Exhibit 10.1

CONSULTING & GENERAL RELEASE AGREEMENT

This Consulting & General Release Agreement (the “Agreement”) is entered into by
Kenneth S. Grossman (“Grossman”) and Signature Group Holdings, Inc. and its
affiliates (collectively “Company”), and is made with knowledge of the facts as
set forth in Paragraphs 1 through 12 below:

FACTUAL RECITALS

1. Grossman and Company entered into an Employment Agreement as of August 2,
2011, providing that Company would employ Grossman as its President under the
terms provided therein (the “Employment Agreement”).

2. On February 8, 2012, Grossman provided Company with written notice that
Grossman was voluntarily resigning his employment with Company, effective
April 30, 2012.

3. On February 8, 2012, Company accepted Grossman’s voluntary resignation of
employment from Company, effective April 30, 2012.

4. On or before April 30, 2012, Company shall issue to Grossman a final
paycheck, including for Grossman’s accrued but unused vacation time. Provided
that the final paycheck is accurate in its amount, Grossman hereby acknowledges
that Grossman will have received all wages, salary, commissions, bonuses,
expenses, and benefits to which Grossman was lawfully entitled arising from
Grossman’s employment with Company, including Grossman’s Employment Agreement.
Accordingly, provided that the final paycheck is accurate in its amount,
Grossman hereby acknowledges and agrees that no additional earned wages, salary,
commissions, bonuses, expenses, or benefits will be due or owing to Grossman for
any period of Grossman’s employment with Company, as distinct from those
payments and benefits as provided in this Agreement. Consequently, California
Labor Code Section 206.5 is not applicable to the resolution of this matter by
the parties hereto. Section 206.5 provides in pertinent part as follows:

No employer shall require the execution of any release of any claim or right on
account of wages due, or to become due, or made as an advance on wages to be
earned, unless payment of such wage has been made.

5. Grossman acknowledges that, by reason of Grossman’s position with Company,
Grossman has been given access to business plans, financial information, and
similar confidential and proprietary materials and information regarding the
Company’s business and financial affairs. Grossman represents that, to the best
of Grossman’s ability and to the best of Grossman’s knowledge, Grossman has held
all such information confidential and will continue to do so, and that, except
in the pursuit of capital

 

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deployment and acquisition opportunities on behalf of Company, for which
Company-approved confidentiality agreements will be secured with the
counterparty, Grossman will not publish or disclose and will not use such
information and relationships for any business (which term herein includes a
partnership, firm, corporation or any other entity) without the prior written
consent of Company.

6. Upon the expiration of the revocation period provided in Paragraph 22 below
without this Agreement being so revoked, Grossman and Company acknowledge that
any employment relationship between them shall terminate effective as of
April 30, 2012, as a result of Grossman’s voluntary resignation, and that they
have no further employment or other relationship except as may arise out of this
Agreement and that Grossman waives any right or claim to reinstatement as an
employee of Company and will not seek employment in the future with Company or
any Releasee (as defined in Paragraph 17 below).

7. Grossman has had the opportunity to make a full disclosure of any violations
of law, illegal conduct, or unethical conduct allegedly committed by Company or
Company’s employees and agents. Grossman is not aware that any such violation or
conduct has occurred and, therefore, has made no such report.

8. Company has not made any representation to Grossman regarding the legal or
tax consequences of any funds received pursuant to this Agreement.

9. Grossman represents that he has not sustained any work-related injury or
illness during Grossman’s employment with Company, and that Grossman has not
filed any and has no intention of filing a claim for workers’ compensation
benefits arising out of, or in the course of, Grossman’s employment with
Company.

10. Grossman was first presented with this Agreement on February 4, 2012.

11. The parties hereto desire to resolve all pending and potential actions and
issues related to Grossman’s employment with, and resignation from, Company, as
well as any other potential actions and issues, without the further expenditure
of time or expense of litigation and, for that reason, have entered into this
Agreement. This Agreement is a full release and settlement of all claims
asserted or which could have been asserted by the parties hereto.

12. While this Agreement resolves all issues between the parties, as well as any
future effects of any acts or omissions, it does not constitute an admission by
Company or by Grossman of any violation of federal, state, or local law,
ordinance or regulation or of any violation of Company’s policies, procedures,
or of any liability or wrongdoing whatsoever. Neither this Agreement nor
anything in this Agreement shall be construed to be or shall be admissible in
any proceeding as evidence of liability or wrongdoing by Company or by Grossman.

 

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AGREED-UPON TERMS AND CONDITIONS

Now, therefore, with full knowledge and agreement as to the facts set forth
above, the parties to this Agreement agree as follows:

13. Grossman shall provide advice and consultation (“Consulting Services”) to
the Company’s Chief Executive Officer (“CEO”) on such matters as requested by
the CEO from time to time, consistent with Grossman’s historic services to
Company and Grossman’s skills and abilities, in a reasonable, timely, and clear
manner. The Consulting Services shall include, but shall not be limited to,
actively seeking to identify acquisition and capital deployment opportunities
for Company. In providing said Consulting Services, Grossman and Company intend
that Grossman shall be an independent contractor to Company, and not an
employee, agent, joint venturer, or partner of Company. Nothing in this
Agreement shall be interpreted or construed as creating or establishing the
relationship of employer and employee between Company and Grossman. Grossman is
not subject to daily supervision by Company concerning how, when and in what
order Grossman’s consulting services are to be performed, and will not be
required to undergo training in any particular manner or method of performance
by Company. Grossman is free at all times to conduct his business in such manner
as he sees fit, including through the provision of employment with, or
consulting services to, other entities. Grossman may allocate whatever portion
of his time to providing the requested Consulting Services to Company as he may
deem proper, and may operate on his own schedule and on a non-exclusive basis
with Company. Grossman is not entitled to participate in any employee benefits
plans provided by Company, including, but not limited to, group health
insurance, vacation pay, sick pay, and any profit sharing plan, other than as
may be available through COBRA.

14. In exchange for the Consulting Services, in consideration of the covenants
undertaken and releases given herein by Grossman, and in full satisfaction of
any and all obligations of Company under the Employment Agreement, Company shall
pay to Grossman a monthly fee of $25,000.00, for a period of 24 months,
beginning May 1, 2012 and ending April 30, 2014, with such payments being
reported at year’s end via Form 1099. Grossman shall be responsible for the
payment of all taxes due on this monthly fee, and Company shall not be liable
for any taxes due to any federal, state or local authority as a result of the
payment of this monthly fee. In addition, in the event Grossman identifies
acquisition, capital deployment and/or similar opportunities for Company, then
the CEO shall recommend to Company’s Board of Directors a reasonable fee to be
paid to Grossman for each such opportunity. Company’s Board of Directors shall
retain all discretion to approve, reject, or modify the CEO’s recommended fee.
Nothing contained herein shall limit Grossman’s ability to receive compensation
from any third party in connection with any such opportunity or transaction,
provided that Grossman shall advise Company’s CEO of the terms and conditions by
which Grossman is eligible to receive compensation from such third party, in
which case Grossman shall

 

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not be eligible to receive a Company-paid fee in connection with such
opportunity or transaction. Company shall reimburse Grossman for customary and
reasonable expenses incurred by Grossman in furtherance Grossman’s Consulting
Services to Company consistent with Company’s past practices as to executives
and including, but not limited to, travel, meals, conference call service, and
other reasonable and necessary services utilized and expenses incurred in
connection with Grossman’s Consulting Services to Company, provided that any
expense in excess of Two Hundred Fifty Dollars ($250.00) must by approved in
advance by Company. In addition, provided that Grossman elects to continue
benefits coverage under COBRA, and for so long as Grossman continues COBRA
continuation coverage, Grossman shall pay the portion of the COBRA premiums
equal to the amount Grossman would have contributed for the same coverage if
Grossman were an active employee of Company, and Company shall be responsible
for paying the remaining portion of Grossman’s COBRA premiums. The Consulting
Services may be terminated by Grossman upon 60 days’ written notice to Company’s
CEO, and, upon such termination, no further payment or benefits hereunder will
be due or payable by Company to Grossman.

15. Notwithstanding Grossman’s voluntary resignation, Grossman’s 2,923,000
non-qualified stock options and 492,224 shares of restricted common stock shall
continue to be subject to the terms and conditions of the Non-Qualified Stock
Option Agreement (attached as Exhibit B to the Employment Agreement and as
amended on December 6, 2011) and the Restricted Stock Award Agreement (attached
as Exhibit C to the Employment Agreement), as if Grossman had been terminated by
Company without cause pursuant to Section 4.1.5 of the Employment Agreement.

16. Grossman shall provide CEO with quarterly reports of Grossman’s Consulting
Services to Company. Company shall be absolved of its obligation to make any
future payments to Grossman in the event that either: (a) Grossman fails to
provide Consulting Services in accordance with the terms of this Agreement; or
(b) any of the following shall occur as reasonably determined by Company’s Board
of Directors: (i) Grossman’s conviction of or plea of guilty or nolo contendere
to, a felony or any other crime involving moral turpitude or dishonesty; or
(ii) Grossman’s willfully engaging in misconduct in the performance of his
duties under this Agreement for Company (including theft, fraud, embezzlement,
and securities law violations, or a violation of Company’s Code of Conduct or
other written policies, if such Code of Conduct or other written policies are
applicable to independent contractors) that is injurious to Company, monetarily
or otherwise.

17. Except for those obligations created by or arising out of this Agreement,
and for other good and valuable consideration provided herein, the receipt of
which is hereby acknowledged by Grossman, Grossman hereby acknowledges full and
complete satisfaction of and releases and discharges and covenants not to sue
Company, its divisions, subsidiaries, partnerships, parent, affiliated
corporations, or other related

 

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entities, past and present, and each of them, as well as their directors,
officers, shareholders, partners, members, representatives, assignees,
successors, business managers, marital community, agents, contractors, insurers,
attorneys, and employees, past and present, and each of them (individually and
collectively, “Releasees”) from and with respect to any and all claims, wages,
agreements, obligations, contracts, demands and causes of action, known or
unknown, suspected or unsuspected, concealed or hidden, including, without
limiting the generality of the foregoing, any claim for severance pay, overtime,
commissions, bonus, contingent compensation or similar benefit, sick leave,
stock, stock options, phantom stock, pension, retirement, life insurance, health
or medical insurance or any other fringe benefit, workers’ compensation or
disability, liquidated damages, penalties, interest, costs, attorneys’ fees, or
any other occurrences, acts or omissions whatever, known or unknown, suspected
or unsuspected, concealed or hidden, resulting from any act or omission by or on
the part of Releasees committed or omitted prior to the date of this Agreement,
including without limiting the generality of the foregoing, any claim under
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act (29 U.S.C. Section 621 et seq.), the National Labor Relations Act, the Fair
Labor Standards Act, the Americans with Disabilities Act, the Rehabilitation Act
of 1973, the Family and Medical Leave Act, the Equal Pay Act, the Employee
Retirement Income Security Act, the California Constitution, the California
Government Code, the California Labor Code, the California Civil Code, the
California Business & Professions Code, the California Fair Employment and
Housing Act, the California Family Rights Act, or any other federal, state or
local law, regulation or ordinance, provided, however, that Grossman does not
waive or release any claim or right he may have to seek indemnity from Company
under California Labor Code Section 2802 or similar statute or law.

18. Except for those obligations created by or arising out of this Agreement,
and except as provided below, Company hereby acknowledges full and complete
satisfaction of and releases and discharges, and covenants not to sue, Grossman
from and with respect to any and all claims, agreements, obligations, losses,
damages, injuries, demands and causes of action, known or unknown, suspected or
unsuspected, concealed or hidden, arising out of, related to, or in any way
connected with Grossman’s employment relationship with or termination from
Company, or any other occurrences, actions, omissions or claims whatever, known
or unknown, suspected or unsuspected, concealed or hidden, which Company now
owns or holds or has at any time heretofore owned or held as against Grossman,
provided, however, that such release of Grossman shall not extend to any claims,
known or unknown, suspected or unsuspected, against Grossman which arise out of
facts which are finally adjudged by a court of competent jurisdiction to be a
willful breach of fiduciary duty or a crime under any federal, state, or local
statute, law, ordinance or regulation, or which are based upon facts which give
rise to a recovery by Company under any applicable policies of insurance solely
as a result of actions or omissions by Grossman and as to which the insurer has
a right to subrogation against Grossman.

 

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19. With respect to the releases by each side set forth above, Grossman and
Company each hereby expressly waives any rights and benefits conferred by
Section 1542 of the California Civil Code, which provides: “A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
Grossman and Company each acknowledges that it may hereafter discover claims or
facts in addition to or different from those which it now knows or believes to
exist with respect to the subject matter of this Agreement and which, if known
or suspected at the time of executing this Agreement, may have materially
affected this settlement. Nevertheless, with respect to the releases by each
side set forth above, Grossman and Company each hereby waives any right, claim
or cause of action that might arise as a result of such different or additional
claims or facts. Grossman and Company each acknowledges that it understands the
significance and consequence of such release and such specific waiver of
Section 1542. In addition, to ensure that this Agreement is fully enforceable in
accordance with its terms, Grossman and Company each agrees to waive any
protection that may exist under any comparable or similar statute and under any
principle of common law of any and all states.

20. This Agreement will have no effect whatsoever on any rights Grossman has or
may have in the future to collect benefits under any Company pension plan or any
Company 401k plan for which Grossman may be eligible, or to roll over those
monies into an Individual Retirement Account. Any such benefits shall be payable
(or not payable) or rolled over in exactly the same manner, on exactly the same
terms, and under exactly the same conditions, as though this Agreement had never
been entered into.

21. Grossman will not engage in or assist in any litigation against Company
relating to anything occurring prior to the effective date of this Agreement,
except as compelled by order of a court or as necessary to participate in an
investigation or proceeding conducted by the California Department of Fair
Employment and Housing (“DFEH”), United States Equal Employment Opportunity
Commission (“EEOC”) , or other governmental agency. Grossman further
acknowledges and understands that this Agreement does not prohibit Grossman from
filing an administrative charge or claim with: (a) the EEOC, DFEH, or any other
state or local agency authorized by the EEOC to accept such charge or claim; or
(b) the National Labor Relations Board. This Agreement does, however, preclude
Grossman from receiving any monetary, injunctive, or other personal relief
related in whole or in part to claims released in this Agreement. Should any
individual or entity who is not subject to this Agreement bring an
administrative charge, claim, or action against Company or any Releasee that
results in assignable recovery or relief for Grossman, Grossman waives any right
to such recovery or relief and specifically assigns to Company and/or any
Releasee, as the case may be, the right to any such recovery or relief arising
from such proceeding. Grossman further agrees that,

 

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during the time Grossman is receiving compensation and/or COBRA assistance
pursuant to this Agreement: (x) he will not initiate, promote, conduct or
support a proxy contest that is adverse to the Company or that challenges a
slate of directors nominated by the Company’s Board of Directors; and (y) he
will vote his shares in support of the slate of directors nominated by Company’s
Board of Directors at the 2012 Annual Meeting of Shareholders. Grossman agrees
to cooperate with Company and to execute such documents as may be necessary to
effect and enforce his obligation to vote the shares of Company common stock
that he owns, whether beneficially or of record, at the 2012 Annual Meeting of
Shareholders. Except as provided above, nothing herein shall constitute a
limitation on Grossman’s ability to vote his shares or to communicate with other
shareholders. Grossman agrees that he will not sell or otherwise transfer any of
his shares of Company common stock without having any such transferee agree to
comply with his obligations pursuant to subpart (y) of this Paragraph of the
Agreement.

22. Grossman shall have twenty-one (21) days from the date Grossman receives
this Agreement in which to consider and sign this Agreement. Any changes,
whether material or immaterial, made to this Agreement after it was first
presented to Grossman shall not restart the running of the 21-day consideration
period. Grossman is hereby advised to consult with an attorney. If Grossman
agrees to all the provisions of this Agreement, Grossman shall return the
executed original of this Agreement to Company’s CEO. Grossman shall have seven
(7) days from the date Grossman signs the Agreement within which to revoke the
Agreement, and any such revocation of the Agreement must be in writing and hand
delivered during the revocation period to Company’s CEO.

23. Grossman agrees that the terms and conditions of this Agreement shall remain
strictly confidential as between the parties and Grossman shall not disclose
them to any other person, other than Grossman’s legal and financial advisors.
Grossman will not make any disparaging statements or remarks in any medium about
Company, any of its employees or its Board of Directors, policies, and/or any of
its services and products. Similarly, Company shall take reasonable steps to
ensure that its Officers and Directors shall not make any disparaging statements
or remarks in any medium about Grossman reasonably likely to harm his business
or personal reputation. Company and Grossman shall work together in good faith
on the content of a Company announcement to Company personnel and a press
release to the public regarding Grossman’s separation from employment with the
Company.

24. Payment of the consideration set forth in Paragraph 14 above is conditioned
upon Grossman first returning all Employer Property (as defined below) and
submission of all business expense reports in a satisfactory and reasonable
manner as required by Company’s policies and practices. “Employer Property”
includes, but is not limited to, any assigned vehicles, office and building
keys, card keys, credit cards, calling and telephone charge cards, PC systems,
laptops, cellular telephones, e-mail and voice mail

 

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passwords, all originals and copies of Company products and documents, all
originals and copies of customer lists, product lists, and/or any other property
belonging to Company.

25. In order to allow a smooth transition and not disrupt Company’s business
operations following Grossman’s separation, upon Company’s request, Grossman
agrees to provide Company with specific operations information and/or any other
information Company deems necessary within a reasonable, timely, and clear
manner. Grossman also agrees that now and in the future Grossman will truthfully
cooperate and honestly assist Company, to the best of Grossman’s ability, in the
event of litigation or claims involving Company or its Releasees, as it concerns
any subject matter within the scope of Grossman’s employment with Company. While
Grossman’s agreement to cooperate and assist in this regard is supported by the
consideration set forth in Paragraph 14 above, to the extent Grossman is
required to assist Company in this manner, Company will reimburse Grossman for
reasonable out-of-pocket expenses associated with Grossman’s assistance.

26. Grossman agrees to pay any federal or state taxes remaining due that may be
required to be paid with respect to this Agreement and agrees to indemnify and
hold Company and all Releasees harmless for any of Grossman’s personal tax
liability whatsoever.

27. If any provision of this Agreement or its application is held invalid, the
invalidity shall not affect other provisions or applications of the Agreement
which can be given effect without the invalid provisions or application and,
therefore, the provisions of this Agreement are declared to be severable. This
Agreement is an integrated Agreement and is the entire Agreement of the parties.
It supersedes the Employment Agreement and all prior negotiations and all
agreements, whether written or oral, except that Section 5 of the Employment
Agreement shall survive this Agreement and shall remain in full force and
effect. This Agreement may be modified only by a writing signed by all the
parties. This Agreement may be executed in counterparts. Any copy or facsimile
of this Agreement shall be as effective as an original.

28. After execution of this Agreement, Company may, but is not required to,
present for approval to the Workers’ Compensation Appeals Board an appropriate
stipulation or compromise and release extinguishing any and all rights or claims
Grossman may have under applicable workers’ compensation provisions. Grossman
will cooperate fully in the execution of this documentation.

29. Any dispute or controversy between Grossman, on the one hand, and Company
(or any other Releasee), on the other hand, in any way arising out of, related
to, or connected with this Agreement or the subject matter thereof, or otherwise
in any way arising out of, related to, or connected with Grossman’s employment
with Company or the termination of Grossman’s employment with Company, shall be
resolved through

 

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final and binding arbitration in Los Angeles, California, pursuant to California
Civil Procedure Code §§ 1282-1284.2, with the exception of Sections 1283 and
1283.05. If the parties cannot agree on an arbitrator within 30 days of either
side’s written notice of intent to arbitrate, the matter shall be submitted to
the Los Angeles office of JAMS (or its successor) and an arbitrator shall be
selected or appointed in accordance with JAMS rules for selection/appointment of
an arbitrator for employment disputes. In the event of such arbitration, the
prevailing party shall be entitled to recover all reasonable costs and expenses
incurred by such party in connection therewith, including attorneys’ fees.
Company and Grossman shall equally advance and share all costs of the
arbitration, including, but not limited to, the arbitrator’s fees, court
reporter fees, and any and all other administrative costs of the arbitration.
Unless otherwise agreed to by the parties, the arbitration shall otherwise be
governed by JAMS’ then-current rules for the arbitration of employment disputes.
Any dispute as to the reasonableness of costs and expenses shall be determined
by the arbitrator. The parties agree that each will submit to any federal or
state court of appropriate jurisdiction located in Los Angeles, California, for
purposes of compelling arbitration pursuant to this Paragraph, or to enforce any
interim or final award entered into by the arbitrator. The arbitrator shall have
no power to add to, subtract from, or modify in any way, the terms of this
Agreement.

30. The undersigned acknowledge that they have read this Agreement, that they
have had opportunity to consult with an attorney, that they have had a
reasonable amount of time to consider this Agreement, that they fully understand
and appreciate its meaning, and that it includes a full and final release and
settlement of all claims, whether such claims are currently known or not, as of
the date of signing that the parties hereto may have against one another, and
they voluntarily sign it.

31. Company agrees that it shall pay attorneys’ fees and costs actually incurred
by Grossman in connection with the review and negotiation of this Agreement up
to and not to exceed Ten Thousand Dollars ($10,000.00).

[SIGNATURE BLOCK ON NEXT PAGE]

 

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EXECUTED this 8th day of February, 2012, at New York, New York.

 

/s/ Kenneth S. Grossman

Kenneth S. Grossman

 

Approved as to content and form: COOLEY LLP Seth Rafkind, Esq. By  

/s/ Seth Rafking

  Seth Rafking, Esq. Attorneys for Kenneth S. Grossman SIGNATURE GROUP HOLDINGS,
INC.

/s/ Craig Forrest Noell

Craig Forrest Noell, Chief Executive Officer Approved as to content and form:
SWERDLOW FLORENCE SANCHEZ SWERDLOW & WIMMER A Law Corporation David A. Wimmer,
Esq. By  

/s/ David A. Wimmer

  David A. Wimmer, Esq. Attorneys for Signature Group Holdings, Inc.

 

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ACKNOWLEDGMENT AND WAIVER

I, Kenneth S. Grossman, hereby acknowledge that I was given 21 days to consider
the foregoing Agreement and knowingly and voluntarily chose to sign the
Agreement prior to the expiration of the 21-day period. I have not been induced
to sign this Agreement prior to the expiration of the 21-day period through
fraud, misrepresentation, threat to withdraw or alter the Agreement prior to the
expiration of the 21-day period, or by providing different terms to me if I
choose to sign the Agreement prior to the expiration of the 21-day period.

I declare under penalty of perjury under the laws of the State of California,
State of New York, and the United States of America that the foregoing is true
and correct.

EXECUTED this 8th day of February, 2012, at New York, New York.

 

/s/ Kenneth S. Grossman

Kenneth S. Grossman

 

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