**Exhibit10.1**

 

**MEMORANDUM OF AGREEMENT**

 

**Between MichaelA. Maglioli and Friendly Ice Cream Corporation**

 

Thisacknowledges and documents our mutual agreement concerning your separation fromFriendly Ice Cream Corporation (“Friendly’s”) effective March 25, 2004****(“SeparationDate”).  This letter will confirmvarious matters concerning your separation from employment so that nomisunderstanding exists between you and Friendly’s.

 

**SALARY CONTINUATION**

 

Friendly’swill continue to pay you semimonthly for two (2) years after your SeparationDate (“Salary Continuation Period”), at your current base rate of pay,including executive match.  The salaryyou receive will be subject to appropriate statutory deductions and such other deductionsnormally made for employees of Friendly’s. In addition, any financial obligation you have to Friendly’s will bededucted.

 

Fromtime to time after your separation, but during your Salary Continuation Period,you may be contacted with questions relating to matters you have been involvedwith (including litigation) while employed by Friendly’s.  You agree to provide your completecooperation and make all pertinent information regarding these mattersavailable upon request, as well as be personally available, at mutuallyconvenient times, on an as-needed basis.

 

**BENEFIT/RETIREMENT PLANS**

 

You will be eligible toparticipate in the short-term disability, accidental death and dismemberment,long-term disability, pension plan, Restricted Stock Plan, Stock Option Plansand such other benefit plans in which you may currently be enrolled onlythrough your Separation Date, and under the terms and conditions of theseplans; provided however, that as part of this Agreement, and in considerationof all of its terms and conditions, management will recommend to the Board ofDirectors to immediately vest the balance of your unvested shares (1,943) inthe Restricted Stock program.  (As inthe past you will be expected to pay the taxes on this stock when it vests.)  In addition management will recommend to theBoard of Directors to immediately vest, 12,177 of your stock options.  In accordance with the terms of the StockOption Plans you will have 3 months to exercise these options, unless youretire, in which case you will have 36 months to exercise the options.  Vesting of stock and options are effectiveon your Separation Date.

 

Yourgroup medical/dental insurance ends on your last day of active work.  Unless you retire, to continuemedical/dental coverage beyond your Separation Date, you must complete a continuationof coverage (COBRA) application, which will be provided to you.  It is your responsibility to make allpayments to the COBRA carrier.  If youelect COBRA, Friendly’s will issue a check or checks to you in order for you topay for coverage for six (6) months.  If you elect to retire, Friendly’s will pay for six (6) months ofRetiree Medical

 

You will be paid the sumof $33,667, which represents a one-third portion (at 100%) of the PerformanceUnit Award Target of $101,000 under the 2003-2005 Incentive Plan

 

Additionalinformation about the effect of your separation on your benefits is containedin the Separation Information document provided to you.

 

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**MISCELLANEOUS**

 

a)You will be reimbursed for the price of your wife’s airplane ticket to Orlandoin April upon submission of the ticket.

b)You will be paid for four (4) weeks vacation

 

**INTERFERENCE AND SOLICITATION**

 

Youagree that during the salary continuation period, you shall not, without theexpress written consent of Friendly’s:

 

a)impair or attempt to impair the relationship, contractual or otherwise, betweenFriendly’s or any of its restaurants and any person who is a supplier, guest orclient of Friendly’s or any of its restaurants; and

b)directly or indirectly solicit or attempt to solicit for employment anyemployee of Friendly’s.

 

**OUTPLACEMENT**

 

Toassist you in securing a new position, Friendly’s has engaged the services ofthe nationally recognized outplacement firm of Lee Hecht Harrison, Inc. for aperiod of one year.  They will providethe following services at any of their offices:

 

1.             Assistance with your skills analysis andpreparation of your resume;

2.             Training which covers critical job searchtechniques and interviewing skills; and

3.             Individualized counseling.

 

Youmay utilize the services of another outplacement provider if you wish; however,the cost of the services may not exceed the cost of Lee Hecht Harrison’sservices.  Payment will be made directlyto the organization by Friendly’s, or reimbursement will be made to you uponpresentation of an invoice indicating that you have already paid it.

 

Friendly’swill also provide up to 3 sessions of executive coaching to you throughWoodstone Consulting.

 

# **COMPANY VEHICLE**

 

You may continue to utilize your company vehicle(personal miles) until March 22, 2006, at which time it must be returned toFriendly’s at a mutually convenient time and place.  You will be given the opportunity to purchase your companyvehicle at the current market value from Merchants Leasing Co.  You should contact Sue Frasier or DonnaSarette at Merchants Leasing directly (800/288-6999, extension 249) for theexact price if you are interested in pursuing this.

 

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**LIFE INSURANCE**

 

The life insurance coverage thathas been provided to you through Pacific Mutual Life Insurance Company isunaffected by your leaving employment because it is your own personalpolicy.  Payments by Friendly’s on yourbehalf will cease as of your Separation Date. Questions about coverage thereafter or about other matters related tothis policy should be referred to Ms. Karen Socola of the AYCO Corporation at(518) 373-7725.  Friendly’s will pay forthe cost of customary meetings with an AYCO representative for the sole purposeof concluding your financial planning services with AYCO, including thepreparation of your 2004 individual tax return, up through April, 2005, afterwhich Friendly’s will no longer pay for any further AYCO advisory services onyour behalf.

 

**COVENANTS**

 

In consideration of the termsset forth in this letter, you agree to the following:

 

1.             You will forever refrain from disclosing orconfirming, either directly or indirectly, any information concerninginsurance, loss claims, loss payments, safety and health conditions, financialcondition, strategic planning or other confidential or non-public informationrelating to Friendly’s or its subsidiaries, divisions, parents and affiliates,and any of their agents, employees, directors and officers which you learned orbecame aware of since the inception of your employment with Friendly’s exceptfor information which is generally known by the public, without Friendly’sprior written consent.

 

2.             You will turn over to your supervisor alloriginals and copies of any documents, manuals, plans, equipment, businesspapers, computer diskettes (or copies of same) or other materials relating toFriendly’s and its subsidiaries, divisions, parents and affiliates, theiragents, employees, directors and officers which are in your control orpossession within seven days of the execution of this Agreement.

 

3.             You, on behalf ofyourself, your spouse, heirs, agents, attorneys, representatives and assigns,hereby release and discharge forever all claims and causes of action of everyname and nature that have arisen or might have arisen at any time up to andincluding the date on which you sign this Agreement (whether known or unknown,accrued, contingent, or liquidated) that you now have or may have againstFriendly’s, any of its subsidiaries, divisions, parents and affiliates, or anyof the aforementioned entities’ agents, employees, directors, and officers,including but not limited to, any claims relating to your employment withFriendly’s and the termination thereof; any claims based on statute,regulation, ordinance, contract or tort; any claims arising under the AgeDiscrimination in Employment Act of 1967, as amended (the “ADEA”), or any otherfederal, state, or local law relating to employment discrimination, harassment,or retaliation; any claims relating to wages, compensation, or benefits; andany related claims for attorney’s fees.

 

4.             You agree not toappeal to arbitration or file a lawsuit in any court of the United States orany State thereof concerning any matter released in this Agreement.  Nothing in this Agreement shall beinterpreted to prohibit you from filing an age discrimination claim with anyanti-discrimination agency, or from participating in an age discriminationinvestigation or

 

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proceeding conducted byany such agency.  However, by signingthis Agreement, you acknowledge that you are waiving your right to moneydamages and any other relief should any agency pursue claims on your behalfarising out of or relating to your employment with and/or separation fromFriendly’s.

 

5.             The parties agree to forever refrain from takingany action or making any statement which brings discredit upon or disparagesthe other party (including, with respect to Friendly’s, its services or products,or any of its directors, officers, employees, or agents).

 

6.             Friendly’s will provide inquiring outplacementagencies, recruiters, or prospective employers with only your start date, enddate, and positions held during your employment with Friendly’s.

 

7.             Friendly’s shall not contest any claims made byyou for unemployment benefits administered by any governmental agency.

 

8.             If you breach any of the terms of this Agreement,Friendly’s may be entitled to recover from you all costs, fees, and expenses(including attorney’s fees) as may be awarded by a court of competentjurisdiction under applicable law and will be entitled to set off what it haspaid you under this Agreement.

 

 

**ENTIRE AGREEMENT**

 

This is the entire agreementbetween us and any prior agreements or understandings, whether oral or written,are entirely superseded by this Agreement. We each have voluntarily accepted the terms as sufficient withoutreservation.  This Agreement may only bemodified by a written agreement signed by you and an officer of Friendly’s.

 

Should any provision of thisAgreement be declared or determined by any court to be illegal or invalid, thevalidity of the remaining parts, terms or provisions shall not be affectedthereby and said illegal part, term or provision shall be deemed not to be apart of this Agreement.

 

Pursuant to its obligationsunder the ADEA, Friendly’s advises you to consult with an attorney prior toexecuting this agreement.  You have 21days from the date of receipt of this document in which to consider thisagreement.  In addition, you may revokethis agreement for seven days following its execution, but only by delivering awritten revocation notice to Garrett Ulrich. This agreement shall not become effective or enforceable until theseven-day revocation period has expired.

 

By signing this Agreement, youacknowledge that you have read and fully understand all of its provisions andthat you are signing it voluntarily. You also acknowledge that you are not relying on any representations byany representative of Friendly’s concerning the meaning of any aspect of thisAgreement.

 

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Each party hereto agrees that they are fullyauthorized and have all of the requisite right, power, and authority to enterinto this Agreement, which is fully binding upon and enforceable against therespective parties hereto in accordance with its terms.

 

This Agreement is madeand entered into in the Commonwealth of Massachusetts and shall in all respectsbe interpreted, enforced, and governed by the laws of the Commonwealth ofMassachusetts.

 

If the above is in agreementwith your understanding, please sign and keep one copy of this document foryour records and return one copy to me.

 

 
|   |   | By:    | /s/     Garrett J. Ulrich |                             |
|--------|--------|--------|------------------------------------------|----------------------------------|
|   |   |   |                                     | Garrett  J. Ulrich               |
|   |   |   |                                     | Vice  President, Human Resources |
|        |        |        |                                          |                                  |  |

 

ACCEPTED AND AGREED TO AS OF THIS 29th DAY OFMARCH, 2004.

 
|   |   | By:    |        /s/  Michael A. Maglioli |   |
|--------|--------|--------|--------------------------------------------------------------------|--------|
|   |   |   | Michael A. Maglioli                                                |   |
|   |   |   |                                                               |   |

 

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