
						 

					
					
						 

					
					
						Cornerstar BBQ, Inc.

				
	
					
						 

					
					
						 

					
					
						Razorback BBQ, Inc.

				
	
					
						 

					
					
						 

					
					
						Larkridge BBQ, Inc.

				
	
					
						 

					
					
						 

					
					
						Mesa Mall BBQ, Inc.

				
	
					
						 

					
					
						 

					
					
						Quebec Square BBQ, Inc.

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By: /s/ William Ferguson

				
	
					
						 

					
					
						 

					
					
						     Name: William Ferguson

				
	
					
						 

					
					
						 

					
					
						     Title: President

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						FAMOUS DAVE’S RIB, INC.

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By: /s/ Jeffery Crivello

				
	
					
						 

					
					
						 

					
					
						     Name: Jeffery Crivello

				
	
					
						 

					
					
						 

					
					
						     Title: Chief Executive Officer

				
	
					
						ACKNOWLEDGED BY:

					
					
						 

					
					
						 

				
	
					
						FAMOUS DAVE’S OF AMERICA, INC.

					
					
						 

					
					
						 

				
	
					
						By: /s/ Jeffery Crivello

					
					
						 

					
					
						 

				
	
					
						     Name: Jeffery Crivello

					
					
						 

					
					
						 

				
	
					
						     Title: Chief Executive Officer

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

 

		

		
			 
		

			
					
						 

					
					
						 

				

		
			Exhibit A
		

		
			Amounts owed to keep the business uninterrupted between the date of this Agreement and Closing
		

		
			

		 

 

PERSONAL GUARANTY
		

		
			THIS PERSONAL GUARANTY (this “Personal Guaranty”) is made and entered into this 29th day of January, 2019, by and between Famous Dave’s Ribs, Inc., a Minnesota corporation (“Secured Party”), and each one of the undersigned personal guarantors (the “Personal Guarantor”). 
		

		
			WHEREAS, the Personal Guarantor have acknowledged and agreed that their entities which they own, __________________________, (the “Sellers”) owe Secured Party an amount equal to at least $____________________ to the order of Secured Party evidencing such amounts due (“Obligations”) as set forth in Exhibit A of the Asset Purchase Agreement dated _____________________ (as amended, supplemented or otherwise modified from time to time, the “Agreement”); and 
		

		
			WHEREAS, this Personal Guaranty is given by the Personal Guarantor in favor of the Secured Party to secure the payment and performance of all the Obligations, as defined in the Agreement;
		

		
			NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
		

		
			WHEREAS, it is the desire of the undersigned Personal Guarantor to personally guaranty the obligations of and to be individually bound by the terms and conditions of the Agreement.
		

		
			NOW, THEREFORE, in consideration of the execution of the Agreement by Secured Party, and for other good and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns, hereby become surety and guaranty for the payment of all amounts and the performance of the covenants, terms and conditions of the Agreement.
		

		
			Obligations under Agreement.  The undersigned, hereby agrees to be personally bound by each and every condition and term contained in the Agreement and agree that this Personal Guaranty should be construed as though the undersigned and each of them executed an agreement containing the identical terms and conditions of the Agreement.  The Personal Guarantor acknowledge having received a copy of the Agreement which is incorporated herein by reference.  
		

		
			 Non-Compliance by Seller.  If Seller fails to comply with any other terms and conditions of the Agreement, then each one of the undersigned, their heirs, successors and assigns, do hereby, individually, jointly and severally, promise and agree to comply with the terms and conditions of the Agreement for and on behalf of the Seller.
		

		
			Obligations of Seller.  If the Seller is at any time in default on any obligation to pay monies to Secured Party or any Affiliate of Secured Party, then the undersigned, their heirs, successors and assigns, do hereby, promise and agree to pay all such monies due and payable by Seller to Secured Party or any upon default by Seller.
		

		
			Liability.  Upon demand by Secured Party, the Personal Guarantor will immediately make each payment required of Seller under the Agreement.  
		

		
			Binding Agreement.  The Personal Guarantor warrants and represents that they have the capacity to execute this Personal Guaranty and that they will be bound by all of the terms and conditions of this Personal Guaranty.  The provisions, covenants and conditions of this Personal Guaranty will inure to the benefit of the successors and assigns of Secured Party.
		

		
			Jurisdiction and Venue.  Except as precluded by applicable law, all arbitration, litigation, actions or proceedings pertaining to this Personal Guaranty will be brought and venued in accordance with the terms of the Agreement and the Personal Guarantor agrees to the dispute resolution provisions, including jurisdiction and venue, contained in the Agreement.
		

		
			PERSONAL GUARANTORS
		

			
					
						 

				
	
					
						By: /s/ William Ferguson

				
	
					
						     Name: William FergusonExhibit

EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT executed as of this 30 day of January, 2019 (“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 collectively with Arrow, the “Company”), and THOMAS J. MURPHY, residing at 186 Hudson Pointe Blvd., Queensbury, New York 12804 (the “Executive”).   The effective date of this Agreement shall be February 1, 2019 (the “Effective Date”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Paragraph 11 of this Agreement.
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, the Executive wishes to continue to serve Arrow and the Bank as part of such executive management team; and
WHEREAS, in this regard, Arrow and the Bank, on the one hand, and the Executive, on the other, have determined that it is in the best interests of all of the parties that the Executive serve as President and Chief Executive Officer of Arrow and the Bank, pursuant to a written employment agreement and in order to secure Executive’s services and skills, which are considered extraordinary, special and unique for its business and the long-term success thereof; and

WHEREAS, the parties have agreed that this Agreement will supersede and replace any and all agreements, written or oral, previously in place regarding the employment of the Executive by either Arrow or the Bank, except for compensatory or employee benefit plans applicable to employees of Arrow and/or the Bank generally or to certain groups or sub-groups of employees of which the Executive is a member, and awards or award agreements issued to the Executive under such plans; and
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 will employ the Executive, and the Executive agrees to be employed by Arrow and the Bank, for the Term of this Agreement, as defined in Section 2 (such employment, the “Employment”).  Arrow and the Bank agree to employ the Executive and the Executive agrees to serve as President and Chief Executive Officer of Arrow and the Bank, with such duties as are described in Section 3 and subject to the other terms and conditions of this Agreement.  
2.Term.
(a)    Term.  The term of Employment of the Executive under this Agreement (“Term”) shall commence on the Effective Date 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, shall expire on the last day of the third full year following the Effective Date. 
(b)    Annual Review.  On or before each anniversary of the Effective Date of this Agreement, each of the Arrow Board and the Bank Board, 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 on the date of such anniversary.  The Replacement Agreement (i) will be for a new term of three (3) years, (ii) will provide for a Base Salary for the Executive at commencement of the Replacement Agreement at least equal to the Base Salary of the Executive as of the last day immediately preceding such commencement, (iii) subject to Paragraph 5(b) hereof, 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 last day immediately preceding such commencement, and (iv) 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 and rights in connection with any early Termination of 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 last day immediately preceding such commencement.  If the Arrow Board and the Bank Board shall determine to offer such a Replacement Agreement to the Executive and the Executive shall accept, this Agreement shall terminate at 11:59 p.m. on the day prior to the commencement date of the Replacement Agreement and the Replacement Agreement shall take effect at 12:00 midnight on such commencement date. 
If, prior to any anniversary of the Effective Date of this Agreement, either the Arrow Board or the Bank Board shall not have offered a Replacement Agreement to the Executive under the preceding subparagraph of this Paragraph 2(b) (a “Non-Offer”), or the Executive, having been offered such a Replacement Agreement, shall not have accepted such Replacement Agreement (a “Non-Acceptance” and with either such Non-Offer or Non-Acceptance constituting a “Non-Renewal”), this Agreement and the Employment of the Executive hereunder shall nevertheless continue in full force and effect until the expiration of the Term of this Agreement in accordance with the terms hereof, and the rights and obligations of each of the parties hereunder, including the rights and obligations of the parties under this Paragraph 2(b), shall continue unchanged during the remaining Term of this Agreement, despite such Non-Renewal, except as may be specifically provided otherwise in this Agreement.    
3.Position and Duties.  The Executive shall continue to serve as the President and Chief Executive Officer of Arrow and the Bank and shall have such 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 Bank Board.  The Executive shall devote substantially all his working time and efforts to the business and affairs of Arrow and the Bank, provided however, that the Executive may, with the approval of the Arrow Board and the Bank Board, serve as a director or officer of any non-competing business or engage in any other activity, including but not limited to, charitable or community activity, to the extent that such does not inhibit the performance of his duties hereunder or otherwise violate this Agreement.
4.Place of Performance.  In connection with the Executive's Employment hereunder, the Executive shall be based at the principal executive offices of Arrow or the Bank, except for required travel on business.  Arrow or the Bank shall furnish the Executive with office space, administrative 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.  The base annual salary (“Base Salary”) of the Executive shall be $540,000.00 payable by Arrow and/or the Bank in equal bi-weekly installments (i.e., every two weeks) or at such other intervals as shall constitute the regular payroll practice of Arrow and/or the Bank.  Such Base Salary shall be effective as of January 1, 2019.  The Executive's Base 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 and the Bank Board, and, if so increased, such Base Salary shall not thereafter during the Term be decreased and the obligation of the Bank or Arrow hereunder to pay the Executive's Base Salary shall thereafter relate to such increased Base Salary.  Compensation of the Executive by Base 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 each of Arrow and the Bank to pay the Executive's Base Salary hereunder.
(b)    Other Benefits.  In addition to the compensation provided for in subparagraph (a) above, the Executive shall be entitled during the Term (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, (ii) to participate in employee incentive plans (cash or equity, annual or long-term incentive) including the Company’s short-term incentive plan under which the Executive will be eligible to receive a cash bonus with the “Target Bonus” being set at fifty percent (50%) of his Base Salary, less all necessary and required federal, state and local payroll deductions, and (iii) to enjoy certain personal benefits provided by Arrow or the Bank including, but not limited to:
(i)    life insurance on the life of the Executive, at no cost to the Executive, under a group plan maintained by Arrow;
(ii)    disability insurance for the Executive, at no cost to the Executive, under a group plan maintained by Arrow;
(iii)    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;
(iv)    reimbursement in full of all business, travel and entertainment expenses incurred by the Executive in performing his duties hereunder in accordance with Arrow’s policies and guidelines regarding the same; and
(v)    fully paid vacation during each calendar year in accordance with the vacation policies of Arrow in effect from time to time.
Neither Arrow nor the Bank shall make any material changes in any of the personal benefits specified in this Agreement adversely affecting the Executive unless such change occurs pursuant to a program applicable to all executive officers of Arrow or the Bank, as the case may be,  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 or the Bank previously enjoying such benefit.
Premiums for the above-described insurance programs will be payable in accordance with the Bank’s regular monthly premium payments applicable to such insurance programs.  Reimbursement of expenses shall be paid not later than the last day of the calendar year following the calendar year in which the expenses were incurred.
6.Termination of Employment following Change of Control.
(a)Retired Early Employee.  If (i) a Change of Control occurs during the Term of Employment hereunder, and (ii) within twelve (12) months after such Change of Control, either (x) Arrow and the Bank deliver to the Executive an advance written notice of Termination of Employment of Executive without Cause, which such notice shall comply with the requirements of Paragraph 11(gg) hereof or (y) the Executive delivers to Arrow and the Bank an advance written notice of a Termination of Employment of Executive for Good Reason, which such notice shall comply with the requirements of Paragraph 11(ff) hereof then, upon subsequent effectiveness of such Termination of Employment (either such termination, if effected under this Paragraph 6(a), a “Termination of Employment of Executive as a Retired Early Employee”), the Executive (sometimes referred to herein as a “Retired Early Employee”) will, following such a Termination of Employment, be entitled to receive, subject to the satisfaction of the conditions specified below in Section 8, upon the effective date of such Termination of Employment, such payments (in addition to any other payments then receivable by him) as are provided hereafter in this Paragraph 6.
(b)    Cash Payments and Benefits.  
i.Subject to Paragraph 8, in the event of a Termination of Employment of Executive as a Retired Early Employee, Arrow or the Bank shall, commencing on the effective date of such Termination of Employment and continuing throughout the Pay-out Period, make equal monthly payments to the Executive (which shall not be deemed Base Salary payments) in an amount such that the present value of all such payments, determined as of the date of such Termination of Employment, equals three (3) times the sum of the Executive’s Base Salary and Target Bonus for the year in which advance written notice of termination of employment occurs. Subject to Paragraph 8, 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 has experienced an unforeseeable emergency, as defined in Code Section 409A and the regulations thereunder, Arrow or the Bank shall make available to the Retired Early Employee, in one (1) lump sum payment, an amount up to the amount needed to relieve such unforeseeable emergency (including taxes reasonably anticipated as a result of such lump sum payment) 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 unforeseeable emergency to the extent the same has not been or may not be relieved by (A) reimbursement or compensation by insurance or otherwise, (B) liquidation of the Retired Early Employee's assets (to the extent such liquidation would not itself cause severe financial hardship), or (C) 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, Arrow or 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, calculated as of the date of such determination, 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.
ii.In the event of  a Termination of Employment of Executive as a Retired Early Employee, Arrow or the Bank shall provide the Executive during the Pay-out Period with  medical, dental and life insurance coverage maintained by Arrow that is generally equivalent to the coverage held by the Executive (including dependent coverage, as applicable) immediately prior to such Termination of Employment, subject to general changes in such group plan offerings by Arrow or the Bank from time to time during the Pay-out Period and further subject to payment by the Executive of any amounts which would be required to be paid by the Executive if the Executive was then employed by Arrow or the Bank under the cost‐sharing arrangements then in effect from time to time, which cost-sharing amounts may be deducted from the cash payments required to be made by Arrow or the Bank under Paragraph 6(b)(i) above.  The cost of any such medical and dental coverage which is self-funded by Arrow or Bank will be included in the taxable income of Executive to the extent it is paid directly or indirectly by Arrow or Bank.  Notwithstanding the foregoing, Arrow’s and the Bank’s obligations under this Paragraph 6(b)(ii) shall terminate to the extent that the Executive becomes eligible for medical,  dental and life insurance coverage from a new employer; provided, however, that the Executive shall be under no obligation to seek other employment or gainful pursuit during the Pay-out Period as a result of this Agreement.
(c)    Death of Retired Early Employee.  If the Retired Early Employee dies before receiving all monthly cash payments payable to him as a Retired Early Employee under Paragraph 6(b)(i) above, the Bank shall pay to the Executive’s spouse, or if the Executive leaves no spouse, to the estate of the Executive, 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 Executive.  Such amount shall be paid within thirty (30) days of the Executive’s death, provided that the spouse may not designate the calendar year of payment.
(d)    Indemnification of Executive.  To the fullest extent permitted under applicable law, in the event a Change of Control and a Termination of Employment of Executive as a Retired Early Employee 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 Agreement related to such events, 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 and 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, provided, however, that such indemnification and reimbursement payments shall not be made later than the last day of the calendar year following the calendar year in which the expenses were incurred.
(e)    No Offset.  Except as is contemplated by Paragraph 6(b)(ii) above, amounts payable to the Executive as a Retired Early Employee under this Paragraph 6 shall not be subject to any offset or reduction for (i) any amounts owed or claimed to be owed by the Executive to Arrow or the Bank or their Affiliates or (ii) any amounts of compensation or income received or generated by the Executive as a result of any other employment or self-employment of the Executive during the Pay-out Period.  The Executive shall be under no obligation to seek other employment or gainful pursuit during the Pay-out Period as a result of this Agreement, and shall be prohibited from accepting certain other forms of employment and from engaging in certain other types of business during the Pay-out Period (as well as during certain other post-Termination of Employment periods) as and to the extent specified in Paragraph 9 of this Agreement.
(f)    Allocation.  If the Executive should elect to become a Retired Early Employee under this Paragraph 6 and as a result of such election should become entitled to receive certain cash payments during the Pay-out Period as set forth above, Arrow shall determine, as soon as practicable following its receipt from the Executive of written notice of such election, the amount, if any, of such future cash payments that may properly be allocated to the Executive’s future performance of his obligations not to compete with, solicit customers or employees from, or disparage Arrow or its Affiliates under Paragraph 9 of this Agreement, with such allocation to be expressed as a single dollar amount equal to the present value determined as of the date of Termination of Employment, of the amounts of the required future payments thus allocated.  When thus determined, the dollar amount of this allocation shall be communicated by Arrow to the Executive.
(g)    Excess Parachute Payment.
i.Anything in this Agreement to the contrary notwithstanding, to the extent that any Company provided payment, distribution or benefit in favor of the Executive  (within the meaning of Section 280G of the Code and the regulations thereunder), whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Change of Control Termination Total Payments”), is or will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then the Change of Control Termination Total Payments shall be reduced (but not below zero) to the extent that, and only to the extent that, such reduction in the Change of Control Termination Total Payments would result in the Executive not being subject to the Excise Tax.  Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Change of Control Termination Total Payments, by first reducing or eliminating the portion of the Change of Control Termination Total Payments which are payable in cash and then by reducing or eliminating non-cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of the Change of Control. Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.
ii.The determination of whether the Change of Control Termination Total Payments shall be reduced as provided in Paragraph 6(g)(i) above and the amount of such reduction (the “Section 4999 Determination”) shall be made at the Company's expense by an accounting firm selected by the Executive from among the six largest accounting firms in the United States or at the Executive’s expense by an attorney selected by the Executive.  Such accounting firm or attorney shall provide its Section 4999 Determination, together with detailed supporting calculations and documentation to the Company and the Executive not later than thirty (30) days after the effective date of the Termination of Employment of Executive as a Retired Early Employee.  If such firm or attorney determines that no Excise Tax is payable by the Executive with respect to the Change of Control Termination Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such determination shall be binding, final and conclusive upon the Company and the Executive.  If such firm or attorney determines that an Excise Tax would be payable, the Company shall have the absolute right to accept such determination as to the extent of the reduction, if any, pursuant to Paragraph 7(g)(i) above, or if the Company so chooses, at its sole discretion, to have such determination reviewed by another accounting firm selected by the Company, at the Company’s expense.  If the Company’s accounting firm is different from an accounting firm that makes such determination, and does not agree with such latter accounting firm, a third accounting firm shall be jointly chosen by the two firms, in which case the determination of such third accounting firm shall be binding, final and conclusive upon the Company and the Executive.
7.Early Termination of Employment.  In addition to any Termination of Employment of Executive as a Retired Early Employee under Paragraph 6 of this Agreement, a Termination of Employment of Executive may occur prior to the normal expiration of the Term under the circumstances and with the consequences set forth below.
(a)    Termination of Employment for Cause.  At any time during the Term of Employment under this Agreement, and subject to the provisions of this Paragraph 7(a), either Arrow or the Bank may effect a Termination of Employment of Executive for Cause if and only if the applicable standards set forth herein are met. Notwithstanding the foregoing, any such Termination of Employment of Executive for Cause shall not become effective unless and until: 
i.reasonable advance notice is given to the Executive in writing setting forth the “for Cause” reasons Arrow or the Bank intends to effect such Termination of Employment of Executive for Cause;
ii.not sooner than thirty (30) days after delivery to the Executive of such notice, an opportunity is provided for the Executive to be heard before the Arrow Board or the Bank Board with counsel; and
iii.after such hearing or opportunity to be heard, written notice of final Termination of Employment of Executive for Cause is delivered to the Executive, setting forth the specific reasons therefore, which Termination of Employment shall be effective as of the date of the delivery of such notice.
Any Termination of Employment of Executive for Cause by Arrow or the Bank (including delivery of the notice specified in subsection (i), above)  shall require the affirmative vote of at least two-thirds (2/3) of the entire Arrow Board or the Bank Board. The Executive will not be entitled to any further compensation for any period subsequent to the effective date of such Termination of Employment, except for payments, if any, payable in accordance with the then current plans and policies of Arrow or the Bank.  Any attempted Termination of Employment of Executive for Cause initiated by Arrow or the Bank under this Paragraph 7(a), by delivery to the Executive of the advance written notice specified in subsection (i) above, that follows the initiation of any other attempted Termination of Employment of Executive under any other provision of this Agreement, by delivery of advance written notice of such earlier attempted Termination of Employment (any such, an “Earlier Termination”) by the party effecting such Termination of Employment to the other party or parties, shall be disregarded such that the Earlier Termination shall govern the procedures applicable to the Termination of Employment of Executive, the effective time of such Termination of Employment, and the consequences of such Termination of Employment, including the compensation and other benefits payable to the Executive as a result thereof, except in each case as may otherwise be required by law, by the affirmative language of applicable statute, regulation or judicial or administrative order, and not by implication alone.
(b)    Termination of Employment Without Cause.  At any time during the Term of Employment under this Agreement, either Arrow or the Bank may effect, pursuant to this Paragraph 7(b), and in accordance with the requirements set forth in Paragraph 11(gg) below, a Termination of Employment of Executive without Cause, provided, however, that any attempt to do so under circumstances that would also qualify such Termination of Employment as a Termination of Employment of Executive without Cause under Paragraph 6(a) of this Agreement, that is, as a Termination of Employment of Executive without Cause following a Change in Control that meets the conditions set forth in Paragraph 6(a), will be deemed a Termination of Employment of Executive without Cause under Paragraph 6(a), and not a Termination of Employment of Executive without Cause under this Paragraph 7(b).  In the event of a Termination of Employment of Executive without Cause under this Paragraph 7(b), on the effective date of such Termination of Employment, and subject to the satisfaction of the conditions specified below in Section 8, Arrow or the Bank shall pay to the Executive, and the Executive shall be entitled to receive, one (1) lump sum payment in a dollar amount equal to the greater of (i) the total amount of Base Salary payments which would have been payable to the Executive during the period extending from such effective date until the normal expiration date of Employment under this Agreement as in effect at such time, had there been no early Termination of Employment of Executive without Cause (and assuming the Executive otherwise would have remained employed throughout such period and that his Base Salary would have remained unchanged throughout such period), or (ii) an amount equal to one hundred percent (100%) of the current Base Salary of the Executive on the effective date of such Termination of Employment.
(c)    Termination of Employment for Good Reason.  At any time during the Term of Employment under this Agreement, the Executive may effect at his own discretion, pursuant to this Paragraph 7(c), a Termination of Employment of Executive for Good Reason, provided, however, that any attempt to do so under circumstances that would also qualify such Termination of Employment as a Termination of Employment of Executive for Good Reason under Paragraph 6(a) of this Agreement, that is, as a Termination of Employment of Executive for Good Reason following a Change in Control that meets the conditions set forth in Paragraph 6(a), will be deemed a Termination of Employment of Executive for Good Reason under Paragraph 6(a), and not a Termination of Employment of Executive for Good Reason under this Paragraph 7(c).  In the event of a Termination of Employment of Executive for Good Reason under this Paragraph 7(c), on the effective date of such Termination of Employment, and subject to the satisfaction of the conditions specified below in Section 8, Arrow or the Bank shall pay to the Executive, and the Executive shall be entitled to receive, one (1) lump sum payment in a dollar amount equal to the dollar amount of the lump sum payment the Executive would have been entitled to receive had a Termination of Employment of Executive without Cause under Paragraph 7(b) above occurred on such date, and under identical circumstances except for the identity of the party effecting such Termination of Employment and the existence of Good Reason. 
(d)    Termination of Employment 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, Arrow or the Bank may effect a Termination of Employment of Executive for Disability upon thirty (30) days' written notice.  Such Termination of Employment of Executive for Disability shall require the affirmative vote of a majority of the entire Arrow Board or Bank Board.  The compensation of the Executive during any period of disability prior to the effective date of such Termination of Employment of Executive for Disability shall be the amounts normally payable to him in accordance with this Agreement, reduced by the sum of the amounts, if any, paid to the Executive for such period under disability benefit plans maintained by Arrow or the Bank.   The Executive shall not be entitled to any further compensation from Arrow or the Bank for any period subsequent to the effective date of such Termination of Employment of Executive for Disability, except for payments, if any, payable in accordance with the then current plans and policies of Arrow or the Bank.  
(e)    Termination of Employment upon Death.   Upon the death of Executive during the Term of Employment hereunder (and simultaneous Termination of Employment of Executive upon Death), the Executive’s estate or beneficiaries, as applicable, shall not be entitled to any further compensation for any period subsequent to the date of death, except for payments, if any, payable in accordance with the then current plans and policies of Arrow or the Bank, including death benefits. 
(f)    Other Early Terminations of Employment.  The Employment of Executive may be terminated before the normal expiration of the Term hereof under certain other circumstances, not otherwise addressed in Paragraphs 6 or 7 hereof, as follows:
(i)    Retirement.  Executive may terminate his Employment hereunder upon retirement at or after attaining retirement or early retirement age under any retirement plan of Arrow and its Affiliates then in effect with respect to which Executive is a covered person (“Retirement”).  Upon any such Termination of Employment of Executive due to Retirement, Executive shall not be entitled to any further compensation for any period subsequent to the effective date of such Termination of Employment for Retirement, except for payments, if any, payable in accordance with the then current plans and policies of Arrow or the Bank including applicable post-retirement benefits and payments provided to or for the Executive under retirement, severance and similar plans of Arrow, the Bank or their Affiliates then in effect as to which the Executive participates.
(ii)    Termination by Executive without Good Reason.  If the Executive determines, at his own discretion, to terminate his Employment prior to the expiration of the Term of Employment hereunder, without Good Reason and in the absence of the Retirement or Disability of the Executive (any such, a “Termination of Employment of Executive without Good Reason”), including any such Termination of Employment of Executive without Good Reason effected by the Executive following his Non-Acceptance of a Replacement Agreement, Executive shall not be entitled to any further compensation for any period subsequent to the effective date of such Termination of Employment of Executive without Good Reason, except for payments, if any, payable in accordance with the then current plans and policies of Arrow or the Bank including applicable qualified or non-qualified employee benefit plans or policies covering Executive or under any other applicable agreements with Executive.  Under no circumstances will Executive effect a Termination of Employment of Executive without Good Reason, except after delivery of advance written notice thereof to Arrow or the Bank, and the effective date of any such Termination of Employment of Executive without Good Reason shall be the thirtieth (30th) day following delivery of such written notice, or such other day as may be mutually agreed upon by Arrow and the Executive.
(iii)    Termination as a Result of Liquidation, Dissolution, Order, Etc.  If the Employment of Executive by Arrow or the Bank is terminated prior to the expiration date of this Agreement as a result of the liquidation, dissolution or winding up of the affairs of Arrow or the Bank or the involuntary closing of the Bank by bank regulators prior to such date, or by virtue of any order or decree of any court or administrative or regulatory agency or body with jurisdiction over Arrow or the Bank ordering or requiring the Termination of Employment of Executive by either or both such entities prior to such expiration date, Executive shall have no right to receive from Arrow or the Bank, and neither Arrow nor the Bank shall have any obligation to pay or provide to Executive, any compensation or benefits, other than such Base Salary payments and normal benefits as may be required to be paid or provided to the Executive through the effective date of the Termination of Employment of Executive; provided, however, that nothing herein shall reduce or affect any obligations that Arrow or the Bank may have to Executive under any other agreement with Executive or under any qualified or non-qualified employee benefit plan or policy covering Executive or under any plan of liquidation or dissolution adopted by Arrow or the Bank in connection with any such liquidation, dissolution or winding up.
8.Delayed Payment of Benefits; Conditions to Payment of Benefits.  
(a)    Notwithstanding anything in the foregoing to the contrary, if the Executive is a “specified employee,” as defined in Code Section 409A and the regulations thereunder, on the date of his Termination of Employment, amounts that constitute nonqualified deferred compensation subject to Code Section 409A that would otherwise have been paid during the six-month period immediately following the date of such Termination of Employment shall be paid on the first regular payroll date immediately following the six-month anniversary of such Termination of Employment, with interest to be paid on each such amount, the payment of which is then delayed, at the rate of yield on U.S. Treasury Bills with the earliest maturity date that occurs at least six months after such date of such Termination of Employment (as reported in the Wall Street Journal) from such date of Termination of Employment to the date of actual payment.  Reimbursements or payments directly to the service provider for health care expenses incurred during such six month period, plus reimbursements and in-kind benefits in an amount up to the applicable dollar limit on elective deferrals to a 401(k) plan under Section 402(g)(1)(B) of the Code, and other amounts that do not constitute nonqualified deferred compensation subject to Section 409A shall not be subject to such six month delay requirement.  
(b)    Notwithstanding anything in the foregoing to the contrary, neither Arrow nor the Bank will have any obligation to make or commence any payment, or provide any benefit, provided for in Section 6 (b), Section 7 (b) or Section 7 (c) unless and until Executive (1) first signs and delivers to Arrow and/or the Bank within 45 days of the date of Termination of Employment a separation and release agreement prepared by Arrow in a form acceptable to Arrow and which such agreement shall include a full release of Arrow, its Affiliates, employee benefit plans/trusts, and their respective directors, officers, employees, agents, administrators, trustees, fiduciaries, insurers, successors and assigns and such other provisions as are typically required by an employer therein, and (2) all conditions to the effectiveness of such separation and release agreement shall have been satisfied. Upon satisfaction of these conditions, the payments and benefits provided for in Section 6(b), 7(b) or 7(c) will commence on the next applicable regular payroll date of Arrow or the date provided for in Section 8 (a), if applicable.    Arrow agrees to provide to Executive on or prior to the date of  the Termination of Employment of Executive, the form of separation and release agreement required by it. 
9.Non-Competition; Non-Solicitation; Non-Disparagement.  Arrow and its Affiliates are engaged in the businesses of banking, lending, trust operations and providing financial, property, casualty and health insurance and investment adviser services and products (collectively, the “Business”).  As a senior executive, Executive provides services that are unique, special and/or extraordinary to the Business in which Arrow and its Affiliates engage, and have access to and will learn of trade secrets of Arrow and its Affiliates and confidential information pertaining to their customers.  The provisions of Paragraphs 9 and 10 are agreed by the parties to be reasonable and necessary to protect the goodwill of Arrow’s and its Affiliates’ Business, the good will of special/long-term customer relationships, Arrow’s and its Affiliates’ confidential information and trade secrets (including but not limited to information concerning their customers, marketing studies, marketing strategies, acquisition plans, costs, personnel and financial performance) and confidential customer information and to protect against unfair competition by an employee whose services are special, unique and/or extraordinary to the Business of Arrow and its Affiliates and their long-term success.  Accordingly, the Executive agrees as follows: 
(a)    Non-Compete.  For a period of two (2) years following the effective date of Termination of Employment of the Executive by any party for any reason (excluding death), including any Termination of Employment following a Change in Control under Paragraph 6 of this Agreement, the Executive will not, directly or indirectly: (1) engage in the business of banking, lending, trust operations or providing financial, property, casualty, or health insurance or investment adviser services or products anywhere in the Designated Area or (2) manage, operate, or control, or accept or hold a position as a director, officer, employee, agent or partner of or adviser or consultant to, or otherwise perform substantial services for or provide advice to, any bank or insured financial institution or other corporation or entity engaged in the business of banking, lending, trust operations or providing financial, property, casualty, or health insurance or investment adviser services and products (directly or through a subsidiary), excluding Arrow and its Affiliates (any such other bank, institution, corporation or entity, a “Financial Institution”), if, as of the effective date of such Termination of Employment, such Financial Institution has any office or branch located within the Designated Area or has immediate plans to establish any office or branch within the Designated Area.  For purposes of the preceding sentence, the “Designated Area” as of any particular time will consist of all counties in the State of New York and any other state in which Arrow or any of its Affiliates maintains an office or branch through which it engages in Business or has acted to establish an office or a branch through which it will engage in Business.  The provisions of this paragraph shall not prohibit Executive during such two-year period from working for a company whose principal business is providing property, casualty or health insurance, private equity investments, or serving as a securities broker if Executive is engaged solely in that business and not in the business of providing banking, lending or trust services.  The term financial services means financial products associated with the business of banking, including in particular but not limited to credit cards, debit cards, checking and savings accounts, and money market funds.
(b)    Non-Solicitation.  For a period of two (2) years following the effective date of Termination of Employment of the Executive by any party for any reason (excluding death), the Executive will not, directly or indirectly,
(i)    acting on behalf of any Financial Institution, regardless of where such Financial Institution is located or doing business, solicit any banking, lending or trust business or the business of providing financial, insurance or investment adviser services or products business for such Financial Institution from, or otherwise seek to obtain as a customer or client of such Financial Institution, any person or entity that, to the knowledge of the Executive, was a customer or client of Arrow or any of its Affiliates, and whom Executive, or anyone supervised directly or indirectly by Executive, worked with, at any point during the one-year period immediately preceding the effective date of such Termination of Employment; or
(ii)    acting on behalf of any other corporation or entity, including any Financial Institution, regardless of where such other corporation or entity is located or doing business, employ, recruit or solicit as an employee of such corporation or entity or retain or seek to retain as an agent or consultant of such corporation or entity, any individual employed by or retained as an agent or consultant of Arrow or any of its Affiliates in furtherance of their Business at any point during the one-year period immediately preceding the effective date of such Termination of Employment if such individual possesses knowledge of any trade secrets or confidential customer information of Arrow or any of its Affiliates, or provided services that were unique and/or extraordinary to Arrow or its Affiliates in their Business and Executive worked with or directly or indirectly managed such individual at any time during the last year of Executive’s Employment.
(c)    Non-Disparagement. For a period of ten (10) years following the effective date of Termination of Employment of the Executive by any party for any reason (excluding death), the Executive will not, directly or indirectly, make any statements, declarations, announcements, assertions, remarks, comments or suggestions, orally or in writing, that individually or collectively are, or may be construed as being, defamatory, derogatory, negative, or disparaging to Arrow or its Affiliates (including any successor to Arrow or its Affiliates by merger or acquisition or any of such successor’s affiliates), or to any director, officer, controlling shareholder, member, employee or agent of any of the foregoing.
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/or its Affiliates, and the parties specifically covenant and agree that should any of the clauses or provisions of the restrictions 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, then and in that event, the court so holding may reduce the extent or duration of such restrictions or effect any other change to such restrictions to the extent necessary to render such restrictions enforceable by said court to the maximum extent permissible under applicable law.  The enforceability of the provisions of this Paragraph 9 shall not be affected by the existence or non-existence of any agreement with similar terms between Arrow and another employee, or by the failure of Arrow or its Affiliates to enforce, or their agreement to waive or change, the terms of any such agreement with another employee containing similar terms.  This Paragraph 9 shall survive termination of this Agreement in accordance with its terms.
10.Confidential Information.  The Executive specifically acknowledges that all information pertaining to Arrow or its Affiliates received by him during the course of his employment which has been designated confidential, constitutes a trade secret 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 its Affiliates and the Executive covenants and agrees not to disclose any of such information, without the express prior written consent of the Arrow Board or the Chief Executive Officer of Arrow, during his employment hereunder or after Termination of Employment, to anyone not employed or engaged by Arrow or an Affiliate 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 written consent, for his own benefit or the benefit of any party other than Arrow or its Affiliates.  This Paragraph 10 shall survive termination of this Agreement.

11.Definitions.  The following capitalized terms when used in this Agreement shall have the following meanings. 
(a)    “Affiliate” means any corporation or other business entity that from time to time is, along with Arrow, a member of a controlled group of businesses, as defined in Sections 414(b) and 414(c) of the Code, provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in such test.  A corporation or other business entity is an Affiliate only while a member of such group.
(b)    “Agreement” shall have the meaning set forth in the introductory paragraph hereof. 
(c)    Intentionally omitted. 
(d)    “Arrow” shall mean Arrow Financial Corporation. 
(e)    “Arrow Board” shall mean the Board of Directors of Arrow. 
(f)    “Bank” shall mean Glens Falls National Bank and Trust Company.
(g)    “Bank Board” shall mean the Board of Directors of the Bank. 
(h)    “Base Salary” shall have the meaning set forth in Paragraph 5(a) hereof. 
(i)    “Change of Control” means:
(i)    The acquisition by one person, or more than one person acting as a group, of ownership of stock of Arrow that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Arrow;
(ii)    The acquisition by one person, or more than one person acting as a group, of ownership of stock of Arrow that, together with stock of Arrow acquired during the twelve-month period ending on the date of the most recent acquisition by such person or group, constitutes 30% or more of the total voting power of the stock of Arrow;
(iii)    A majority of the members of the Arrow Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Arrow Board before the date of the appointment or election; or 

(iv)    One person, or more than one person acting as a group, acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or group) assets from Arrow that have a total gross fair market value (determined without regard to any liabilities associated with such assets) equal to or more than 40% of the total gross fair market value of all of the assets of Arrow immediately before such acquisition or acquisitions.
Persons will not be considered to be acting as a group solely because they     purchase or own stock of the same corporation at the same time, or as a result of the same public offering.  However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with Arrow. 

This definition of Change of Control shall be interpreted in accordance with, and in a manner that will bring the definition into compliance with, the regulations under Section 409A of the Code.
(j)    “Change of Control Termination Total Payments” shall have the meaning set forth in Paragraph 6(g) hereof.
(k)    “Code” shall mean the Internal Revenue Code of 1986, as amended. 
(l)    Intentionally omitted.  
(m)     “Designated Area” shall have the meaning set forth in Paragraph 9(a) hereof.
(n)    “Effective Date” shall have the meaning set forth in the introductory paragraph hereof.
(o)    “Employment” shall have the meaning set forth in Paragraph 1 hereof.
(p)    “Excise Tax” shall have the meaning set forth in Paragraph 6(g)(i) hereof.
(q)    “Executive” shall mean Thomas J. Murphy.
(r)    “Financial Institution” shall have the meaning set forth in Paragraph 9(a) hereof.
(s)    “Non-Acceptance” shall have the meaning set forth in Paragraph 2(b) hereof. 
(t)    “Non-Offer” shall have the meaning set forth in Paragraph 2(b) hereof.
(u)    “Non-Renewal” shall have the meaning set forth in Paragraph 2(b) hereof. 
(v)     “Pay-out Period” shall mean the period commencing on the date of Termination of Employment and ending two years thereafter.
(w)     “Replacement Agreement” shall have the meaning set forth in Paragraph 2(b) hereof.  
(x)     “Retired Early Employee” shall have the meaning set forth in Paragraph 6 hereof. 
(y)     “Retirement” shall have the meaning set forth in Paragraph 7(f)(i) hereof. 
(z)    “Section 4999 Determination” shall have the meaning set forth in Paragraph 6(g)(ii) hereof.
(aa)    “Target Bonus” shall have the meaning set forth in Paragraph 5(b) hereof. 
(bb)    “Term” shall have the meaning set forth in Paragraph 2(a) hereof. 
(cc)    “Termination of Employment” or “Termination of Employment of Executive” means the separation from service of the Executive, as defined in the regulations under Section 409A of the Code, with and from Arrow and its Affiliates. Generally, for purposes of Section 409A, a separation from service means a decrease in the performance of services to no more than 20% of the average for the preceding 36-month period, disregarding leaves of absence of up to six months where there is a reasonable expectation the Executive will return.
(dd)    “Termination of Employment of Executive as a Retired Early Employee” means a Termination of Employment of Executive pursuant to Paragraph 6(a) hereof, that is, either a Termination of Employment of Executive without Cause or a Termination of Employment of Executive for Good Reason, in either case, following a Change in Control and otherwise meeting the requirements of Paragraph 6(a) hereof.
(ee)    “Termination of Employment of Executive for Cause” shall mean a termination of the Employment of Executive by Arrow or the Bank pursuant to Paragraph 7(a) for any one or more of the following “Causes:”
(i)    any willful misconduct by the Executive which is materially injurious to Arrow or the Bank or their Affiliates, monetarily or otherwise; 
 (ii)    any willful failure by the Executive to follow the reasonable directions of the Arrow Board or the Bank Board; 
(iii)    any failure by the Executive substantially to perform any reasonable directions of the Arrow Board or the Bank Board (other than failure resulting from disability or death), within thirty (30) days after delivery to the Executive by the respective Board of a written demand for substantial performance, which written demand shall specifically identify the manner in which the respective Board believes that the Executive has not substantially performed; 
(iv)    any inability of the Executive to serve as an officer or director of any subsidiary company, or perform any substantial portion of Executive’s duties hereunder, by reason of any order of the Federal Deposit Insurance Corporation, the Office of the Comptroller of Currency, or any other regulatory authority or agency having jurisdiction over Bank or any of its Affiliates; or
(v)    intentionally providing false or misleading information to, or otherwise misleading, the Arrow Board, the Bank Board or any committee thereof.
(ff)     “Termination of Employment of Executive for Good Reason” means any Termination of Employment of Executive, effected by the Executive, in his sole discretion, following Executive’s discovery of a Good Reason for such Termination of Employment (as defined below), and meeting all of the requirements for such Termination of Employment set forth below.  Any such Termination of Employment of Executive for Good Reason shall be deemed to have been effected under Paragraph 7(c) of this Agreement unless it meets all of the conditions for a Termination of Employment of Executive for Good Reason under Paragraph 6(a) hereunder, in which event it shall be deemed to have been effected under Paragraph 6(a).  Any Termination of Employment of Executive for Good Reason under this Agreement will be commenced upon, and only upon, delivery of advance written notice thereof by the Executive to Arrow or the Bank, which written notice must be delivered, if such Termination of Employment is to become effective, not later than ninety (90) days after the discovery by the Executive of the Good Reason underlying such Termination of Employment (and, if the Termination of Employment of Executive for Good Reason is being effected under Paragraph 6(a) of this Agreement, not later than one (1) year after the date of the Change in Control the occurrence of which is a pre-condition to the right of Executive to effect such a Termination of Employment under Paragraph 6(a)).  The written notice of termination delivered by the Executive to Arrow or the Bank shall (i) state that the Termination of Employment of Executive for Good Reason is being effected under Paragraph 6(a) or Paragraph 7(c), as appropriate, (ii) identify with reasonable particularity the Good Reason or Good Reasons underlying the Termination of Employment, and (iii) specify the effective date of such Termination of Employment, which shall be a date not less than thirty (30) days nor more than one hundred eighty (180) days after the delivery of such notice to Arrow or the Bank, as determined by the Executive.  If, prior to the effective date of the Termination of Employment of Executive specified in the written notice, Arrow or the Bank is able to remedy in full, and remedies in full, the circumstances underlying or constituting the Good Reason or Good Reasons identified by the Executive in the written notice, then such Good Reason or Good Reasons shall be deemed cured and the Termination of Employment of Executive for Good Reason shall be deemed null and void, effective upon execution of written affidavit of cure signed by Arrow and the Bank and consented to by the Executive, such consent not to be unreasonably withheld.  For purposes of any Termination of Employment of Executive for Good Reason, “Good Reason” shall mean (i) the occurrence of a Non-Offer of a Replacement Agreement pursuant to Paragraph 2(b) hereof; (ii) a material diminution in the Executive’s title, authority, duties, or responsibilities; (iii) Executive is required to relocate more than 100 miles from the base location at which Executive currently performs his employment duties; or (iv) the occurrence of a material breach by the Company of any provision of this Agreement. 
(gg)     “Termination of Employment of Executive without Cause” means any Termination of Employment of Executive by Arrow or the Bank prior to normal expiration of the Term of Employment hereunder, for any reason or no reason, that does not qualify as a Termination of Employment of Executive for Cause or otherwise meet the definition of any other Termination of Employment of Executive hereunder.  Any such Termination of Employment of Executive without Cause shall be deemed to have been effected under Paragraph 7(b) of this Agreement unless it meets all the conditions for a Termination of Employment of Executive without Cause under Paragraph 6(a) hereunder, in which event it shall be deemed to have been effected under Paragraph 6(a).  Any Termination of Employment of Executive without Cause under this Agreement will be commenced upon, and only upon, delivery of advance written notice thereof by Arrow or the Bank to Executive, stating that such Termination of Employment is a Termination of Employment of Executive without Cause under Paragraph 6(a) or Paragraph 7(b) of this Agreement, as appropriate, and specifying the effective date of such Termination of Employment, which shall be a date not less than thirty (30) days nor more than ninety (90) days after the date of delivery of such notice to Executive, as determined by Arrow or the Bank.  Any such Termination of Employment of Executive without Cause (including the delivery of the required written notice of termination) shall require the affirmative vote of not less than two-thirds (2/3) of the entire Arrow Board or Bank Board.

12.Successors and Assigns; Assumption by Successors.  This Agreement is a personal services contract which may not be assigned by Arrow or the Bank to, or assumed from Arrow or the Bank 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.
13.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.
14.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.
15.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.
16.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 Arrow or 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 last remaining restriction set forth in Paragraph 9 expires.  Paragraph 10 shall survive termination of this Agreement.
17.Performance by Arrow or Bank.  Performance under this Agreement by Arrow and the Bank, including the payment of any amounts provided for hereunder, are subject to applicable law and regulation including payments prohibited under 12 CFR 359 and any other payment restrictions on executive compensation under applicable banking law and regulation.  Any obligation of Arrow or the Bank to make a payment under any provision of this Agreement shall be deemed an obligation of both parties to make such payment, and the making of such payment by either such party shall be deemed performance of the obligation to pay by both such parties.
18.Company Policies or Guidelines.  In consideration of the Executive’s employment with Arrow and the Bank, Executive agrees that his compensation and benefits provided for hereunder or otherwise by Arrow or the Bank are subject to (i) applicable laws and regulations as are in effect from time to time, and (ii) current or subsequently adopted policies or guidelines issued by the Arrow Board or the Bank Board , in each case, impacting such compensation or benefits pursuant to the terms of such applicable laws, regulations, policies or guidelines (e.g., clawback or incentive compensation recoupment policies and/or stock ownership guidelines).
19.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.
20.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 without reference to conflicts of law principles.
21.Section 409A Compliance.  The parties intend that all provisions of this Agreement comply with the requirements of Internal Revenue Code Section 409A to the extent applicable.  No provision of this Agreement shall be operative to the extent that it will result in the imposition of the additional tax described in Code Section 409A(a)(1)(B)(i)(II).  If any provision hereof is reasonably deemed to contradict Section 409A, the parties agree to revise, to the extent practicable, the Agreement as necessary to comply with Section 409A and fulfill the purpose of the voided provision.  Nothing in this Agreement shall be interpreted to permit accelerated payment of nonqualified deferred compensation, as defined in Section 409A, or any other payment in violation of the requirements of Section 409A.  With respect to reimbursements that constitute taxable income to Executive, no such reimbursements or expenses eligible for reimbursement in any calendar year shall in any way affect the expenses eligible for reimbursement in any other calendar year and Executive’s right to reimbursement shall not be subject to liquidation in exchange for any other benefit.
22.Authorization.  Arrow and the Bank represent and warrant that the execution of this Agreement has been duly authorized by resolution of their respective boards.
[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have executed or caused to be executed this Agreement as of February 1, 2019.
ARROW FINANCIAL CORPORATION

By: /s/ Andrew J. Wise
Andrew J. Wise, COO and Senior Vice President

GLENS FALLS NATIONAL BANK
AND TRUST COMPANY

By: /s/ Andrew J. Wise
Andrew J. Wise, COO and Executive Vice President

“EXECUTIVE”

/s/ Thomas J. Murphy
Thomas J. Murphy, President & CEO

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