**Exhibit 10.1**

 

**MEMORANDUMOF AGREEMENT**

 

**Between Lawrence A. Rusinko andFriendly Ice Cream Corporation**

 

This acknowledges and documents our mutual agreementconcerning your separation from Friendly Ice Cream Corporation (“Friendly’s”),effective May 31, 2005****(“SeparationDate”).  This Agreement will confirmvarious matters concerning your separation from employment so that nomisunderstanding exists between you and Friendly’s.

 

**I.****                                         SALARY CONTINUATION**

 

Friendly’s will continue to pay you semimonthly, until May 31,2006, at your current base rate of pay (plus executive match and automobileallowance).  The salary you receive willbe subject to appropriate statutory deductions and such other deductionsnormally made for employees of Friendly’s.

 

From time to time after your separation, but during yoursalary continuation period, you may be contacted with questions relating tomatters you have been involved with 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.

 

**II.****                                     VACATION**

 

You will be paid for any earned and unused vacation time(10 day maximum), as of your Separation Date, in accordance with Friendly’sVacation Policy.

 

**III.****                                 BENEFIT/RETIREMENT PLANS**

 

Youwill be eligible to participate in the medical/dental, short-term disability,accidental death and dismemberment, long-term disability, Annual IncentivePlan, 1997 Stock Option Plan, 2003 Incentive Plan and such other benefits plansin which you may currently be enrolled only through your Separation Date, andunder the terms and conditions of these plans. Your group medical/dental insuranceends on your last day of active work.  Tocontinue medical/dental coverage beyond your Separation Date, you must completea continuation of coverage (COBRA) application, which will be provided toyou.  It is your responsibility to makeall payments to the COBRA carrier.  Ifyou elect COBRA, Friendly’s will issue a check or checks to you in order foryou to pay for coverage through August 31, 2005.

 

**IV.****                                OUTPLACEMENT**

 

To assist you in securing a new position, Friendly’s hasengaged the services of the nationally recognized outplacement firm of LeeHecht Harrison, Inc. for a period of six (6) months.  They will provide the following services atany of their offices:

 

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

 

2.                                       Training which covers critical job search techniquesand interviewing skills; and

 

3.                                       Individualized counseling for a six-month period.

 

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**V.****                                    LIFE INSURANCE**

 

The life insurance coverage that has been provided toyou through Pacific Mutual Life Insurance Company is unaffected by your leavingemployment because it is your own personal policy.  Payments by Friendly’s on your behalf willcease 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 Corporationat (518) 373-7725.

 

**VI.****                                FINANCIAL PLANNING**

 

Friendly’s will pay for the cost of customary meetingswith an AYCO representative for the sole purpose of concluding your financialplanning services with AYCO, up through May 31, 2006, after which Friendly’swill no longer pay for any further AYCO advisory services on your behalf.

 

**VII.****                            COVENANTS**

 

In consideration of the terms set 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 other materials relating to Friendly’s and itssubsidiaries, divisions, parents and affiliates, their agents, employees,directors and officers which are in your control or possession within sevendays of the execution of this Agreement.

 

3.                                       You, onbehalf of yourself, your spouse, heirs, agents, attorneys, representatives andassigns, hereby release and discharge forever all claims and causes of actionof every name and nature that have arisen or might have arisen at any time upto and including the date on which you sign this Agreement (whether known orunknown, accrued, contingent, or liquidated) that you now have or may haveagainst Friendly’s, any of its subsidiaries, divisions, parents and affiliates,or any of the aforementioned entities’ agents, employees, directors, andofficers, including but not limited to, any claims relating to your employmentwith Friendly’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 agreenot to file a lawsuit in any court of the United States or any State thereof

 

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concerning any matter released inthis Agreement.  Nothing in thisAgreement shall be interpreted to prohibit you from filing an agediscrimination claim with any anti-discrimination agency, or from participatingin an age discrimination investigation or proceeding conducted by any suchagency.  However, by signing thisAgreement, you acknowledge that you are waiving your right to money damages andany other relief should any agency pursue claims on your behalf arising out ofor relating to your employment with and/or separation from Friendly’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 orproducts, or any of its directors, officers, employees, or agents).

 

6.                                       If either party breaches any of the terms of thisAgreement, the non-breaching party may be entitled to recover from thebreaching party all costs, fees, and expenses (including attorney’s fees) asmay be awarded by a court of competent jurisdiction under applicable law and ifFriendly’s prevails as a non-breaching party, it will be entitled to set offwhat it has paid you under this Agreement.

 

**VIII.****                        ENTIRE AGREEMENT**

 

This is the entire agreement between us and any prioragreements or understandings, whether oral or written, are entirely supersededby this Agreement.  We each havevoluntarily accepted the terms as sufficient without reservation.  This Agreement may only be modified by awritten agreement signed by you and an officer of Friendly’s.

 

Should any provision of this Agreement be declared ordetermined by any court to be illegal or invalid, the validity of the remainingparts, terms or provisions shall not be affected thereby and said illegal part,term or provision shall be deemed not to be a part of this Agreement.

 

Pursuant to its obligations under the ADEA, Friendly’sadvises you to consult with an attorney prior to executing this agreement.  You have 21 days from the date of receipt ofthis document in which to consider this agreement.  In addition, you may revoke this agreement forseven days following its execution, but only by delivering a written revocationnotice to Friendly’s Vice President of Human Resources.  This agreement shall not become effective orenforceable until the seven-day revocation period has expired.

 

By signing this Agreement, you acknowledge that you haveread and fully understand all of its provisions and that you are signing itvoluntarily.  You also acknowledge thatyou are not relying on any representations by any representative of Friendly’sconcerning the meaning of any aspect of this Agreement.

 

In theevent, after the execution of this Agreement but before all payments to youhave been made, Friendly’s determines that you have engaged in any fraudulentor illegal activity related to Friendly’s not actually known to Friendly’sprior to the execution of this Agreement, Friendly’s shall have the right toterminate its remaining obligations under this Agreement, declaring it null andvoid.

 

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Eachparty hereto agrees that they are fully authorized and have all of therequisite right, power, and authority to enter into this Agreement, which isfully binding upon and enforceable against the respective parties hereto inaccordance with its terms.

 

ThisAgreement is made and entered into in the Commonwealth of Massachusetts andshall in all respects be interpreted, enforced, and governed by the laws of theCommonwealth of Massachusetts.

 

If the above is in agreement with your understanding,please sign and keep one copy of this document for your records and return onecopy to me.

 

 
| ACCEPTED AND AGREED TO AS OF THIS 31st DAY OF MAY, 2005. |
|----------------------------------------------------------|
|                                                     |   |
|                                                     |   |
| By:                                                      |  /s/ Garrett J Ulrich |   |
|                                                     | Garrett J. Ulrich |
|                                                     | Vice President, Human  Resources |
|                                                     |   |
|                                                     |   |
| By:                                                      |  /s/ L A Rusinko |   |
|                                                     | Lawrence A. Rusinko |

 

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