Exhibit 10.1

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) is made between Eric J. Draut
(“Employee”) and Unitrin Services Company, for itself and on behalf of its
affiliates and subsidiaries (“Employer”) on the date last written below.

BACKGROUND

Employer does not provide severance pay on the termination of employment as a
matter of right or entitlement. Severance pay is a benefit provided solely at
Employer’s discretion under appropriate circumstances and only when Employer
receives a signed release of claims before payments begin.

Due to Employee’s years of service, assistance in the transition of his
responsibilities, and successful wind-down of Fireside Bank, Employer has
determined that the appropriate circumstances exist for providing severance pay
to Employee and Employee wishes to take advantage of that benefit. Employee and
Employer now wish to specifically describe Employee’s severance benefits and the
parties’ respective rights and obligations.

TERMS AND CONDITIONS

In consideration of their mutual promises and undertakings described below,
Employee and Employer agree as follows:

1. Employment Responsibilities End. Employee’s day-to-day, on-site employment
responsibilities to Employer, and any of its affiliates and subsidiaries, shall
end on August 6, 2010 and will be followed by a transition period during which
Employee and Employer will work out an orderly transfer of Employee’s
responsibilities and during which Employee will be deemed to be on vacation.
Such transition period will end at the close of business on September 3, 2010 at
which time Employee’s employment will formally terminate (“Termination Date”).
Employee agrees that Employee has been paid all wages, benefits, and other
compensation owed to Employee by Employer through the Termination Date, subject
to the obligation of Employer for the payment of: (i) salary at Employee’s
current base rate through the Termination Date, (ii) expense reimbursement
reports that are outstanding on the date hereof or which are submitted hereafter
pursuant to paragraph 15, and (iii) all vacation time, if any, that will be
accrued but unpaid on the Termination Date, taking into account vacation time
that will be assessed to Employee for the transition period described above. Any
such accrued and unpaid vacation time will be paid to Employee no later than the
next regularly scheduled payday after the Termination Date. Employee agrees that
Employee is not entitled to any additional or future compensation or benefits
arising out of Employee’s employment with Employer, except for such compensation
or benefits, if any, arising under the pension, 401(k), stock option and
restricted stock plans of Unitrin, Inc. to which Employee may be entitled by
virtue of Employee’s employment with Employer, subject in all cases to the terms
and conditions of the plans and agreements governing such compensation and
benefits. Without limitation to the above, Employee acknowledges and agrees that
Employee is not entitled to any severance pay pursuant to the Unitrin, Inc.
Employee General Severance Pay Plan.

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2. Severance Payment. A severance payment in the gross total amount of one
million two hundred thousand dollars ($1,200,000.00), less ordinary tax
withholdings and all required deductions, will be paid to Employee provided that
all of the following conditions have occurred: (a) Employee signs this Agreement
and returns it to Employer by August 26, 2010, (b) Employee submits in writing
in the form of Attachment A hereto his resignation from the boards of directors
of the companies referenced in Attachment A and from all elected and appointed
offices held with such companies, and the benefit plan committees referenced in
Attachment A, such resignations to be effective at the close of business on
September 3, 2010, (c) the seven day revocation period has passed without
revocation of this Agreement, (d) Employee has executed and returned the
Acknowledgment Form (Attachment B hereto) to Employer confirming Employee’s
decision not to revoke this Agreement, and (e) Employee has returned all company
property to Employer. Employee acknowledges and agrees that the severance
payment: (i) shall not be deemed “compensation” for purposes of any of
Employer’s qualified retirement plans or other benefit programs and payment of
the severance payment does not entitle Employee to any retirement plan
contributions by Employer for Employee’s benefit or account, and (ii) is in full
satisfaction of Employee’s annual incentive award for 2010 under the Unitrin,
Inc. 2009 Performance Incentive Plan. Employee further acknowledges and agrees
that the termination of Employee’s employment will result in the forfeiture of
all amounts potentially payable to Employee under multi-year incentive awards
granted to Employee in 2009 and 2010 under the Unitrin, Inc. 2009 Performance
Incentive Plan, in accordance with Section 6.4(a) of such Plan and the
agreements governing such awards to which Employee is a party.

Severance Payments shall be made in accordance with the following schedule:

 

  •  

Payment 1 – September 15, 2010 in the gross amount of $400,000.00.

 

  •  

Payment 2 – December 15, 2010 in the gross amount of $400,000.00.

 

  •  

Payment 3 – December 31, 2010 in the gross amount of $400,000.00.

If Employee elects to continue health and dental insurance coverage under COBRA,
he will be charged at the employee non-COBRA rate (or, at the appropriate family
non-COBRA rate if Employee elects to continue coverage for one or more eligible
dependents) applicable during the months in which he elects to maintain
coverage. Such continuation coverage will end on the earlier of the date
Employee first becomes eligible for health insurance coverage with a subsequent
employer or the date Employee is no longer eligible for COBRA coverage under
applicable COBRA rules. If this agreement to provide COBRA benefits to Employee
raises any compliance issues or impositions of penalties under any
non-discrimination rules that have been issued or are issued in the future
pursuant to the Patient Protection and Affordable Care Act (PPACA), the parties
agree to modify this Agreement so that it complies with the terms of those
non-discrimination rules without impairing the economic benefit to Employee of
this provision.

3. Outplacement Services. Upon return of the signed Agreement and Attachments A
and B to the Employer, Employer agrees to pay up to thirty thousand dollars
($30,000.00) to provide 12 months of outplacement services for Employee through
DBM or a professional outplacement firm of Employee’s choosing, provided
Employee has commenced utilization of the outplacement services within three
months of the date he executes this Agreement. If Employee has

 

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not commenced utilization of the outplacement services within two months of the
Termination Date and Employer has not entered into a binding contract for such
services at Employee’s request, Employer will pay to Employee the amount it
would otherwise have paid to a third party for outplacement services pursuant to
the preceding sentence.

4. Unemployment Claims. Employer expressly agrees that the release language in
Section 6 below shall not prevent Employee from applying for unemployment
benefits to which Employee may be entitled under applicable law.

5. Non-Solicitation of Employees, Confidentiality, Good Behavior and Return of
Property.

(a) Employee Agrees that he shall not for a period of twelve (12) months
immediately following the Termination Date, solicit, induce, entice, employ or
in any manner encourage any person then employed by Employer to leave the employ
of Employer. This prohibition applies only to employees with whom Employee had
material contact pursuant to Employee’s duties during the period of twelve
(12) months immediately preceding the Termination Date and includes, without
limitation, all officers of Unitrin, Inc. For purposes of this Agreement,
“Material Contact” means interaction between Employee and another employee of
Employer: (i) with whom Employee actually dealt or (ii) whose employment or
dealings with Employer or services for Employer were handled, coordinated,
managed, or supervised by Employee. If Employee breaches the terms of this
paragraph 5(a), he will be liable for any attorneys’ fees incurred by Employer
in seeking the enforcement of this paragraph 5(a) and will forfeit his right to
continued health insurance coverage at the employee (or family) non-COBRA rate
as described in paragraph 2. Notwithstanding the foregoing sentence, Employer
will also have the right to obtain any other legal and equitable relief to which
it might be entitled for any breach of this Agreement, including paragraph 5(a).

(b) Employee agrees not to disclose, communicate, use to the detriment of
Employer or for Employee’s own benefit or the benefit of any other person, or
misuse in any way any confidential information or trade secrets of Employer.

(c) Employee agrees to return to Employer all Employer credit cards,
identification cards, access cards and keys to Employer’s properties or
facilities that Employee may have in his possession. Employee shall return any
and all Employer confidential files and all Employer confidential and
proprietary information that Employee may have in his possession. Employee shall
return any and all of Employer’s property, including but not limited to,
computer equipment, peripherals, printers, and company vehicles. Employer agrees
that Employee may retain the Employer’s laptop computer and cellular phone,
including stored contacts, but subject to the removal of all Unitrin data, that
he used during the course of his employment immediately prior to the Termination
Date. Employer further agrees that Employee may retain the phone number assigned
to the cellular phone and the landline phone number which are assigned to the
Employer. Employee will be responsible for taking all necessary steps to
transfer those numbers to an account in his name and will be responsible for all
costs of maintaining service for these phone numbers after the Termination Date
and Employer agrees to reasonably cooperate with Employee in connection with
such steps.

 

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6. Consideration to Employer – Release of Claims and Agreement Not to Sue.
Except as stated below, Employee hereby forever releases, discharges and holds
harmless Employer and its respective subsidiaries, affiliates, predecessors,
successors and assigns, and their officers, directors, shareholders, principals,
employees, insurers, and agents from any claim or cause of action whatsoever
which Employee either has or may have against Employer resulting from or arising
out of or related to Employee’s employment by Employer, or the termination of
that employment, including any claims or causes of action Employee has or may
have pursuant to the Age Discrimination in Employment Act, 29 USC Section 621 et
seq.; the Older Workers Benefit Protection Act of 1990; Title VII of the Civil
Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 USC Sec.
2000(e); the Americans with Disabilities Act, 42 USC Sec. 12101; the
Rehabilitation Act of 1973, 29 USC Sec. 701; the Family and Medical Leave Act of
1993, 29 USC Sec. 2618; 775 Ill.Comp.Stat.Ann. 5/1-103, 5/2-102, 5/2-103,
5/2-104, and 56 Ill. Adm. Code 5210.110; and any other law or regulation of any
local, state or federal jurisdiction.

This release does not apply to any claims or rights that may arise after the
date that Employee signs this Agreement, or relate to the consideration for this
Agreement, vested rights under the Employer’s employee benefit plans as
applicable on the date Employee signs this Agreement, or any claims that the
controlling law clearly states may not be released by private agreement.
Furthermore, this release does not waive any rights Employee might have to
indemnification as a corporate officer, benefit plan committee member, or board
member pursuant to the Unitrin, Inc. articles of incorporation and bylaws, his
Indemnification and Expense Advance Agreement dated March 23, 2009, applicable
benefit plan documents, or by applicable statutory or common law.

Nothing in this Agreement shall be construed to prohibit Employee from filing a
charge with or participating in any investigation or proceeding conducted by the
Equal Employment Opportunity Commission (EEOC), National Labor Relations Board
(NLRB), or a comparable state or local agency, or participating in any
investigation or proceeding conducted by such administrative agency.
Notwithstanding the foregoing, Employee agrees to waive his right to recover
monetary damages in any charge, complaint, or lawsuit filed by Employee or by
anyone else on his behalf. At this time, Employee represents and warrants that
Employee has no claims, complaints, charges, or other proceedings pending with
any administrative agency, commission or other forum relating directly or
indirectly to Employee’s employment with Employer, or if Employee does have such
a charge pending, he understands that such a claim, complaint, or charge will
not result in any monetary benefit to Employee due to acceptance of
consideration for signing this release.

Other than an action for breach of this Agreement, Employee expressly
acknowledges that if Employee files any claim or lawsuit, or causes or aids any
claim or lawsuit to be filed on Employee’s behalf, regarding any matter
described in this Agreement, Employer may be entitled to recover from Employee
some or all money paid under this Agreement, plus attorneys’ fees and costs
incurred in defending against such action, to the extent permitted by law.

7. No Admission of Liability. Nothing in this Agreement shall be construed to be
an admission of liability by Employer and its respective subsidiaries,
affiliates, predecessors, successors and assigns, and their officers, directors,
shareholders, principals, employees, insurers, and agents for any alleged
violation of any of Employee’s statutory rights or any common law duty imposed
upon Employer.

 

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8. Adequate Consideration. Employee agrees that the consideration provided for
this Agreement is above and beyond any amounts already owed to Employee and is
adequate consideration for all promises and releases contained in this
Agreement.

9. Non-waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach of the same or any other provision of this Agreement.

10. Notices. Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and personally delivered or sent by a
recognized overnight courier service to Employee’s residence as last shown on
Employer’s employment records, in the case of Employee, or to Unitrin Services
Company, Attn: Donald G. Southwell, President, One East Wacker Drive, Suite
1000, Chicago, Illinois 60601, in the case of Employer.

11. Successors and Assigns. Except as otherwise provided in specific provisions
above, this Agreement shall be binding upon and inure to the benefit of
Employee, Employee’s spouse, Employee’s heirs, executors, administrators,
designated beneficiaries and upon anyone claiming under Employee or Employee’s
spouse, and shall be binding upon and inure to the benefit of Employer and its
successors and assigns. Employee warrants and represents that, except as
provided herein, no right, claim, cause of action or demand, or any part
thereof, which Employee may have arising out of or in any way related to
Employee’s employment with Employer, has been or will be assigned, granted or
transferred in any way to any other person, entity, firm or corporation, in any
manner, including by subrogation or by operation of marital property rights.

12. Severability. If a court or other body of competent jurisdiction should
determine that any term or provision of this Agreement is invalid or
unenforceable, such term or provision shall be reformed rather than voided, if
possible, in accordance with the purposes stated in this Agreement and with
applicable law, and all other terms and provisions of this Agreement shall be
deemed valid and enforceable to the extent possible.

13. Oral Agreements; Applicable Law. The parties acknowledge that there are no
oral agreements or understandings that conflict with, modify, supplement or
supersede the terms and conditions of this Agreement. This Agreement shall be
construed under the laws of the State of Illinois applicable to contracts
entered into and to be performed in the State of Illinois.

14. Representations and Warranties. By signing below, the Employee represents
and warrants that Employee has been advised in writing to consult with an
attorney before signing this Agreement, and Employee has had the opportunity to
do so if desired.

Employee acknowledges that this Agreement has been delivered to Employee on
August 5, 2010 and understands that Employee has up to twenty-one (21) days
following such date to sign and return this Agreement to Employer. Employee
agrees that any changes made to this Agreement do not restart the running of the
21-day period.

 

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The Employee further acknowledges and understands that some portions, or all of
the payments and/or benefits described in this Agreement, are the consideration
to the Employee for waiving rights under the Age Discrimination in Employment
Act (“ADEA”) referenced in Section 6 and for Employee’s obligations described in
Section 5.

Finally, Employee understands that Employee has the right within seven (7) days
of the signing of this Agreement to revoke Employee’s waiver of rights to claim
damages under ADEA. If Employee does revoke that waiver within the seven (7) day
period, the Agreement shall be null and void.

Any revocation must be in writing and delivered to Donald G. Southwell,
President, Unitrin Services Company, One East Wacker Drive, Suite 1000, Chicago,
IL 60601.

If Employee sends the revocation by mail, it must be (1) properly addressed,
(2) postmarked no later than the seventh (7th) day after execution of this
Agreement and, (3) sent by certified mail, return receipt requested; otherwise,
the revocation must be delivered to Employer no later than the seventh day after
execution of this Agreement.

15. Expense Reimbursement. By no later than the Termination Date, Employee
agrees to submit an expense account form to Employer for reimbursement of
reasonable business expense items incurred on behalf of Employer prior to the
Termination Date for which Employer has not yet then paid. Upon receipt of such
expense account form, together with such supporting documentation as Employer
may require, Employer will pay Employee for business expense items so incurred
by the next regularly scheduled payday after the Termination Date.

16. Employee Cooperation and Assistance. Employee agrees to cooperate fully with
Employer in the defense of any lawsuits, defense in any other type of
proceeding, and preparation of any response to any examination or investigation
by any government entity, including, but not limited to, the Federal Deposit
Insurance Corporation (FDIC), the California Department of Financial
Institutions and the various state departments of insurance and any other such
claims or matters, arising out of or in any way related to the policies,
practices, or conduct of Employer and its subsidiaries and affiliates during the
time Employee was employed by Employer, and shall testify fully and truthfully
in connection therewith. In addition, Employee agrees that, upon reasonable
notice, Employee will participate in such informal interviews by counsel for
Employer as may be reasonably necessary to ascertain Employee’s knowledge
concerning the facts relating to any such litigation, investigation, claim and
other such matters, and to cooperate with such counsel in providing testimony
whether through deposition, affidavit, or at trial in any such litigation,
examination, or proceeding. If Employee’s action is required under this
paragraph after 12 months from the Termination Date, Employer will compensate
Employee at an agreed-upon rate for time spent, provided Employee submits a
detailed account to Employer of his actions. Employer will make every reasonable
effort to accommodate Employee’s personal and business schedules when requesting
his assistance and cooperation.

17. Legal Fees. Employer agrees to reimburse Employee for a maximum of $4,000 in
reasonable legal fees incurred in connection with this Agreement. Employee will
submit adequate evidence of such fees.

 

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18. Compliance with Code §409A. All payments due under this Agreement will be
paid no later than March 15, 2011.

Caution: This Agreement is a Release. Employer hereby advises Employee to read
it and to consult with an attorney prior to signing it.

TO EVIDENCE THEIR AGREEMENT, the parties have executed this document as of the
date last written below.

 

Employee        Unitrin Services Company

/s/ Eric J. Draut

       By:   

/s/ Donald G. Southwell

Eric J. Draut        Donald G. Southwell        President Date: August 19, 2010
       Date: August 20, 2010

 

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Attachment A

Resignation

I, Eric J. Draut, hereby resign from my positions as a director of each of the
following companies, effective at the close of business on September 3, 2010:

Unitrin, Inc.

Unitrin Services Company

Fireside Bank

Fireside Securities Corporation

I also hereby resign from all elected and appointed offices I currently hold
with the foregoing companies and from all elected and appointed offices, if any,
with all other subsidiaries or affiliates of such companies, and from the
Unitrin, Inc. Master Retirement Trust Investment Committee, the Unitrin, Inc.
Defined Contribution Retirement Plan Trust Administrative Committee, and any
other committee of a plan sponsored by Unitrin, Inc. or one of its subsidiaries
or affiliates, in each case effective at the same date and time referenced
above.

 

 

Eric J. Draut Date:                                                          ,
2010

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Attachment B

Seven Day Right to Revocation

Acknowledgment Form

I, Eric J. Draut, hereby acknowledge that Unitrin Services Company tendered a
Separation Agreement offer which I voluntarily agreed to accept on
                                    , 2010, a date at least seven days prior to
today’s date.

I certify that seven calendar days have elapsed since my voluntary acceptance of
this above-referenced offer (i.e. seven days have elapsed since the above date),
and that I have voluntarily chosen not to revoke my acceptance of the
above-referenced Separation Agreement.

Signed this      day of             , 2010.

 

 

Eric J. Draut

 

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