Document:

EXHIBIT 10.21

                     FRANCHISE AGREEMENT

      This Agreement, made this 16th day of September, 1987,
by   and  between  Ryan's  Family  Steak  Houses,  Inc.,   a
corporation formed and operated under the laws of the  State
of South Carolina, having its principal place of business at
405  Lancaster  Avenue,  Greer,  South  Carolina  29651-0405
(hereinafter referred to as "FRANCHISOR"), and Family  Steak
Houses  of Florida, Inc., a corporation formed and  operated
under the laws of the State of Florida, having its principal
place  of  business  at  2113 Florida  Boulevard,  Suite  A,
Neptune  Beach, Florida  32233 (hereinafter referred  to  as
"FRANCHISEE").

                    W I T N E S S E T H:

     WHEREAS, as a result of the expenditure of time, effort
and   money,  FRANCHISOR  has  acquired  unique  experience,
special  skills, technique and knowledge with  reference  to
the   development,  opening  and  operating  of   food   and
restaurant facilities; and

      WHEREAS, FRANCHISOR has devised a standard unique  and
uniform   system  for  the  establishment,   operation   and
development  of  same in specially designed  buildings  with
distinctive  fixtures,  equipment,  interior  and   exterior
accessories and color schemes, food formulas, inventory  and
accounting  system, and comprehensive management assistance,
which system is identified by the mark, "Ryan's Family Steak
House"; and

      WHEREAS, FRANCHISOR is the sole and exclusive owner of
the  entire right, title and interest, together with all the
goodwill  connected  therewith, in and to  the  service  and
trademarks,   "Ryan's   Family  Steak   House"   and   other
proprietary marks, patent and copyrights, if any; and

      WHEREAS, in connection therewith, FRANCHISOR  has,  by
maintenance of uniformity and high standards or quality  and
service,  established a reputation, demand and goodwill  for
said  food  and  restaurant facilities operated  under  such
system and in its name; and

      WHEREAS,  all of the foregoing have a distinctive  and
valuable  significance to the public, and FRANCHISEE,  being
cognizant  thereof, desires to make use of the name  "Ryan's
Family  Steak  House" and enjoy the commercial  benefits  of
that  name and the benefits of the merchandising system  and
operating services related thereto throughout the  State  of
Florida    (except   for   FRANCHISOR's   Existing   Florida
Restaurants, as defined below); and
      WHEREAS, on or about January 21, 1986, FRANCHISOR  and
Eddie  L.  Ervin,  Jr., entered into a  franchise  agreement
granting Mr. Ervin a nonexclusive right to make use  of  the
name  "Ryan's Family Steak House" and operate Ryan's  Family
Steak House restaurants within the State of Florida, and Mr.
Ervin,  with  the  consent  of  FRANCHISOR,  assigned   such
franchise agreement to FRANCHISEE; and

      Whereas,  in September, 1987, FRANCHISEE acquired  the
Ryan's  Family  Steakhouse Restaurant  in  Apopka,  Florida,
owned   by  another  FRANCHISEE  of  FRANCHISOR,   and,   in
connection with such acquisition, was assigned all rights of
such FRANCHISEE under a franchise agreement with FRANCHISOR,
which rights FRANCHISOR made exclusive franchise rights  for
the  applicable territory with a term of up  to  forty  (40)
years; and

     WHEREAS, FRANCHISOR and FRANCHISEE desire to enter into
this  franchise  agreement,  amending  and  superceding  the
franchise  agreement entered into on January 21,  1986;  and
the  FRANCHISEE  agreement relating to the Apopka,  Florida,
Ryan's Family Steak House restaurant.

      NOW,  THEREFORE, the parties hereto  intending  to  be
legally  bound  in  consideration of the mutual  agreements,
covenants and promises contained herein, do hereby agree  as
follows:

I.        APPOINTMENT AND FRANCHISE FEE

          A.   FRANCHISOR hereby grants unto FRANCHISEE the
right to use  the  registered mark, "Ryan's Family Steak
House",  and all  trademarks, logos, tradenames or service
marks adopted presently  or  subsequently, by FRANCHISOR; and
the right, franchise and privilege to use FRANCHISOR's
techniques in the  operation of Ryan's Family Steak House
Restaurants (the "Restaurant" or "Restaurants"), under the
specific conditions hereinafter set forth, in the State of
Florida,
subject  to  location approval in accordance with  paragraph
II.A,  hereof.  FRANCHISEE shall have the right to use  such
marks  in  connection  with  the operation  of  FRANCHISEE's
business,  including, without limitation,  the  use  of  the
registered  mark as a fictitious name under which FRANCHISEE
transacts business at the Restaurants, and the use  of  such
marks,  logos or insignia on the signs, stationery, business
cards  and  advertising in connection with the  Restaurants,
and  in,  on, or in connection with the Offering Memorandum,
Registration  Statements, Prospectuses  or  other  documents
prepared  or  used by FRANCHISEE to offer, sell or  register
with governmental agencies securities issued by FRANCHISEE.

          B.   The rights provided under this Franchise
Agreement to
FRANCHISEE  will be exclusive with respect to the  State  of
Florida,  except  that  FRANCHISOR  reserves  the  right  to
maintain  and continue operating two (2) Restaurants  within
the  State  of  Florida,  one (1) which  the  FRANCHISOR  is
currently  operating  in Panama City, Florida  and  one  (1)
which  FRANCHISOR intends to construct on a  site  owned  by
FRANCHISOR in Pensacola, Florida, and the right to construct
and  operate additional restaurants within Escambia  County,
Florida ("FRANCHISOR's Existing Florida Restaurants").

          C.   Provided that FRANCHISEE shall be in compliance
with
the  requirements  of paragraph I.H below, FRANCHISOR  shall
not  enfranchise any other Ryan's Family Steak Houses within
the  State  of  Florida.  FRANCHISEE will not,  directly  or
indirectly,  construct,  own or operate  any  Ryan's  Family
Steak  House within five (5) miles, measured from the center
of  the building, of a site of FRANCHISOR's Existing Florida
Restaurants.

          D.    FRANCHISOR reserves the right, notwithstanding
any
rights  granted  elsewhere herein, to  promote  and  conduct
special sales through mobile units or temporary locations at
special   events   such  as  fairs,  conventions,   athletic
contests,  etc.,  in  the territory  granted  to  FRANCHISEE
hereunder;  provided,  however, that FRANCHISOR  offers  the
opportunity to conduct such promotions and special sales  to
FRANCHISEE  in writing thirty (30) days prior to such  event
and   FRANCHISOR   does  not  receive  written   notice   of
FRANCHISEE's  acceptance of the aforesaid offer  within  ten
(10) days after offer.

          E.   FRANCHISOR retains the right to market
products under
the  trademarks and Proprietary Marks licensed to FRANCHISEE
herein  through  grocery stores, supermarkets,  and  similar
outlets  within the territory granted FRANCHISEE  hereunder,
but  not  any products which FRANCHISEE is licensed to  sell
under such trademarks and Proprietary Marks at its franchise
location.

          F.   FRANCHISOR retains the right to conduct
product
marketing  tests in which FRANCHISEE may, but  will  not  be
required to, participate.

          G.   Under FRANCHISOR approving a site, the terms
of this Agreement  shall apply to such site and, within thirty
(30) days after a site is approved under Paragraph II,
FRANCHISEE
shall  pay to FRANCHISOR the sum of Fifteen Thousand Dollars
($15,000.00) as a franchise fee for such location.   In  the
event  the  contract  to purchase a  site  location  is  not
completed, then such franchise fee shall be applied  to  the
next  location  submitted  for  approval  by  FRANCHISEE  to
FRANCHISOR.

          H.   FRANCHISOR shall not grant any franchise to a
party
other than FRANCHISEE to own or operate a Restaurant in  the
counties  of  Decatur,  Thomas, Lowndes,  Camden  and  Glynn
within  the  State of Georgia. From time-to-time, FRANCHISEE
may  submit  to FRANCHISOR a proposed site or  sites  within
such counties.  FRANCHISOR shall determine*

          I.   As part of the consideration for the exclusive
franchise  rights  granted under this  Franchise  Agreement,
FRANCHISEE  agrees  to  construct or  acquire  and  commence
operations  of additional Restaurants, such that  FRANCHISEE
is   operating  in  cumulative  number  (required   minimum)
Restaurants on December 31 of each year, beginning  in  1988
and ending in 1997, as indicated in the following table:

                                  Cumulative Minimum Number
                                   of Restaurants Required
                Date                 to be in Operation
     December 31, 1988                       18
     December 31, 1989                       22
     December 31, 1990                       26
     December 31, 1991                       30
     December 31, 1992                       34
     December 31, 1993                       37
     December 31, 1994                       40
     December 31, 1995                       43
     December 31, 1996                       46
     December 31, 1997, and all
     Subsequent years during
     the term of this
     Agreement, including                    49
     renewal options

           The  failure  of  FRANCHISEE to comply  with  the
requirements  of  this subsection I shall not  constitute  a
basis  for  termination under Section XV of this  Agreement,
but shall solely give FRANCHISOR the option to terminate the
exclusive nature of FRANCHISEE's franchise rights within the
State of Florida.

          J.   The terms of this Agreement shall apply to all
Restaurants owned and operated or to be owned or operated by
FRANCHISEE,  or  his  assignees,  and  the  terms  of   this
Agreement all supersede any prior agreements in effect  with
respect to all Restaurants owned by FRANCHISEE.
II.       LOCATION

           A.    At  such  time  as  FRANCHISEE  desires  to
construct an additional Restaurant, FRANCHISEE shall  submit
a list of no more than three (3) proposed sites, in order of
preference of proposed sites for a Restaurant.  There  shall
be  no  more  than  three  (3)  alternative  proposed  sites
submitted for approval at any one time with respect  to  any
one  Restaurant.  FRANCHISOR shall then inspect and evaluate
the suitability of the proposed sites in the codes presented
until  one  location  is found suitable.   FRANCHISOR  shall
notify FRANCHISEE of site approval or disapproval.

           B.    FRANCHISEE agrees at his expense to  do  or
cause  to  be done the acquiring, leasing or development  of
the  site approved by FRANCHISOR pursuant to Paragraph  IIA,
above.

           C.   FRANCHISOR will furnish to FRANCHISEE design
development  drawings  for  a  Ryan's  Family  Steak  House,
including requirements for lot and site dimensions,  design,
image,  interior  and  exterior  layout,  finish  materials,
fixtures,  equipment,  signs  and  decor  and  will  furnish
reasonable guidance to FRANCHISEE in the development of  the
site.

           D.    FRANCHISEE agrees at his expense to  do  or
cause to be done the following:

               1.   Convert design development drawings into
construction documents.

               2.   Prepare and submit to the FRANCHISOR for
approval detailed site and building plans and specifications
for  the Ryan's Family Steak House at the approved location,
which  plans  and  specifications  shall  comply  with   the
FRANCHISOR's  requirements  and all  applicable  ordinances,
building codes, permit requirements and restrictions.

                3.    Obtain all required building, utility,
sign, health and business permits and licenses and any other
required permits and licenses.

               4.   Construct new building or alter existing
building in accordance with current plans and specifications
approved   by   the  FRANCHISOR;  provided,  however,   that
FRANCHISOR   cannot   require   FRANCHISEE   to   meet   any
specifications  that  are not required of  FRANCHISOR's  own
properties of similar size, age, function and design.

                5.    Purchase  and  install  all  fixtures,
furnishings,   sign,  decor,  materials,   equipment,   etc.
required  for  the Ryan's Family Steak House  in  conformity
with current specifications.

           6.    Purchase an opening inventory of the needed
products, materials and supplies.

           7.    Secure  all  financing  required  to  fully
develop  the  Ryan's  Family Steak House  and  complete  its
development  within a reasonable time after  obtaining  site
approval.

III.      PROPRIETARY MARKS

          A.   FRANCHISEE acknowledges that the name "Ryan's
Family
Steak  House"  is  a valid service and/or  trademark  solely
owned  by  FRANCHISOR and that only the  FRANCHISOR  or  its
designated FRANCHISEES have the right to use such  trademark
and  such other trademarks, services marks, trade names  and
copyrights  as  may  presently  exist  or  be  acquired   by
FRANCHISOR  and licenses for use by FRANCHISEE,  along  with
all  ancillary  signs,  symbols or  other  indicia  used  in
connection  or  conjunction  with  said  marks.   FRANCHISEE
further  acknowledges that valuable goodwill is attached  to
such  trademarks, services marks, trade names and copyrights
and  that  he will use same only in the manner  and  to  the
extent specifically licensed by this Agreement.

               1.   FRANCHISEE understands and agrees that,
although its
license of said proprietary marks is exclusive in the  State
of  Florida,  FRANCHISOR  has the right  itself  to  operate
Franchisor's Existing Florida Restaurants, under said marks.
2.   FRANCHISEE expressly covenants that during the time of
this Agreement and after the expiration or termination
thereof, FRANCHISEE shall not directly or indirectly contest
or aid in contesting the validity or ownership of said
Proprietary Mark and copyrights.

               3.   FRANCHISEE agrees to promptly notify
FRANCHISOR of any
claim, demand, or suit based upon or arising from, or of any
attempt  by any other person, firm, or corporation,  to  use
the  service  and/or trademark licenses  hereunder,  or  any
trademark, service mark, symbol, trade names, copyright,  or
colorable  variation  thereof, in  which  FRANCHISOR  has  a
proprietary  interest.  FRANCHISEE agrees also  to  promptly
notify FRANCHISOR of any litigation instituted by FRANCHISEE
or  by  any  person, firm, corporation or government  agency
against  FRANCHISOR.  In the event FRANCHISOR,  pursuant  to
the  terms  of this Section III, undertakes the  defense  or
prosecution of any litigation, FRANCHISEE agrees to  execute
any and all documents and do such acts and things as may, in
the opinion of counsel for FRANCHISOR, be necessary to carry
out  such  defense or prosecution, either  in  the  name  of
FRANCHISOR or in the name of FRANCHISEE, as FRANCHISOR shall
elect.

          B.   It is expressly recognized that any and all
goodwill
associated  with  said  proprietary  marks  and  copyrights,
including any goodwill which might be deemed to have  arisen
through   FRANCHISEE's  activities,  inures   directly   and
exclusively to the benefit of FRANCHISOR.

          C.   FRANCHISEE shall not sue the words, "Ryan's
Family
Steak House" or the word "Ryan" as part of its corporate  or
other business name.  FRANCHISEE shall not license, register
or   purchase  vehicles,  fixtures,  products,  supplies  or
equipment,  or  perform  any other  activity  or  incur  any
obligation   or  indebtedness  except  in  its   individual,
corporate or other business name.

          D.   FRANCHISEE understands and acknowledges that
each and
every  detail  of  the FRANCHISOR's system is  important  to
FRANCHISOR,  to  FRANCHISEE, or  to  other  licensed  Ryan's
Family  Steak  House  franchisees in order  to  develop  and
maintain   uniformity  of  facilities  and   services   and,
therefore,  to  enhance  the reputation,  trade  demand  and
goodwill   of   Ryan's   Family  Steak  House   Restaurants.
FRANCHISEE accordingly covenants:

               1.   To operate, advertise, and promote its
franchise under
the  name  "Ryan's  Family Steak House"  without  prefix  or
suffix; and

               2.   To adopt and use the proprietary marks
licensed
hereunder solely in the manner prescribed by FRANCHISOR; and

               3.   To carry out its business under said
proprietary marks
in  accordance  with  operational standards  established  by
FRANCHISOR  and  as set forth in the Confidential  Operating
Manual and/or other documents.

          E.   In order to preserve the validity and
integrity of the
proprietary  marks  and copyrights licensed  herein  and  to
insure the FRANCHISEE is properly employing the same in  the
operation  of its franchise, FRANCHISOR or its agents  shall
at  all  reasonable  times  have  the  right  to  entry  and
inspection of FRANCHISEE's premises and, additionally, shall
have the right to observe the manner in which FRANCHISEE  is
rendering   its   services,  to  confer  with   FRANCHISEE's
employees and customers, and to select products and supplies
for  test  and evaluation purposes to make certain that  the
quantities  and ingredients are satisfactory and within  the
quality control provisions established by FRANCHISOR.
IV.       TRAINING AND ASSISTANCE

          A.   FRANCHISOR shall make available to FRANCHISEE
 and
FRANCHISEE's designated managers, and FRANCHISEE's  managers
shall attend and successfully complete, prior to opening for
business,  a  training and familiarization  course  at  such
place  and  for  such  length of time  as  FRANCHISOR  shall
designate.  Said training program shall cover all aspects of
the  operation  of  a Ryan's Family Steak  House  Franchise.
Accommodations,  salaries, and travel expenses  during  this
period shall be borne by FRANCHISEE.

          B.   During the first week of operation by
FRANCHISEE of a
Ryan's  Family  Steak  House,  FRANCHISOR  will  furnish  to
FRANCHISEE, at FRANCHISEE's option, at FRANCHISEE's premises
and   at   FRANCHISOR's   expense,   one   of   FRANCHISOR's
representatives for the purpose of facilitating the  opening
of  FRANCHISEE's  location.  Such representative  will  also
assist   FRANCHISEE   in  establishing   and   standardizing
procedures  and techniques essential to the operation  of  a
Ryan's  Family  Steak  House and shall  assist  in  training
personnel.

          C.   FRANCHISOR shall provide a continuing advisory
 service
which shall include, but not be limited to, consultation  on
promotional, business or operational problems with  analysis
of   FRANCHISEE's  sales,  marketing  and  financial   data.
FRANCHISOR   may  make  reasonable  charges  for   operating
assistance  required by FRANCHISEE in excess of that  normal
provided.

          D.   FRANCHISOR shall, from time to time when
available,
send  to  FRANCHISEE operational materials and bulletins  on
new sales, marketing developments, products and techniques.

          E.   The requirements contained in subparagraphs A
 and B
above  relating to training and opening assistance shall  be
at  the option of FRANCHISOR in instances wherein FRANCHISEE
is purchasing an existing operating unit or an existing unit
which had been in operation.

V.        ADVERTISING

           Recognizing  the  value of  advertising  and  the
importance   of  the  standardization  of  advertising   and
promotion  to  the  furtherance of the goodwill  and  public
image  of  Ryan's Family Steak House Restaurant,  FRANCHISEE
agrees:

          A.   To submit to FRANCHISOR or its designated
agency, for
its  prior  approval,  all  sales  promotion  materials  and
advertising  to  be used by FRANCHISEE, including,  but  not
limited  to,  newspapers, radio and television  advertising,
specialty and novelty items, signs, boxes, matches, bags and
wrapping  papers.  In the event written or oral  disapproval
of said advertising and promotional material is not received
by  FRANCHISEE  from  FRANCHISOR or  its  designated  agency
within  fifteen  (15) days from the date  such  material  is
submitted  to  and  received by FRANCHISOR,  said  materials
shall  be deemed approved.  Failure by FRANCHISEE to conform
with  the  provisions  herein and subsequent  non-action  by
FRANCHISOR to this failure and default shall not  be  deemed
as  a waiver of further or additional failures and defaults.
The  submission  of advertising to FRANCHISOR  for  approval
shall  not affect FRANCHISEE's right to determine the prices
at which FRANCHISEE sells its products.

          B.   At such time as FRANCHISOR commences national
 or
regional  advertising, and upon written notice by FRANCHISOR
to  FRANCHISEE, then and in that event, FRANCHISEE agrees to
pay to Ryan's Family Steak House Corporate Advertising Fund,
at  the same time and in the same manner as, and in addition
to,  the  Continuing Services and Royalty  Fee  provided  in
Paragraph  XI  herein, a sum equal to one  percent  (1%)  of
FRANCHISEE's  gross receipts, as defined  in  Paragraph  XI,
which  sum  shall  be  expended  by  FRANCHISOR  solely  and
exclusively for the development of advertising materials and
for  national  and/or regional advertising or promotions  of
FRANCHISOR and its products.  FRANCHISOR will make available
to   FRANCHISEE,  advertising,  marketing  and   promotional
material for use by FRANCHISEE billed at cost.

          1.   Upon the request of FRANCHISEE, FRANCHISOR
will provide
an annual accounting of the Corporate Advertising Fund.

          2.   The content of such advertising, as well as
the media
in  which  such  advertising  is  to  be  placed,  shall  be
determined by FRANCHISOR or its designated agency.

          C.   FRANCHISEE shall not advertise or use any
other form of
promotion,  the trademarks of FRANCHISOR without appropriate
copyright and registration marks.

VI.       CONFIDENTIAL OPERATING MANUAL

          A.   In order to protect the reputation and goodwill
associated with the mark, "Ryan's Family Stead House" and to
maintain  the  uniform  standards of  operation  thereunder,
FRANCHISEE  shall  conduct  its Ryan's  Family  Steak  House
franchise    in    strict   accordance   with   FRANCHISOR's
Confidential Operation Manual.
B.
FRANCHISEE shall at all times treat as confidential, and
shall not at any time disclose, copy, duplicate, record or
otherwise produce, in whole or in part, or otherwise make
available to any unauthorized person or source, the contents
of said Manual.

          C.   The Confidential Operating Manual shall at
all times
remain the sole property of FRANCHISOR and shall promptly be
returned  upon the expiration or other termination  of  this
Agreement.

          D.   FRANCHISOR may, from time to time, revise the
content
of  said  Manual so as to convey to FRANCHISEE  advancements
and   new  developments  in  sales,  marketing,  operational
techniques  and other items and procedures relevant  to  the
operation   of  a  Ryan's  Family  Steak  House   franchised
business.

VII.      MAINTENANCE AND REPAIRS

          A.   FRANCHISEE, at its expense, shall at all
times during
the  term  of  this  Agreement, maintain  the  interior  and
exterior of the franchised premises, keep the equipment  and
furnishings  in  good  repair,  and  insure  the  attractive
appearance  and sound operating condition of  the  facility.
FRANCHISEE,  at the reasonable request of FRANCHISOR,  shall
make  necessary repairs to the premises in order to maintain
uniform appearance and protect the reputation of the  Ryan's
Family  Steak  House system.  FRANCHISEE shall not,  without
prior  written approval, make any changes in the layout  and
decor of the Ryan's Family Steak House Restaurant franchised
hereunder.

          B.   In the event FRANCHISEE does not maintain the
 premises
as  required  above, FRANCHISOR, after notice to FRANCHISEE,
and  at its option, may order the necessary maintenance  and
repairs and charge the cost of same to FRANCHISEE.

          C.   FRANCHISEE shall not, without the prior
 written consent
of  FRANCHISOR, place in, on or upon the location franchised
hereunder,  or  in  any communication  media,  any  form  of
advertising  related to the sale of the business  franchised
or the rights granted hereunder.

VIII.          ACCOUNTING AND RECORDS

          A.   To enable FRANCHISEE and FRANCHISOR to best
ascertain
their  costs and maintain an economical method of operation,
FRANCHISEE agrees to keep and preserve, during the  term  of
the franchise granted hereunder, full, complete and accurate
books  and  accounts  in an accounting form  and  manner  as
prescribed in the Confidential Operating Manual.
B.   FRANCHISEE shall submit to FRANCHISOR such periodic
reports, forms and records as specified, and in the manner
and at the time as specified, in the Confidential Operating
Manual.

          C.   FRANCHISOR's representatives shall have the
right at
any  reasonable time to inspect FRANCHISEE's books,  records
and  cash  control devices or systems.  If  such  inspection
reveals  that  the gross receipts reported by FRANCHISEE  to
FRANCHISOR  are less than the gross receipts ascertained  by
such  inspection, then FRANCHISEE shall immediately  pay  to
FRANCHISOR the amount owed to FRANCHISOR in accordance  with
the corrected gross receipts report.  Upon the discovery  of
discrepancy  in the report of gross receipts of two  percent
(2%)  or more, FRANCHISEE shall pay and reimburse FRANCHISOR
for  any  and  all expenses connected with said  inspection,
including  but  not  limited to, reasonable  accounting  and
legal  fees, as well as interest on the unreported  receipts
at  the  maximum rate permitted by law from  the  date  said
payment was due.  Such payments are without prejudice to any
other remedies FRANCHISOR may have under this Agreement.

IX.       STANDARDS OF QUALITY

          A.   FRANCHISEE recognizes that it is essential to
 the
proper  marketing of Ryan's Family Stead House  and  to  the
preservation and promotion of its reputation and  acceptance
by  the  public at large, that uniform standards of quality,
food  appearance, uniform quantities, volumes and  types  of
food be maintained.  FRANCHISEE therefore agrees, as part of
the  consideration for this Agreement, that FRANCHISEE  will
at  all  times  dispense, sell, or offer  for  sale  to  the
public,   only  such  articles,  foods  or  other   products
(whatsoever) as shall meet the reasonable specifications and
standards  from  time  to  time  designated  in  writing  or
consented  to in writing by an officer or person  designated
by  an officer of FRANCHISOR for sale and service from or at
the  Ryan's  Family  Steak  Houses licensed  hereunder;  and
FRANCHISEE shall sell, serve and dispense all such articles,
foods   and   other  products  as  shall   meet   all   such
specifications and standards designated by FRANCHISOR.

          B.   FRANCHISEE shall purchase all food products,
supplies
and  materials  required  for the operation  of  the  Ryan's
Family  Steak  House licensed hereunder, from manufacturers,
suppliers, or distributors designated by FRANCHISOR or  from
such  other  suppliers  who  shall,  with  respect  to  such
products,  supplies or materials, meet all  of  FRANCHISOR's
specifications and standards as to quality, taste,  texture,
composition, strength, finish and appearance, and who  shall
adequately  demonstrate their capability and  facilities  to
supply  the  FRANCHISEE's needs in the  quantities,  at  the
times,  and  with the reliability requisite to an  efficient
operation.

               1.   In the event FRANCHISEE intends to
purchase food
products,   supplies   and  materials  from   manufacturers,
suppliers  or  distributors other than those  designated  by
FRANCHISOR, FRANCHISEE shall, prior to purchasing  any  such
food  products,  supplies  and  materials,  give  FRANCHISOR
written "Notice for Intended Change of Supplier" on the form
provided  for  that  purpose in the  Confidential  Operating
Manual.

               2.   In the event FRANCHISOR rejects
 FRANCHISEE's intended
new  manufacturer, supplier or distributor, FRANCHISOR must,
within  sixty  (60)  days  of the  receipt  of  FRANCHISEE's
"Notice  of  Intended Change of Supplier", notify FRANCHISEE
in  writing  of  its rejection.  Said "Notice of  Rejection"
must  list in detail all areas wherein the intended supplier
fails  to  meet  FRANCHISOR's  product  specifications   and
standards   or  other  requirements  as  contained   herein.
Failure  to  so  notify FRANCHISEE within such  time  period
shall  constitute  a  waiver of any and  all  objections  by
FRANCHISOR  to  the  previously  undesignated  manufacturer,
supplier or distributor submitted by FRANCHISEE.  FRANCHISOR
may continue from time to time to inspect any manufacturer's
or  supplier's  facilities  and products  to  assure  proper
production,     processing,    packaging,    storing     and
transportation of food products, supplies or materials to be
purchased  by  FRANCHISEE.  Permission for  such  inspection
shall  be  a  condition of the continued  approval  of  such
manufacturer, supplier or distributor.

               3.   FRANCHISEE may, within thirty (30) days
of receipt of
FRANCHISOR's  "Notice  of  Rejection"  of  the  undesignated
manufacturer, supplier or distributor, invoke the provisions
relating  to  arbitration contained in this Agreement.   The
cost  of  any such arbitration shall be borne by the  losing
party.

               4.   All intended and previously undesignated
 manufacturers,
suppliers  or  distributors, as  a  condition  precedent  to
acceptance,  must agree to permit agents or  representatives
of  FRANCHISOR  to inspect their facilities, both  initially
and  from  time  to time as may reasonably be  required,  to
assure  FRANCHISOR  of  the proper  production,  processing,
packaging, storing and transportation of the food  products,
supplies or materials to be purchased by FRANCHISEE.

               5.   FRANCHISOR may require that samples from
the supplier
be  delivered  to FRANCHISOR or to a designated  independent
testing laboratory for testing prior to approval and use.  A
charge  not to exceed the actual cost of these tests may  be
made by FRANCHISOR and shall be paid by FRANCHISEE.
X         MODIFICATION OF THE SYSTEM

          FRANCHISEE recognizes and agrees from time to time
hereafter FRANCHISOR may change or modify the system
presently identified by the mark, "Ryan's Family Steak
House" including the adoption and use of new or modified
trade names, trademarks, equipment or new techniques, and
the FRANCHISEE will accept, use and display for the purpose
of this Agreement any such changes in systems, including new
or modified trade names, trademarks, service marks or
copyrighted materials, new products, new equipment or new
techniques, as if they were part of this Agreement at the
time of execution hereof;  provided, however, that
FRANCHISEE is not required to make any changes not required
of FRANCHISOR's own restaurants of similar size, age,
function and design.

XI.       CONTINUING SERVICES AND ROYALTY FEE

          A.   Until December 30, 1987, FRANCHISEE shall pay
 to
FRANCHISOR, so long as this Agreement shall be in effect,  a
Continuing  Service and Royalty Fee equal  to  four  percent
(4%)  of  the  total gross receipts from each Ryan's  Family
Steak  House  franchised hereunder,  said  Fee  to  be  paid
monthly   in   the  manner  specified  below  or   otherwise
prescribed in the Confidential Operating Manual.

               1.   FRANCHISEE shall submit to FRANCHISOR,
on a form
approved by FRANCHISOR, a correct statement of gross
receipts signed by an appropriate officer of FRANCHISEE, no
later than the tenth (10th) day of each month.  Each monthly
statement of gross receipts shall be accompanied by the
Continuing Services of Royalty Fee payment based on the
gross receipts reported in the statement so submitted.
FRANCHISEE will make available for reasonable inspection at
reasonable times by FRANCHISOR, all original books and
records that FRANCHISOR may deem necessary to ascertain
gross receipts.

               2.   The term "gross receipts" as used herein
 shall mean the
total of all sales of merchandise and all business
transacted in, on, upon and from the premises of each Ryan's
Family Steak House franchised hereunder; provided, that the
term "gross receipts" shall not include the amounts
collected and paid to the governmental authorities wherein
the franchise is located, under the provisions of any Sales
Tax Act, Retailer's Occupation Tax Act, or similar Acts of
said governmental authorities.

          B.   Commencing on January 1, 1988, FRANCHISEE
 shall pay to
FRANCHISOR, so long as this Agreement shall be in effect,  a
Continuing Service and Royalty Fee, as follows:

               1.   With respect to Restaurants in operation
 prior to
January 1, 1988:

               (a)  For the period commencing December 31,
 1987, and ending
   December 28, 1988, a fee equal to four and one-quarter
   percent (4.25%) of the total gross receipts from such
   Restaurants;

               (b)  For the period commencing December 29,
1988 and ending
   January 3, 1990, a fee equal to four and one-half percent
   (4.5%) of the total gross receipts from such Restaurants;

               (c)  For the period commencing January 4, 1990
 and ending
   January 2, 1991, a fee equal to four and three quarters
   percent (4.75%) of the total gross receipts from such
   Restaurants; and

               (d)  For the period commencing January 3,
1991, throughout the duration of this Agreement, a fee
equal to five percent (5%) of the total gross receipts
from such Restaurants.

               2.   With respect to Restaurants placed in
operation on or
after January 1, 1988, a fee equal to five percent (5%) of
the total gross receipts from such Restaurants.

               3.   Such fee shall be paid monthly in the
 manner specified
above.

          C.   FRANCHISEE will supply to FRANCHISOR on or
before the
twentieth (20th) day of each month, in the form approved  by
FRANCHISOR,   an   operating  statement  of   receipts   and
disbursements for the last preceding fiscal month  (4  or  5
week  period).  In addition, within ninety (90)  days  after
the  close  of  each  twelve (12)  month  accounting  period
(fiscal  year)  FRANCHISEE shall  deliver  to  FRANCHISOR  a
Profit  and Loss Statement for the twelve (12) month  period
and  a Balance Sheet.  Such statements shall be prepared  in
accordance  with  generally accepted accounting  principles,
applied  on  a consistent basis and audited by  a  Certified
Public Accountant.

          D.   In the event FRANCHISEE fails to pay any
Continuing
Service  and  Royalty  Fee  or any advertising  payment  due
pursuant to Paragraph V.B, within fifteen (15) days after it
is  due, FRANCHISEE shall pay interest on the amount due  at
the  rate  of one and one-half percent (1.5%) per  month  for
each and every month that said amount is not paid, but in no
event  shall  FRANCHISEE be compelled to pay interest  at  a
rate greater than the maximum permitted by applicable law.
XII.      INSURANCE

          A.   FRANCHISEE shall procure for each Restaurant
 before the
commencement  of business, and maintain in  full  force  and
effect  during  the  entire  term  of  this  Agreement,   at
FRANCHISEE's sole expense, an insurance policy  or  policies
protecting FRANCHISEE and FRANCHISOR and their officers  and
employees  against any loss, liability or expense whatsoever
from  fire  (including extended coverage), personal  injury,
death, property damage, products liability or theft, arising
or  occurring upon or in connection with such premises or by
reason  of  FRANCHISEE's operation upon, from, or  occupancy
of,  such premises.  FRANCHISOR shall be an additional named
insured  in  such policy or policies (Workman's Compensation
excepted).   Such policy or policies shall be written  by  a
responsible  insurance company or companies satisfactory  to
FRANCHISOR, and shall include the following:

          Insurance            Minimum Limits of Liability
Workmen's Compensation                  Statutory

General Liability, including            $5,000,000
products and bodily injury

Property Damage                         $1,000,000

The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any
insurance which may be maintained by FRANCHISOR.  Within
thirty (30) days of the signing of this Agreement, but in no
event later than the day before the date on which FRANCHISEE
first opens its establishment for business at each
Restaurant, the Certificates of Insurance showing compliance
with the foregoing requirements shall be furnished by
FRANCHISEE to FRANCHISOR for approval.  Such certificates
shall state that said policy or policies will not be
cancelled or altered without at least ten (10) days prior
written notice to FRANCHISOR.  Maintenance of such insurance
and the performance by FRANCHISEE of the obligations under
this paragraph shall not relieve FRANCHISEE of liability
under the indemnity provision set forth in this Agreement.
Minimum limits as required above may be modified from time
to time, as conditions require, by written notice to
FRANCHISEE.  FRANCHISOR need not be included in any fire
policy if he has no interest in said premises or the
equipment therein as owner, lessee, mortgagee or otherwise.

          B.   Should FRANCHISEE, for any reason, not
procure and
maintain  such  insurance  coverage  as  required  by   this
Agreement,
Then  FRANCHISOR shall have the right and authority, at  its
option,  to immediately procure such insurance upon  notice,
and  FRANCHISEE  will pay and reimburse FRANCHISOR  for  all
costs of same.

XIII.          TERM

          A.   This Agreement shall be effective and binding
from the
date of its execution and the initial term of this Franchise
shall continue until December 31, 2010.

          B.   At the end of said initial term, if FRANCHISEE
has
faithfully  observed and performed all  of  its  obligations
hereunder, FRANCHISEE may renew and extend the term  of  its
franchisee  for two (2) separate additional  ten  (10)  year
periods under the terms of this Agreement; provided, that at
the time of renewal:

          1.   FRANCHISEE gives FRANCHISOR written notice of
 such
election to renew not less than twelve (12) months prior  to
the end of the initial term;

          2.   FRANCHISEE executes and is obligated to
perform under
FRANCHISOR's   then  current  standard  from  of   Franchise
Agreement;  provided,  however, that the  FRANCHISOR's  then
current  form of Franchise Agreement contains provisions  in
substantially  the  same  form as  the  provisions  in  this
Franchise Agreement.

          3.   FRANCHISEE executes a general release, under
 seal, of
any  and  all claims against FRANCHISOR; provided,  however,
that  FRANCHISOR cannot refuse to pay any bonafide  existing
debts asserted against FRANCHISOR by FRANCHISEE.

          4.   FRANCHISEE is not in default of any provision
 of this
Franchise  Agreement, or any amendment thereof or  successor
hereto,   and   has  fully  and  faithfully  performed   all
obligations throughout the term of this Franchise Agreement;

          5.    FRANCHISEE is not in default of any monetary
obligations  owed  by  FRANCHISEE  to  FRANCHISOR  and   its
subsidiaries   and   affiliates   and   to   any   financial
institutions,  lender, or other entity  to  whom  FRANCHISOR
deems  itself  potentially liable in whole  or  in  part  as
guarantor,  surety, or otherwise, and has timely  met  other
material  obligations throughout the term of  the  Franchise
Agreement;

          6.   FRANCHISEE agrees to remodel and modernize
 all of
FRANCHISEE's  existing restaurants to the extent  that  such
remodeling  and modernization is necessary to  conform  such
restaurants  to  FRANCHISOR's then  current  remodeling  and
modernization  plan  for  FRANCHISOR's  own  restaurants  of
similar size, age, function and design.

XIV.      COVENANTS

          A.   During the term of this Franchise Agreement
or any
extension thereof;
               1.   FRANCHISEE shall devote the resources
 necessary to
manage  and  operate the Restaurants licensed  hereunder  in
accordance with the terms of this Agreement.

               2.   FRANCHISEE shall not, either directly or
 indirectly,
for  itself or on behalf of or in conjunction with any other
person,  persons, partnership or corporation own,  maintain,
engage  in,  participate  or  have  any  interest  in,   the
operation  of  any  other steak house restaurant;  provided,
however, that:

                    (a)  The above provisions relating to
interests in other
restaurants  shall not apply to any interest  in  additional
Ryan's Family Steak Houses.

                    (b)  The above provisions relating to
 interests in other
restaurants  shall not apply to ownership by  FRANCHISEE  of
(i)  any  other business or restaurant other than a  family-
oriented,  steak  house restaurant; or (ii) the  outstanding
securities of any corporation whose securities are  publicly
held  and traded, provided that said securities are held  by
FRANVHISEE   for   investment   purposes   only   and   that
FRANCHISEE's total holdings do not constitute more than five
percent   (5%)  of  the  outstanding  securities   of   said
corporation.

          B.   FRANCHISEE further covenants that during the
 term of
this  Agreement or any extensions or renewals  thereof,  and
for  a period of two (2) years thereafter, regardless of the
cause of termination, FRANCHISEE shall not:

               1.   Divert or attempt to divert any business
 or any
customers  of  the  Ryan's  Family  Steak  Houses   licensed
hereunder to any other competitive establishment, by  direct
or indirect inducement or otherwise.

               2.   Employ or seek to employ any person
employed by
FRANCHISOR or any other person who is at the time  operating
or employed by or at any other Ryan's Family Steak House, or
otherwise  directly  or indirectly induce  such  persons  to
leave their employment thereat.

          C.   FRANCHISEE further covenants that for a period
 of two
(2)   years   after  the  termination  of  the   franchisee,
regardless of the cause of termination, it shall not, either
directly  or indirectly, for itself, or on behalf of  or  in
conjunction  with any other person, persons, partnership  or
corporation, own, maintain, engage in, or participate in the
operation of any restaurant or eating establishment within a
radius   of  five  (5)  miles  of  any  location  franchised
hereunder or within a radius of five (5) miles of any  other
Ryan's Family Steak House.

          D.   FRANCHISEE shall not, during the term of this
 Agreement
or  after  its  termination, communicate or divulge  to  any
other  person,  persons,  partnership  or  corporation,  any
information   or   knowledge  concerning  the   methods   of
manufacture,  preparation, promotion, sale  or  distribution
used  in  a  Ryan's Family Steak House nor shall  FRANCHISEE
disclose or divulge in whole or in part any trade secrets or
private process of FRANCHISOR or its affiliated companies.

          E.   Covenants contained in this paragraph shall be
constructed  as  severable  and  independent  and  shall  be
interpreted and applied consistent with the requirements  of
reasonableness  and  equity.  Any  judicial  reformation  of
these covenants consistent with this interpretation shall be
enforceable as though contained herein and shall not  affect
any other provisions or terms of this Agreement.

XV.       TERMINATION AND DEFAULTS

          A.   In the event that the FRANCHISEE shall become
insolvent, under the equity theory of insolvency, or make an
assignment for the benefit of creditors, or if a petition in
bankruptcy is filed by FRANCHISEE or such petition is  filed
against  and  consented to by FRANCHISEE, or a  receiver  is
appointed, or if FRANCHISEE is adjudicated bankrupt, or if a
bill in equity or other proceeding for the appointment of  a
receiver  of FRANCHISEE or other custodian is appointed,  or
if  proceedings  for  composition with creditors  under  any
state  or  federal law should be instituted  by  or  against
FRANCHISEE,   or  if  the  real  or  personal  property   of
FRANCHISEE shall be attached or levied upon by any  sheriff,
marshall,  or  constable, to the extent  that  any  of  said
events  materially  affects the  ability  of  FRANCHISEE  to
operate  any  or  all  of its restaurants  in  a  continuing
manner,  then  in  any of said events, FRANCHISEE  shall  be
deemed  to be in default under this Agreement and all rights
granted  to  FRANCHISEE hereunder shall thereupon  terminate
upon  the  occurrence of the above event or  events  without
notice  to FRANCHISEE.  FRANCHISOR will be entitled  to  any
damages suffered by it as a result of this termination.

          B.   Except as provided in Paragraph XV.A of this
 Agreement,
if  FRANCHISEE shall be in default under the terms  of  this
Agreement and such default shall not be cured within  thirty
(30)  days after receipt of written "Notice to Cure" thereof
from  FRANCHISOR, then in addition to all other remedies  at
law  or in equity, FRANCHISOR may immediately terminate this
Agreement.  In the event FRANCHISEE is in default under  the
terms  of this Franchise Agreement within twelve (12) months
after  a prior default, and FRANCHISOR has served FRANCHISEE
with a "Notice of Cure" with respect to prior such defaults,
this   Agreement  may  be  terminated  without   notice   by
FRANCHISOR  upon such subsequent default.  Franchisee  shall
be in default under this Agreement:

          1.   If FRANCHISEE fails, refuses or neglects to
promptly
pay  to  FRANCHISOR any monies owing to FRANCHISOR  on  date
due; or

          2.   If FRANCHISEE fails to submit reports or
financial data
which FRANCHISOR requires under this Agreement; or

          3.   If FRANCHISEE vacates or abandons a material
 portion of
the Restaurants operated under the franchise granted herein,
or if FRANCHISEE loses or surrenders the right to the use of
a  material  portion of the Restaurants operated  under  the
franchise  granted  herein by reason  of  foreclosure,  non-
payment  of  rent, waste, non-compliance  with  terms  of  a
lease,  or  for any similar reason, and such abandonment  or
other  loss  of  the  use  of  the  Restaurants  materially,
adversely  affects  the FRANCHISEE's business  as  a  whole;
provided, however, that the abandonment or loss of use of  a
specific  Restaurant by itself does not constitute  default.
For  the purposes of this subparagraph B.3., the abandonment
or  loss of a "material portion" shall be deemed to  be  the
abandonment  or  loss of ten percent (10%) or  more  of  the
total  Restaurants operated by FRANCHISEE  within  a  twelve
(12) month period.

          4.   If FRANCHISEE fails to comply with any of the
requirements  imposed  upon it by  this  Agreement,  in  the
Confidential  Operating  Manual, or other  such  operational
memoranda  issued  by  FRAHCHISOR,  or  uses  bad  faith  in
carrying out the terms of the franchise.

          C.   In addition to FRANCHISOR's right to
terminate this
Agreement, and not in lieu thereof, FRAHCNISOR, in the event
that  FRANCHISEE shall not have cured a default  under  this
Agreement  within  the  thirty (30) days  after  receipt  of
written "Notice to Cure" from FRANCHISOR, may enter upon the
premises of any Ryan's Family Steak House licensed hereunder
and   exercise  complete  authority  with  respect  to   the
operation  of said restaurant until such time as  FRANCHISOR
determines that the
default   of   FRANCHISEE   has   been   cured   and    that
there is compliance with the requirements of this Agreement.
FRANCHISEE    specifically   agrees   that   a    designated
representative  of  FRANCHISOR may take over,  control,  and
operate  said restaurant and that FRANCHISEE shall  pay  his
salary  plus  all  expenses  reasonably  incurred  by   such
representative  so  long  as it shall  be  required  by  the
representative to enforce compliance herewith.

          D.   For the purposes of this Section, receipt of
notice is
defined in Paragraph XXIII.

XVI.      RIGHTS  AND  DUTIES OF PARTIES UPON EXPIRATION  OR
          TERMINATION

          A.   Upon termination or expiration of this
Agreement,
FRANCHISEE  shall immediately cease to be a licensed  Ryan's
Family Steak House franchisee and;

           1.   FRANCHISEE shall promptly pay FRANCHISOR all
sums owing from FRANCHISEE to FRANCHISOR under the terms  of
this  Agreement.  Said sums shall include all damages, costs
and expenses, including reasonable attorneys' fees, incurred
by   FRANCHISOR  by  reason  of  default  on  the  part   of
FRANCHISEE, whether or not such occur prior to or subsequent
to  the termination or expiration of the franchise, and said
sums   shall  include  all  costs  and  expenses,  including
reasonable  attorneys'  fees,  incurred  by  FRANCHISOR   in
obtaining   injunctive  or  other  relief  to  enforce   the
provisions of this contract.

          2.   FRANCHISEE shall immediately thereafter cease
to use, by advertising or in any manner whatsoever, the name
"Ryan's  Family Steak House" or any forms, manuals, slogans,
signs,  marks,  symbols, or devices used in connection  with
the  operation  of  a Ryan's Family Steak  House  franchise.
FRANCHISEE  shall not represent or advertise that FRANCHISOR
or  FRANCHISEE  were  formerly  parties  to  this  Franchise
Agreement   or  that  FRANCHISEE  did  business  under   the
trademarks or name of FRANCHISOR.

          3.   FRANCHISEE shall take such action as shall be
necessary  to  cancel any assumed or equivalent registration
which  contains the name "Ryan's Family Steak House" or  any
other  trademark of FRANCHISOR, and FRANCHISEE shall furnish
FRANCHISOR evidence satisfactory to FRANCHISOR of compliance
with  this  obligation within thirty (30)  days  after  said
termination.

          B.   Upon termination or expiration of this
Agreement,
FRANCHISOR  shall have a right of first refusal to  purchase
from  FRANCHISEE all or any part of the physical  assets  of
FRANCHISEE used in the operation of FRANCHISEE's restaurants
as                         such                        right
of   first   refusal  is  set  forth  in  Section   XIX   of
this  Agreement.  FRANCHISOR may exercise the right of first
refusal  by giving FRANCHISEE written notice thereof  within
sixty  (60)  days after termination or not less  than  sixty
(60) days prior to expiration of this Agreement, as the case
may be.

          C.   The expiration or termination of this
Agreement shall
not  prevent  FRANCHISEE from maintaining and operating  its
then  currently  owned  Restaurants, or  opening  additional
restaurants, under a different name, provided, however, that
FRANCHISEE  cannot use any trade name similar  to,  or  that
represents an association with, FRANCHISOR.

          D.   No right or remedy herein conferred upon or
reserved to
FRANCHISOR is exclusive of any other right or remedy  herein
or by law or equity provided or permitted; but each shall be
cumulative of every other right or remedy given hereunder.

XVII.       COMMENCEMENT AND HOURS OF OPERATION

          A.   FRANCHISEE shall commence operation of a
Restaurant not
later  than nine (9) months after a site for such Restaurant
has   been  approved  by  FRANCHISOR,  and  shall  meet  the
requirements  for total number of units to be  in  operation
each year, as indicated in paragraph I.H.

          B.   FRANCHISEE recognizes that continuous and
daily
availability  of  products  and service  to  the  public  is
essential  to the adequate promotion of Ryan's Family  Steak
House  and  that  any failure to provide  such  availability
affects  FRANCHISOR both locally and nationally.  FRANCHISEE
shall  keep each Restaurant open for business, as a  minimum
schedule,  during  the hours of 11:00  a.m.  to  10:00  p.m.
Sunday  through Thursday and 11:00 a.m. to 11:00 p.m. Friday
and  Saturday, and shall otherwise conduct the  business  in
accordance   with  generally  accepted  business  standards.
These requirements may be changed by FRANCHISOR from time to
time.

XVIII.      TRANSFERABILITY OF INTEREST

          A.   This Agreement and all rights hereunder may
be assigned
and  transferred by FRANCHISOR and, if so, shall be  binding
upon and inure to the benefit of FRANCHISOR's successors and
assigns.

          B.   This Agreement and all rights hereunder may
 be assigned
and  transferred by FRANCHISEE, and, if so, shall be binding
upon and inure to the benefit of Franchisee's successors and
assigns, subject only to the right of first refusal  as  set
forth in Paragraph XIX of this Agreement and subject to  the
following conditions and requirements:

          1.   FRANCHISEE may not, without FRANCHISOR's
prior written
consent,  by  operation of law or otherwise,  sell,  assign,
transfer, convey, give away or encumber to any person, firm,
or  corporation, its interest in this Agreement or any  part
of  this Agreement.  Any purported assignment not having the
consent  of  FRANCHISOR shall be null  and  void  and  shall
constitute a material default hereunder.

          2.   FRANCHISOR shall not unreasonably withhold
its consent
to  any  transfer referred in Paragraph XVIII.B.1.  of  this
Agreement  when  requested;  provided,  however,  that   the
following conditions and requirements shall first be met  to
the full satisfaction of FRANCHISOR:

          (a)  If the transfer, whether consummated alone or
 together with  other related previous, simultaneous, or
 proposed transfers, would have the effect of transferring
control of the franchise licensed herein to an individual
or group of individuals or to a corporation or partnership
controlled by parties which is (are) neither a signatory,
nor an officer of a signatory, of this Agreement:

               (1)  The transferee(s), if an individual or
group of individuals,  shall  be  of good  moral  character
and reputation.  The transferee(s) shall have a good credit
     rating and competent business qualifications reasonably
     acceptable  to  FRANCHISOR.  FRANCHISEE  shall  provide
     FRANCHISOR with such information as FRANCHISOR may require
     to make such determination concerning each such proposed
     transferee(s).

               (2)  The transferee(s) or such other
     individual(s) as shall
     be  the  actual manager(s) of the franchise shall  have
     successfully completed and passed the training course then
     in  effect for FRANCHISEE, or otherwise demonstrated to
     FRANCHISOR's satisfaction, sufficient ability to operate the
     unit(s) being transferred.

               (3)  The transferee(s), shall jointly and
     severally execute both or either (as FRANCHISOR shall direct):

               aa.  A Franchise Agreement and other standard
      ancillary agreements with FRANCHISOR, on the current
      standard forms being used by FRANCHISOR; and/or

               bb.  A written assignment with FRANCHISEE and
      FRANCHISOR, under seal, (in a form satisfactory to
      FRANCHISOR) assuming all of FRANCHISEE's obligations
      hereunder.

          (b)  In the event FRANCHISOR is unsatisfied with the
     financial qualifications of any proposed transferee(s), but
     it otherwise satisfied with such proposed transferee(s),
     FRANCHISOR may, at its election, consent to such transfer,
     if FRANCHISEE shall, upon request of FRANCHISOR, under seal,
     (in a form satisfactory to FRANCHISOR) guaranteeing the full
     payment and performance of any obligations assumed by or
     assigned to transferee(s).

          (c)  The term of any assignment made hereunder shall
     be for
     the unexpired term of this Agreement and for any extensions
     or renewals as provided herein.

          (d)  If the transferee is a corporation, the capital stock
     of which is not registered with the Securities and Exchange
     Commission:

                 (1)    Each   stock  certificate   of   the
          transferee  corporation shall  have  conspicuously
          endorsed  upon  it a statement  that  it  is  held
          subject   to,  and  that  further  assignment   or
          transfer  thereof is subject to, all  restrictions
          imposed upon assignments by this Agreement; and

                (2)   No  new shares of common or  preferred
          voting  stock in the transferee corporation  shall
          be  issued  to  any  person,  partnership,  trust,
          foundation,   or  corporation  without   obtaining
          FRANCHISOR's prior written consent.

          3.   FRANCHISEE shall have fully paid and
satisfied all of
FRANCHISEE's  obligations to FRANCHISOR,  its  subsidiaries,
affiliates  or  assignees,  and  either  the  transferee  or
FRANCHISEE  shall have fully paid to FRANCHISOR  a  transfer
fee  of  Five Thousand Dollars ($5,000.00) for the  training
course,   supervision,  administrative,  accounting,   legal
and/or  other  FRANCHISOR expenses in  connection  with  the
transfer.

          4.   No sale, assignment, transfer, conveyance,
 encumbrance,
or  gift  of  any  interest in this  Agreement,  or  in  its
franchise granted thereby, shall relieve FRANCHISEE and  the
shareholders   participating  in   any   transfer   of   the
obligations  of  the  covenant not to compete  contained  in
Section   XIV,  except  where  FRANCHISOR  shall   expressly
authorize in writing.

XIX.        RIGHT OF FIRST REFUSAL

          If at any time during the term hereof, as extended
by  options, FRANCHISEE shall receive a bona fide  offer  to
purchase   the  franchise,  in  whole  or  in  part,  or   a
Restaurant,  and/or  the equipment and  chattels  incidental
thereto,  which  offer  FRANCHISEE  is  willing  to  accept,
FRANCHISEE shall communicate to an officer of FRANCHISOR  in
writing,  by  certified mail, the full terms of said  offer,
the  name  of the offeror, and reasonably current  financial
reports  and description of the business operations  of  the
offeror.  FRANCHISOR may elect to purchase said franchise or
Restaurant,  and/or  the equipment and  chattels  incidental
thereto,  on  the terms as contained in the  offer,  and  if
FRANCHISOR so elects, it shall give to FRANCHISEE a  written
notice  of  such  election within sixty (60)  days  after  a
receipt   of   FRANCHISEE's  communication   of   offer   to
FRANCHISOR.   If FRANCHISOR shall fail to give such  written
notice  of  election within the sixty (60) days,  FRANCHISEE
may sell to the offeror on the terms offered, subject to the
provisions  relating to transferability  as  heretofore  set
forth in Paragraph XVIII.  In the event FRANCHISOR elects to
purchase, said purchase must be completed within one hundred
twenty  (120)  days  from  date of  FRANCHISOR's  notice  of
election to purchase.

XX.         TAXES AND PERMITS

          A.   FRANCHISEE shall promptly pay when due all
 taxes and
assessments  against the premises or the equipment  used  in
connection  with  FRANCHISEE's business, and  all  liens  or
encumbrances or every kind and character created  or  placed
upon  or against any of said property, and all accounts  and
other  indebtedness of every kind incurred by FRANCHISEE  in
the conduct of said business.

          B.   FRANCHISEE shall comply with all federal,
state, and
local laws and regulations, and shall timely obtain any  and
all  permits,  certificates, or licenses necessary  for  the
full  and  proper conduct of its Ryan's Family  Steak  House
Restaurants.

XXI.        INDEPENDENT CONTRACTOR

          A.   This Agreement does not constitute FRANCHISEE
 as an
agent,   legal  representative,  joint  venturer,   partner,
employee,   or  servant  of  FRANCHISOR  for   any   purpose
whatsoever; and it is understood between the parties  hereto
that FRANCHISEE shall be an independent contractor and is in
no  way authorized to make any contract, agreement, warranty
or representation on behalf of FRANCHISOR.  FRANCHISEE shall
prominently  display in its Restaurant  a  certificate  from
FRANCHISOR  stating  that  said Restaurant  is  operated  by
FRANCHISEE as a FRANCHISEE of Ryan's Family Steak House, and
not as an agent thereof.

          B.   Under no circumstances shall FRANCHISOR be
liable for
any   act,  omission,  debt  or  any  other  obligation   of
FRANCHISEE.  FRANCHISEE shall indemnify and save  FRANCHISOR
harmless  against any such claim and the cost  of  defending
against such claims arising directly or indirectly from,  or
as   a  result  of,  or  in  connection  with,  FRANCHISEE's
operation of the franchised business.

XXII.       NON-WAIVER

           No  failure  of any party to exercise  any  power
reserved   to  it  hereunder,  or  to  insist  upon   strict
compliance  by  the  other  party  with  any  obligation  or
condition  hereunder,  and  no custom  or  practice  of  the
parties  in variance with the terms hereof, shall constitute
a  waiver  of  any party's right to demand exact  compliance
with  the  terms  hereof.   Waiver  by  any  party  of   any
particular  default by the other party shall not  affect  or
impair  such  party's  right in respect  to  any  subsequent
default of the same or of a different nature; nor shall  any
delay,  waiver, forbearance, or omission of  such  party  to
exercise  any  power or right arising out of any  breach  or
default  by the other party of any of the terms, provisions,
or  covenants hereof, affect or impair such party's  rights,
nor  shall  such constitute a waiver by such  party  of  any
right  hereunder or of the right to declare  any  subsequent
breach or default.  Subsequent acceptance by a party of  the
payments  due to it hereunder shall not be deemed  to  be  a
waiver  by  such party of any preceding breach by the  other
party  of  any  terms,  covenants  or  conditions  of   this
Agreement.

XXIII.      NOTICE

          A.   Whenever notice is required by provisions
 of this
Agreement  to be given to the FRANCHISOR, such notice  shall
be in writing addressed to the FRANCHISOR as follows:

               Ryan's Family Steak Houses, Inc.
               405 Lancaster Avenue
               Greer, South Carolina  29651

or   at  such  other  address  as  FRANCHISOR  shall  notify
FRANCHISEE in writing; and a copy of such notice given to:

               James M. Shoemaker, Jr.
               Wyche, Burgess, Freeman & Parham, P.A.
               44 East Camperdown Way
               Greenville, South Carolina  29603

          B.   Whenever notice is required by the provisions
 of this
Agreement  to be given to FRANCHISEE, such notice  shall  be
given in writing addressed to the FRANCHISEE as follows:

               Family Steak Houses of Florida, Inc.
               2113 Florida Blvd., Suite A
               Neptune Beach, Florida  32223

or   at  such  other  address  as  FRANCHISEE  shall  notify
FRANCHISOR in writing; and a copy of such notice given to:

               William A. Van Nortwick, Jr.
               Martin, Ade, Birchfield & Johnson, P.A.
               Post Office Box 59
               3000 Independent Square
               Jacksonville, Florida  32202

          C.   Any notice shall be deemed to have been duly
 given if
personally  given  or  sent  by  United  States   mail,   by
commercially  recognized overnight delivery service,  or  by
telegram  or telex confirmed by letter; and will  be  deemed
given,  unless earlier received (i) if sent by certified  or
registered mail, return receipt requested, or by first class
mail, five calendar days after being deposited in the United
States  mail, postage prepaid; (ii) if sent by United States
Express mail, two calendar days after being deposited in the
United  States  mail,  postage prepaid;  (iii)  if  sent  by
commercially recognized overnight delivery service,  on  the
date  of  receipt;  (iv) if sent by  telegram  or  telex  or
facsimile   transmission,  on  the   date   sent,   provided
confirmatory  notice  is sent by first-class  mail,  postage
prepaid;  and  (v)  if delivered by hand,  on  the  date  of
receipt.

XXIV.       LIABILITY FOR BREACH

           In the event of any default on the part of either
party  hereto,  in  addition to any other  remedies  of  the
aggrieved  party,  the party in default  shall  pay  to  the
aggrieved  party all amounts due and all damages, costs  and
expenses,  including reasonable attorneys' fees incurred  by
the aggrieved party as a result of any such defaults.

XXV.        ENTIRE AGREEMENT

           This Agreement, the attached Exhibits hereto, and
the   documents  referred  to  herein,  shall  be  construed
together  and  constitute  the  entire,  full  and  complete
agreement  between FRANCHISOR and FRANCHISEE concerning  the
subject  matter hereof, and supersedes all prior agreements,
no other representation having induced FRANCHISEE to execute
this   Agreement,   and   there  are   no   representations,
inducements,  promises, or agreements,  oral  or  otherwise,
between  the parties not embodied herein, which are  of  any
force  or  effect  with  reference  to  this  Agreement   or
otherwise.   No  amendment, change  or  variance  from  this
Agreement  shall be binding on either party unless  executed
in writing.

XXVI.       SEVERABILITY

           Each section, part, term and/or provision of this
Agreement  shall be considered severable, and  if,  for  any
reason, any section, part, term and/or provisions herein  is
determined  to  be invalid and contrary to, or  in  conflict
with,  any existing or future law or regulation, such  shall
not  impair the operation or affect the remaining  portions,
sections,  parts, terms and/or provisions of this Agreement,
and  the  latter  will continue to be given full  force  and
effect  and  bind  the  parties  hereto;  and  said  invalid
sections, parts, terms and/or provisions shall be deemed not
be  a  part  of this Agreement; provided, however,  that  if
FRANCHISOR   determines  that  said  finding  of  illegality
adversely affects the basic consideration of this Agreement,
FRANCHISOR may, at its operation, terminate this Agreement.

XXVII.      APPLICABLE LAW

           This Agreement was accepted in the State of South
Carolina  and shall be interpreted and construed  under  the
laws  thereof, which laws shall prevail in the event of  any
conflict to laws.

XXVIII.     ARBITRATION

           Except as specifically otherwise provided in this
Agreement,  the  parties agree that  any  and  all  disputes
between  them and any claim by either party that  cannot  be
amicably settled, shall be determined solely and exclusively
by  arbitration in Atlanta, Georgia, in accordance with  the
rules of the American Arbitration Association.

          A.   Each party shall select one arbitrator, and
the two so
designated shall select a third arbitrator.  If either party
shall fail to designate an arbitrator within seven (7)  days
after  arbitration is requested, or if the  two  arbitrators
shall fail to select a third arbitrator within fourteen (14)
days  after the arbitration is requested, then an arbitrator
shall  be  selected by the American Arbitration  Association
upon  application of either party.  Arbitration  proceedings
shall  be  conducted  in  compliance  with  the  rules  then
prevailing   of   the   American  Arbitration   Association.
Judgment  upon  an award of the majority of the  arbitrators
shall  be  binding,  and  shall be entered  in  a  court  of
competent jurisdiction.

          B.   Nothing herein contained shall bar the right
of either
party to obtain injunctive relief against threatened conduct
that  will  cause  loss or damages under  the  usual  equity
rules,   including  the  applicable  rules   for   obtaining
preliminary injunction, provided an appropriate bond against
damages be provided.

XXIX.       FRANCHISEE

           The  term "FRANCHISEE" shall be deemed to include
all  persons  who  succeed to the interest of  the  original
FRANCHISEE  by  transfer or operation of law  in  accordance
with provisions of this Agreement.

XXX.        BUSINESS RISK OF FRANCHISEE

           The  success of the business venture contemplated
to  be  undertaken by FRANCHISEE by virtue of this Agreement
is  speculative  and depends, to a large  extent,  upon  the
ability  of  FRANCHISEE as an independence  businessman,  as
well  as  other  factors.   FRANCHISOR  does  not  make  any
representation  or warranty as to the potential  success  of
the business venture contemplated hereby.

           FRANCHISEE acknowledges that it has entered  into
this Agreement after making an independent investigation  of
FRANCHISOR's  operations  and not  upon  any  representation
which   is  not  expressly  set  forth  herein,  to   induce
FRANCHISEE  to  accept  this  franchise  and  execute   this
Agreement.

XXXI.       STATEMENT OF LEGAL COMPOSITION

           As an inducement to FRANCHISOR entering into this
Franchise  Agreement  with  the FRANCHISEE,  the  FRANCHISEE
hereby   represents   and  warrants  to  FRANCHISOR,   which
representations and warranties are all of material fact  and
are  and  will be relied upon by FRANCHISOR, that FRANCHISEE
is  a  Florida  corporation  with  its  principal  place  of
business in Neptune Beach, Florida.

           IN WITNESS WHEREOF, the parties hereto, intending
to  be legally bound hereby, have duly executed, sealed  and
delivered this Agreement in duplicate the day and year first
above written.

Signed, sealed and delivered
in the presence of:     FRANCHISEE:
                        Family Steak Houses of Florida, Inc.
/s/ Signature Illegible____________

/s/  Sandra B. Cooper  ________   By:_/s/Eddie L. Ervin, Jr.

___(SEAL)
AS  TO  FRANCHISEE                Eddie L. Ervin,  Jr.,  its
                                  President

                         FRANCHISOR:
                         Ryan's Family Steak Houses, Inc.
/s/ Sara A. Barfield____________

/s/   J.M.   Shoemaker,  Jr.______ By:_T. Mark McCall______
(SEAL)
As to FRANCHISEE                   T. Mark McCall, its
                                   President
                                   And Chief Executive Officer

                                   (CORPORATE SEAL)
_______________________________
in its sole and absolute discretion whether to grant
FRANCHISEE a franchise within one or more of such counties.EMPLOYMENT AGREEMENT

(As Amended 6/28/00)

	AGREEMENT made as of the 1st day of January, 2002, ("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
THOMAS L. HOY, residing at 25 Pershing Road, Queensbury, New York 12804 (the
"Executive").

Recitals

	WHEREAS, Arrow and the Bank, consider the maintenance of a competent and
experienced executive management team to be essential to the long-term success of Arrow and
the Bank; and

	WHEREAS, in this regard, Arrow and the Bank have determined that it is in the best
interests of each that the Executive continue to serve as President and Chief Executive Officer of
Arrow and the Bank, pursuant to a written employment agreement; and

	WHEREAS, Arrow and the Bank have agreed with the Executive that the pre-existing
employment agreement between the Executive and each of them should be replaced by this
Agreement.

	NOW, THEREFORE, in furtherance of the interests described above and in consideration
of the respective covenants and agreements herein contained, the parties hereto agree as follows:

	1.	Employment

		Arrow and the Bank agree to employ the Executive and the Executive agrees to continue to serve as President and Chief Executive Officer of Arrow and the Bank
during the term of this Agreement.

	2.	Term

				a.	The term of this Agreement shall commence on the date hereof and, unless the
Executive becomes a Retired Early Employee under Paragraph 6 of this
Agreement or such employment is earlier terminated as provided in Paragraph 7
of this Agreement, employment under this Employment Agreement shall
terminate on December 31, 2004, or such earlier date on which the Executive's
retirement (including early retirement if the Executive so elects) becomes effective
under any retirement plan of Arrow then in effect.

		b.	Annual Review.  On or before December 31 of each year during the term of this
Agreement, the Board of Directors of Arrow (the "Arrow Board"), or the
committee of the Arrow Board, if any, duly authorized to make determinations
regarding executives and the terms of their employment (the "Committee"), will
consider and vote upon a proposal to extend to the Executive an offer to replace
this Agreement with a new employment agreement (the "Replacement
Agreement") commencing January 1 of the ensuing year.  The Replacement
Agreement will be for a new term of three years, will provide for a base annual
salary for the Executive at commencement of the Replacement Agreement at least
equal to the base annual salary of the Executive as of December 31 of the year
just completed (the "Preceding Year-End"), will provide for other benefits having
an aggregate value to the Executive at least equal to the aggregate value of the
other benefits provided to the Executive as of the Preceding Year-End, and will
contain other terms and conditions relating to the Executive's position and duties,
place of performance, rights upon a change of control of Arrow or the Bank or a
change of authority of the Executive, and rights in connection with any early
termination of the employment of the Executive that are, in each such instance, at
least as favorable to the Executive as the terms and conditions relating to such
matters under this Agreement and generally shall be as favorable to the Executive
as is this Agreement, as of the Preceding Year-End.  If the Arrow Board or the
Committee shall vote to offer such a Replacement Agreement to the Executive
and the Executive shall accept, this Agreement shall terminate as of December 31
of the year of such offer and acceptance and the Replacement Agreement shall
take effect as of January 1 of the ensuing year.

			If the Arrow Board or the Committee shall elect not to offer such a Replacement
Agreement to the Executive or the Executive, having been offered such a
Replacement Agreement, shall elect not to accept such Replacement Agreement,
this Agreement and the employment of the Executive hereunder shall continue in
full force and effect from the date of such election until the termination of this
Agreement in accordance with its terms (such period to be referred to hereinafter
as the "Winding-Down Period"), and the rights and obligations of each of the
parties hereunder shall continue unchanged during the Winding-Down Period
except as may be specifically provided otherwise in this Agreement.

	3.	Position and Duties

		The Executive shall continue to serve as President and Chief Executive Officer of
Arrow and the Bank and shall have duties, responsibilities, and authority as normally
attend such positions or as may reasonably be assigned to the Executive from time to
time by the Arrow Board or the Board of Directors of the Bank (the "Bank Board").
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, serve as a director or officer of any non-competing business or engage in any other activity, including but not limited to,
charitable or community activity, to the extent that they do not inhibit the
performance of his duties hereunder.

			4.	Place of Performance

		In connection with the Executive's employment hereunder, the Executive shall be based at the principal executive offices of the Bank, except for required travel on
business.  The Executive shall not be required to change his residence from the area in
which he now resides.  The Bank shall furnish the Executive with office space,
stenographic assistance, and such other facilities and services as shall be suitable to
the Executive's position and adequate for the performance of his duties hereunder.

	5.	Compensation

				(a)	Salary.  Upon commencement of this Agreement, the base annual salary of the
Executive should be $330,000.00, payable by the Bank in equal bi-weekly
installments or at such other intervals as shall be agreed upon by the parties.  In
addition, the Executive shall receive from the Bank or Arrow such annual bonus,
if any, as may be determined by the Arrow Board or the Committee.  The
Executive's base annual salary may be increased from time to time in accordance
with the normal business practices of Arrow and the Bank as determined by the
Arrow Board or the Committee, and, if so increased, such base annual salary shall
not thereafter during the Executive's employment under this Agreement be
decreased and the obligation of the Bank hereunder to pay the Executive's base
annual salary shall thereafter relate to such increased base annual salary.
Compensation of the Executive by base annual salary payments shall not prevent
the Executive from participating in any other compensation or benefit plan of
Arrow or the Bank in which he is entitled to participate and participation in any
such other compensation or benefit plan shall not in any way limit or reduce the
obligation of the Bank to pay the Executive's base annual salary hereunder.

				(b)	Other Benefits.  In addition to the compensation provided for in subparagraph (a)
above, the Executive shall be entitled during the term of his employment under
this Agreement (i) to participate in any and all employee benefit programs or
stock purchase programs of Arrow or the Bank now or hereafter in effect and
open to participation by qualifying employees of Arrow or the Bank generally,
including but not limited to the retirement plan, supplemental retirement plan,
employee stock purchase plan and employee stock ownership plan of Arrow or
the Bank, and (ii) to enjoy certain personal benefits provided by Arrow or the
Bank, including but not limited to:

						(A)	life insurance on the life of the Executive, at no cost to the Executive,
under a group plan maintained by Arrow;

						(B)	disability insurance for the Executive, at no cost to the Executive, under
a group plan maintained by Arrow;

						(C)	comprehensive medical and dental insurance under a group plan
provided by Arrow, with the Executive to pay only those amounts
required to be paid thereunder by covered employees generally under
the cost-sharing arrangements in effect from time to time under such
plan;

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

						(E)	fully paid vacation during each calendar year in accordance with the
vacation policies of Arrow in effect from time to time.

		Arrow shall not make any material changes in any of the personal benefits itemized
above adversely affecting the Executive unless such change occurs pursuant to a
program applicable to all executive officers of Arrow and the adverse effect on the
Executive is not proportionately greater than the adverse effect of the change on any
other executive officer of Arrow previously enjoying such benefit.

			6.	Change of Control or Change of Authority

				(a)	Retired Early Employee.  If a Change of Control or Change of Authority (as such
terms are defined in subparagraph 6(f) below) occurs during the term of the
Executive's employment under this Employment Agreement, either the Executive,
on the one hand, or Arrow or the Bank, on the other, may elect by written notice,
given to the other party or parties, at any time within twelve (12) months after
such Change of Control or Change of Authority, to terminate the employment of
the Executive by Arrow and the Bank, whereupon the Executive will become a
"Retired Early Employee," and will be entitled to receive such payments as are
provided hereafter in this Paragraph 6.  Such election and the termination of the
Executive's employment shall become effective on the first day of the second
calendar month commencing after delivery of the notice or on such earlier date as
the Executive in his sole discretion may specify (the "Effective Date").

				(b)	Cash Payments.  If the Executive should become a Retired Early Employee
hereunder, the Bank shall, during the period commencing on the Effective Date
and ending two years thereafter (the "Pay-Out Period"), make equal monthly
payments to the Executive (which shall not be deemed base annual salary
payments) in an amount such that the present value of all such payments,
determined as of the Effective Date, equals two hundred ninety-nine percent
(299%) of the Base Amount, as such term is defined in subparagraph 6(f) below.
If at any time during the Pay-Out Period the Arrow Board in its sole discretion
shall determine, upon application of the Retired Early Employee supported by
substantial evidence, that the Retired Early Employee is then under a severe
financial hardship resulting from (i) a sudden and unexpected illness or accident of
the Retired Early Employee or any of his dependents (as defined in section 152(a)
of the Internal Revenue Code), (ii) loss of the Retired Early Employee's property
due to casualty, or (iii) other similar extraordinary and unforeseeable
circumstance arising as a result of events beyond the control of the Retired Early
Employee, the Bank shall make available to the Retired Early Employee, in one
(1) lump sum, an amount up to but not greater than the present value of all
monthly payments remaining to be paid to him in the Pay-Out Period, calculated
as of the date of such determination by the Arrow Board, for the purpose of
relieving such severe financial hardship to the extent the same has not been or
may not be relieved by (xi) reimbursement or compensation by insurance or
otherwise, (xii) liquidation of the Retired Early Employee's assets (to the extent
such liquidation would not itself cause severe financial hardship), or (xiii)
distributions from other benefit plans.  If (a) the lump sum amount thus made
available is less than (b) the present value of all such remaining monthly payments,
the Bank shall continue to pay to the Retired Early Employee monthly payments
for the duration of the Pay-Out Period, but from such date forward such monthly
payments will be in a reduced amount such that the present value of all such
reduced payments will equal the difference between (b) and (a), above.  The
Retired Early Employee may elect to waive any or all payments due him under
this subparagraph.

				(c)	Death of Retired Early Employee.  If the Retired Early Employee dies before
receiving all monthly payments payable to him under subparagraph 6(b), above,
the Bank shall pay to the Retired Early Employee's spouse, or if the Retired Early
Employee leaves no spouse, to the estate of the Retired Early Employee, one (1)
lump sum payment in an amount equal to the present value of all such remaining
unpaid monthly payments, determined as of the date of death of the Retired Early
Employee.

				(d)	Indemnification of Executive.  In the event a Change of Control or Change of
Authority occurs, Arrow and the Bank shall indemnify the Executive for all legal
fees and expenses subsequently incurred by the Executive in seeking to obtain or
enforce any right or benefit provided under this Employment Agreement, not
limited to the rights and benefits provided under this Paragraph 6 and whether or
not the Executive has become a Retired Early Employee hereunder, provided,
however, that such right to indemnification will not apply if and to the extent that
a court of competent jurisdiction shall determine that any such fees and expenses
have been incurred as a result of the Executive's bad faith.  Indemnification
payments payable hereunder by Arrow or the Bank shall be made not later than
thirty (30) days after a request for payment has been received from the Executive
with such evidence of indemnifiable fees and expenses as Arrow or the Bank may
reasonably request.

				(e)	No Offset.  Amounts payable to 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 Retired Early Employee to Arrow or the Bank or their
affiliates or (ii) any amounts of compensation or income received or generated by
the Retired Early Employee as a result of any other employment or self-employment of the Retired Early Employee during the Pay-Out Period.  The
Retired Early Employee 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 8 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 Retired Early Employee's
future performance of his obligations not to compete with, solicit customers or
employees from, or disparage Arrow or its affiliates under Paragraph 8 of this
Agreement, with such allocation to be expressed as a single dollar amount equal
to the present value on the Effective Date 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 Retired Early Employee.

		(g)	Section 280G Tax Gross-Up.  Notwithstanding anything to the contrary
contained elsewhere in this Agreement or in any other agreement, plan or policy
of or binding upon Arrow or the Bank, in the event that the aggregate payments
or benefits to be made or afforded to the Executive under (i) this Agreement, (ii)
any and all other agreements between the Executive and Arrow or its affiliates
and (iii) any and all plans and arrangements of Arrow or its affiliates in which the
Executive participates, should cause the Executive to be obligated to pay or to
become liable for any Federal excise taxes under Section 4999(a) of the Code
and/or any state or local excise taxes attributable to payments that qualify as
"excess parachute payments" under Section 280G of the Code (collectively, such
Federal, state and local taxes to be referred to as "Parachute Taxes"), Arrow
promptly shall pay on behalf of the Executive or reimburse the Executive for the
latter's payment of the following:

			(i)	such Parachute Taxes;

			(ii)	all Parachute Taxes payable by the Executive as a result of Arrow's
payment or reimbursement of amounts under subsection (i), above, this
subsection (ii) or subsection (iii) below; and

			(iii)	all Federal, state, and local income taxes payable by the Executive as a
result of Arrow's payment or reimbursement of amounts under subsections
(i) and (ii), above, and this subsection (iii).

		(h)	Definitions.

					(i)  The "Base Amount" for purpose of this Paragraph 6 shall equal the average
Annual Compensation (as defined below) of the Executive for the most
recent five (5) taxable years ending before the date on which the Change of
Control or Change of Authority occurred.  "Annual Compensation" as used
in the foregoing sentence shall mean, for any given taxable year of the
Executive, all compensation payable by Arrow or the Bank to the Executive
that is includible in the gross income of the Executive for such year for
federal income tax purposes, plus any amount of salary otherwise payable by
Arrow or the Bank to the Executive for such year (A) that is deferred under
Section 401(k) of the Code under any plan maintained by Arrow or the Bank
permitting such deferrals, or (B) that is deferred by the Executive under any
nonqualified retirement or income deferral plan maintained by Arrow or the
Bank, to the extent deferred amounts under such plan are excludable for
federal income tax purposes from the gross income of the deferring employee
in the year of deferral.

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

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

	7.	Early Termination of Employment

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

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

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

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

					(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), 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.

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

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

						(B)	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 with counsel; and

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

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

				(b)	Termination Without Cause.  Arrow may terminate the Executive's employment
under this Agreement prior to the normal expiration of its term without cause
upon thirty (30) days' written notice.  Termination without cause by Arrow shall
require the affirmative vote of at least two-thirds (2/3) of the entire Arrow Board.
In the event of any such termination without cause, the Bank shall pay to the
Executive on the effective date of such termination one (1) lump sum payment in
an amount equal to the greater of (i) the total amount of base annual salary
payments which would have been payable to the Executive during the remaining
term of the Agreement, assuming no early termination of the Agreement under
Paragraph 6 or this Paragraph 7 and assuming the current base annual salary of
the Executive on such date is unchanged throughout such remaining term, or (ii)
an amount equal to one hundred percent (100%) of the current base annual salary
of the Executive on such date.  No attempted termination without cause under
this subparagraph 7(b) shall be effective if the Executive shall have the right to
elect, and shall have elected, to become a Retired Early Employee under
Paragraph 6 of this Agreement, in which latter case the Executive will retain all of
the rights of a Retired Early Employee specified in Paragraph 6, including the
right to receive certain payments thereunder.

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

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

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

				(f)	Death.  In the event of the death of the Executive during the term of his
employment hereunder, the Bank shall pay to the beneficiary or beneficiaries of
the Executive listed on the Executive's current beneficiary designation on file with
Arrow or the Bank, or in the absence of any such designation, to the Executive's
estate, a lump sum amount equal to the base annual salary of the Executive as of
the date of death, and upon payment of such amount and any other amounts due
and owing hereunder and unpaid as of the date of death, this Employment
Agreement shall thereupon terminate and no further amounts shall be payable
hereunder.

		(g)	Termination by Executive During Winding-Down Period.  At any point during a
Winding-Down Period, the Executive may terminate his employment under this
Agreement prior to the normal expiration date of his employment hereunder, for
any reason or no reason, upon written notice delivered to Arrow.  Such
termination of employment shall become effective on the date indicated in the
written notice, which date shall not be less than thirty (30) days nor more than
ninety (90) days after delivery of the written notice.  In the event of such
termination of employment, neither Arrow nor the Bank shall have any obligation
under this Agreement to make any payments or provide any benefits to the
Executive, other than the obligation to make the base annual salary payments and
to provide those benefits required to be paid or provided through the effective
date of termination of employment pursuant to Paragraph 5 hereof, provided,
however, that nothing herein shall reduce or affect any obligations that Arrow or
the Bank may have to the Executive under any other agreement with the
Executive or under any qualified or non-qualified employee benefit plan covering
the Executive.

	8.	Non-Competition; Non-Solicitation; Non-Disparagement

		If the employment of the Executive with Arrow and/or the Bank is terminated by any
party under Paragraph 6 or is terminated by the Executive other than pursuant to one
of the provisions of this Agreement specifically authorizing the Executive to so
terminate:

		(i)		For a period of two (2) years following the effective date of such termination
of employment, the Executive will not, directly or indirectly, 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, any bank or insured financial institution or
other corporation or entity engaged in the financial services business or a
corporation or entity controlling any of the foregoing, 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 is in competition with Arrow or any
of its affiliates in the Designated Area (as defined below) by virtue of such
Financial Institution's having any office or branch located within the
Designated Area or having 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 in which Arrow or any of its subsidiary banks or other
affiliates engaged in providing financial services then maintains an office or a
branch or has acted to establish an office or a branch.

		(ii)	For a period of two (2) years following such termination of employment, the
Executive will not, directly or indirectly,

				(a)	acting on behalf of any Financial Institution, regardless of where such
Financial Institution is located or doing business, solicit 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 subsidiary banks or other affiliates engaged in
providing financial services at any point during the one-year period
immediately preceding the effective date of such termination of
employment; or

				(b)	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 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
Arrow or any of its subsidiary banks or other affiliates engaged in
providing financial services at any point during the one-year period
immediately preceding the effective date of such termination of
employment.

		(iii)	For a period of ten (10) years following the effective date of such termination
of employment, the Executive will not, directly or indirectly, make any one
or more 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 by
merger or acquisition or any of such successor's affiliates), or to any
director, officer, controlling shareholder, 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 8 only to the extent necessary for the protection of the legitimate business
interests of Arrow, and the parties specifically covenant and agree that should any of
the clauses or provisions of the 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 during the term of this
Agreement, 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.

	9.	Confidential Information

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

	10.	Successors and Assigns; Assumption by Successors

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

	11.	Notices

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

	12.	Waiver of Breach

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

	13.	Invalidity

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

	14.	Entire Agreement; Written Modification; Termination

		This agreement contains the entire agreement among the parties concerning the
employment of the Executive by Arrow and the Bank.  No modification, amendment
or waiver of any provision hereof shall be effective unless in writing specifically
referring hereto and signed by the party against whom such provision as modified or
amended or such waiver is sought to be enforced.  This Agreement shall terminate as
of the time 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 8 expires.

	15.	Payment by Arrow or Bank.

		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.

	16.	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.

	17.	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.

	18.	Authorization

		The Bank and Arrow represent and warrant that the execution of this Employment
Agreement has been duly authorized by resolution of their respective Boards.  This
Paragraph 18 shall survive termination of the Agreement.

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

						ARROW FINANCIAL CORPORATION

						By:  

						     Michael F. Massiano

						     Chairman, Personnel Committee

						GLENS FALLS NATIONAL BANK AND TRUST
COMPANY

						By:  

						     Michael F. Massiano

						     Chairman, Personnel Committee

						"EXECUTIVE"

						   

						Thomas L. Hoy

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