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EXHIBIT 10.1

SENIOR PREFERRED FORBEARANCE AGREEMENT

        This SENIOR PREFERRED FORBEARANCE AGREEMENT (this "Agreement") is
entered into as of February 27, 2002, by and between Fannie May Holdings, Inc.,
a Delaware corporation (the "Company"), and the persons named on the signature
pages hereof as Holders (collectively, the "Holders").

RECITALS:

        A.    The Company and the Holders entered into that certain Stock
Purchase Agreement, dated as of August 22, 1991 (as amended, the "Purchase
Agreement").

        B.    As a condition to the closing of the transactions contemplated by
the Purchase Agreement, the Company adopted and filed with the Secretary of
State of the State of Delaware that certain Certificate of Designation relating
to the 5% Senior Preferred Stock, no par value (the "Senior Preferred Stock"),
pursuant to which the Senior Preferred Stock was created having the rights,
qualifications, limitations and restrictions set forth therein (the "Original
Certificate of Designation").

        C.    On June 28, 2001, the Company and the Holders entered into the
Senior Preferred Amendment Agreement (the "Senior Preferred Amendment
Agreement"), pursuant to which the Company and the Holders agreed to certain
amendments of the Original Certificate of Designation. The "Amended and Restated
Certificate of Designation of 5% Senior Preferred Stock of Fannie May
Holdings, Inc.", which effected such amendments, was filed with the Secretary of
State of the State of Delaware on June 28, 2001 (the "Amended Certificate of
Designation"; collectively with the Purchase Agreement, the Senior Preferred
Amendment Agreement and the Senior Preferred Stock, the "Senior Preferred
Documents").

        D.    The Company and the Holders agree that, as of the date hereof, a
total of 1,243.8558 shares of Senior Preferred Stock are issued and outstanding
and held of record by the Holders as set forth on the signature pages hereof
(1,000 shares of which were issued in 1991 in connection with the Company's
acquisition of Archibald Candy Corporation, an Illinois corporation
("Archibald"), and the remainder of which have been issued as paid-in-kind
dividends since such original issuance).

        E.    The Company has failed to make a $3.0 million redemption payment
to the Holders, which was due to be paid on January 15, 2002 pursuant to the
Amended Certificate of Designation (the "January 15, 2002 Redemption Payment"),
and, as a result, all $10.5 million of the remaining redemption payments on the
Senior Preferred Stock (the "Remaining Redemption Payments") became due and
owing on February 14, 2002 and has not been paid (the "Senior Preferred
Default").

        F.    Pursuant to the Amended Certificate of Designation, upon the
Senior Preferred Default, the number of directors constituting the Company's
Board of Directors (the "Board") automatically is increased by one and the
holders of the Senior Preferred Stock have the right to elect an individual to
fill such newly created directorship and that director (the "Control Director")
shall have 51% of the total voting power of the Board.

        G.    Archibald is party to a Financing Agreement dated as of June 28,
2001 (as amended, supplemented or modified from time to time, the "CIT Financing
Agreement") with the lenders party thereto (the "Lenders") and The CIT
Group/Business Credit, Inc., as Agent for the Lenders ("Agent"). Certain "Events
of Default" (as defined therein) have occurred and are continuing under the CIT
Financing Agreement; however, the Agent and the Lenders have entered into a
Forbearance Agreement with Archibald, the Company and Archibald Candy (Canada)
Corporation dated as of December 31, 2001 (as amended, supplemented or otherwise
modified from time to time, the "CIT Forbearance Agreement"), pursuant to which
the Lenders have agreed to forbear from exercising their rights under the CIT
Financing Agreement and to continue lending to Archibald despite the occurrence
and continuance of such Events of Default until no later than March 1, 2002 (the
"CIT Forbearance Termination Date").

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        H.    Archibald has issued $170 million in aggregate principal amount of
its 101/4% Senior Notes due 2004 (the "Notes") pursuant to that certain
Indenture dated as of July 2, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Indenture") by and between Archibald and The
Bank of New York, as trustee. An "Event of Default" (as defined therein) has
occurred and is continuing under the Indenture; however, certain holders of the
Notes (the "Consenting Noteholders") are willing to enter into a forbearance
agreement (the "Noteholders' Forbearance Agreement") with Archibald pursuant to
which the Consenting Noteholders are willing to agree for a limited period of
time to forbear from exercising their rights under the Indenture and the Notes
despite the occurrence and continuance of such Event of Default.

        I.    The Agent and the Lenders are willing to extend the CIT
Forbearance Termination Date beyond March 1, 2002 and the Consenting Noteholders
are willing to enter into the Noteholders' Forbearance Agreement, in each case,
only if the Holders are willing to forbear from enforcing their respective
rights that arise because of the Senior Preferred Default, subject to the terms
and conditions of this Agreement.

        NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

        Section 1.    Definitions.    

        1.1  The following terms used in this Agreement shall have the meanings
set forth below:

        "Forbearance Default" means any of the following: (a) the termination of
the Noteholders' Forbearance Agreement without the execution and delivery of
another agreement containing terms reasonably satisfactory to the Holders (other
than if the result of a breach by the Holders of their obligations under
Section 2.1 hereof); (b) the termination of the CIT Forbearance Agreement
without the execution and delivery of another agreement among Archibald, the
Agent and the Lenders containing terms reasonably satisfactory to the Holders
(other than if the result of a breach by the Holders of their obligations under
Section 2.1 hereof); (c) the failure of the Company to comply at any time in any
material respect with any of its obligations under this Agreement; or (d) any
warranty or representation made by the Company under or in connection with this
Agreement shall prove to be false when made.

        "Termination Date" means the earlier to occur of (a) April 30, 2002 (or
such later date as may be mutually agreed in writing by the Company and Holders
owning of record a majority of the outstanding Senior Preferred Stock) and
(b) the date on which the Holders provide written notice to the Company of their
election to declare the occurrence of the Termination Date, which shall be no
earlier than the fifth day following the date upon which a Forbearance Default
occurs.

        Section 2.    Agreement to Forbear.    

        2.1  On the condition that the Lenders extend the CIT Forbearance
Termination Date beyond March 1, 2002 and the Consenting Noteholders enter into
the Noteholders' Forbearance Agreement, the Holders shall refrain through the
Termination Date from exercising their right to elect a Control Director or
taking any other action or exercising any of their rights and remedies under the
Senior Preferred Documents or applicable law that may exist by virtue of the
Senior Preferred Default.

        2.2  Nothing in this Agreement shall be construed as a waiver of or
acquiescence to the Senior Preferred Default, which shall continue in existence
subject only to the agreement of the Holders, as set forth herein, not to
enforce their rights or remedies until the Termination Date.

        2.3  Except as expressly provided herein, the execution and delivery of
this Agreement shall not: (a) constitute an extension, modification or waiver of
any aspect of the Senior Preferred Documents; (b) give rise to any obligation on
the part of the Holders to extend, modify or waive any term or condition of the
Senior Preferred Documents; or (c) give rise to any defenses or counterclaims to
the

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right of the Holders to compel payment of the redemption payments or to
otherwise enforce their rights or remedies under the Senior Preferred Documents.

        2.4  Except as expressly limited herein, the Holders hereby expressly
reserve all of their rights and remedies under the Senior Preferred Documents
and under applicable law with respect to the Senior Preferred Default,
including, without limitation, the accrual of interest in accordance with
Section 1.5 of the Amended Certificate of Designation on the January 15, 2002
Redemption Payment from January 15, 2002 and on all of the Remaining Redemption
Payments from February 14, 2002. From and after the Termination Date, the
Holders shall be entitled to enforce the Senior Preferred Documents in
accordance with their terms and applicable law.

        2.5  Notwithstanding anything to the contrary: (a) from and after the
Termination Date, the Holders shall be free to exercise any and all of their
rights and remedies under the Senior Preferred Documents or applicable law that
may exist by virtue of the Senior Preferred Default, including taking action to
collect all Redemption Payments and all interest accrued thereon; and (b) except
for the right to elect the Control Director, the Holders shall retain and may
exercise all other voting rights in respect of their Senior Preferred Stock
without restriction or limitation of any kind, including, without limitation,
all voting rights under Section 1.7 of the Amended Certificate of Designation.

        Section 3.    Representations and Warranties.    

        3.1  In consideration of the agreement of the Holders to the forbearance
herein contained, the Company hereby represents and warrants to the Holders as
of the date hereof as follows:

        (a)  The execution, delivery and performance of this Agreement by the
Company is within its corporate powers and has been duly authorized by all
necessary corporate action on its part.

        (b)  This Agreement constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

        3.2  Each Holder hereby represents and warrants to the Company as of the
date hereof that it owns the number of shares of the Senior Preferred Stock set
forth on the signature pages to this Agreement for such Holder.

        Section 4.    Covenants.    

        In consideration of the agreement of the Holders to the forbearance
herein contained, the Company hereby covenants and agrees with the Holders that,
until the Termination Date and at all times thereafter that the Holders own
Senior Preferred Stock and there is no Control Director:

        4.1  The Holders shall have the right, voting separately as a single
class with each share of Senior Preferred Stock entitled to one vote, to
designate an individual (the "Observer") who shall be entitled to observe all
regular and special meetings of the boards of directors of the Company and its
subsidiaries and of all committees thereof, whether in person or via electronic
means, and to receive the same prior notice of such meetings as is provided to
the members of such boards of directors and committees; provided, however, that
the Observer (a) shall have no voting rights and (b) shall execute and deliver
to the Company a confidentiality agreement in form and substance reasonably
satisfactory to the Company. The Company shall provide to the Observer any and
all information and documents and other materials that are provided to the
members of any such board of directors or committee as and when the same are
provided to any such member.

        4.2  The Company shall, upon reasonable prior written notice from the
Holders and the execution and delivery of appropriate confidentiality
agreements, make its and its subsidiaries' officers and other management
personnel available for meeting with the Holders to discuss the affairs,
finances, financial condition and business operations of the Company and its
subsidiaries.

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        4.3  Subject to the execution and delivery of appropriate
confidentiality agreements, the Company shall cooperate fully, and cause its and
its subsidiaries' officers and other management personnel to cooperate fully, in
furnishing information as and when reasonably requested by or on behalf of the
Holders regarding the affairs, finances, financial condition and business
operations of the Company and its subsidiaries.

        4.4  The Company shall promptly notify the Holders if and when a
Forbearance Default occurs.

        Section 5.    Miscellaneous.    

        5.1    Headings.    Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.

        5.2    GOVERNING LAW.    THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.

        5.3    Counterparts.    This Agreement may be executed in any number of
counterparts, and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.

        5.4    Continued Effectiveness.    The terms of the Amended Certificate
of Designation remain unchanged, and all such terms shall remain in full force
and effect and are hereby confirmed and ratified.

        5.5    Transfer of Senior Preferred Stock.    Except as expressly
provided herein, this Agreement shall not in any way restrict the right or
ability of any Holder to sell, assign, transfer or otherwise dispose of any
Senior Preferred Stock; provided, however, that any such transfer prior to the
Termination Date shall not be effective unless and until the transferee delivers
to the transferor and the Company a written agreement, in form and substance
reasonably satisfactory to the Company, pursuant to which such transferee
assumes the obligations of the transferor hereunder in respect of the Senior
Preferred Stock transferred.

        5.6    Parties.    This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their successors and permitted assigns.
No rights or obligations of any party under this Agreement may be assigned or
transferred to any other person or entity, except as provided in Section 5.5
hereof. Nothing in this Agreement, express or implied, shall give to any person
or entity, other than the parties hereto, any benefit or any legal or equitable
right, remedy or claim under this Agreement.

        5.7    Notices.    All notices hereunder shall be deemed given if in
writing and delivered or sent by telecopy, courier or by registered or certified
mail (return receipt requested) to the addresses or telecopier numbers indicated
on the signature pages hereto (or at such other addresses or telecopier numbers
as shall be specified by like notice). Any notice given by delivery, mail or
courier shall be effective when received. Any notice given by telecopier shall
be effective upon oral or machine confirmation of transmission.

        5.8    Amendment.    This Agreement may not be amended except by written
agreement of the Company and Holders owning of record a majority of the
outstanding Senior Preferred Stock.

[signature pages follow]

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        IN WITNESS WHEREOF, the parties hereto have caused this Senior Preferred
Forbearance Agreement to be executed as of the date first set forth above by
their respective duly authorized officers.

COMPANY:   FANNIE MAY HOLDINGS, INC.
Address:
1137 W. Jackson Boulevard
Chicago, IL 60607
Attention: President
Telephone: 312-432-3409
Facsimile: 312-243-3992
 
By:
 
/s/ TED A. SHEPHERD

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Ted A. Shepherd
President and Chief Operating Officer
HOLDERS:
 
 
 
 
78.1639 Shares of Senior Preferred Stock
 
JOHN D. THORNE TRUST UNDER PARAGRAPH 1 OF ARTICLE III OF THE JEAN D. THORNE
TRUST DATED DECEMBER 2, 1985
Address:
John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ JOHN D. THORNE

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John D. Thorne, Trustee
78.1639 Shares of Senior Preferred Stock
 
MARTHA THORNE MORROW TRUST UNDER PARAGRAPH 1 OF ARTICLE III OF THE JEAN D.
THORNE TRUST DATED DECEMBER 2, 1985
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ MARTHA THORNE MORROW

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Martha Thorne Morrow, Trustee
78.1639 Shares of Senior Preferred Stock
 
SUSAN THORNE KRILEY TRUST
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ SUSAN THORNE KRILEY

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Susan Thorne Kriley, Trustee
78.1639 Shares of Senior Preferred Stock
 
KATHERINE THORNE TRUST UNDER PARAGRAPH 1 OF ARTICLE IV OF THE JEAN D. THORNE
TRUST DATED DECEMBER 2, 1985
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ SUSAN THORNE KRILEY

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    By:   /s/ MARTHA THORNE MORROW

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Susan Thorne Kriley and Martha Thorne Morrow, Co-Trustees

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232.8001 Shares of Senior Preferred Stock
 
JOHN D. THORNE TRUST UNDER PARAGRAPH 2 OF ARTICLE III OF THE JEAN D. THORNE
TRUST DATED DECEMBER 2, 1985
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ JOHN D. THORNE

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John D. Thorne, Trustee
232.8001 Shares of Senior Preferred Stock
 
MARTHA THORNE MORROW TRUST UNDER PARAGRAPH 2 OF ARTICLE III OF THE JEAN D.
THORNE TRUST DATED DECEMBER 2, 1985
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ MARTHA THORNE MORROW

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Martha Thorne Morrow, Trustee
232.8001 Shares of Senior Preferred Stock
 
SUSAN THORNE KRILEY TRUST UNDER PARAGRAPH 2 OF ARTICLE III OF THE JEAN D. THORNE
TRUST DATED DECEMBER 2, 1985
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ SUSAN THORNE KRILEY

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Susan Thorne Kriley, Trustee
232.8001 Shares of Senior Preferred Stock
 
KATHERINE THORNE TRUST UNDER PARAGRAPH 2 OF ARTICLE III OF THE JEAN D. THORNE
TRUST DATED DECEMBER 2, 1985
Address:
c/o John D. Thorne
124 South Cliffwood Avenue
Los Angeles, California 90049
 
By:
 
/s/ SUSAN THORNE KRILEY

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    By:   /s/ MARTHA THORNE MORROW

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Susan Thorne Kriley and Martha Thorne Morrow, Co-Trustees

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EXHIBIT 10.1
SENIOR PREFERRED FORBEARANCE AGREEMENT