<PAGE>

                                 Exhibit 10.1

                         SEPARATION AGREEMENT & RELEASE


MUST BE RECEIVED BY J. O. NICHOLAS, HUMAN RESOURCES DEPARTMENT, ON OR BEFORE
MARCH 29, 2001, by 4:30 p.m. C.S.T.

                                    TO BE COMPLETED BY J. O. Nicholas Only

                                    RECEIVED __________________________
                                              Date          Initials

In consideration for the Separation Benefits described in Section II of the
amended letter to me dated January 30, 2001, from Jon Nicholas (and attached to
this Agreement) I, Larry Blanford, voluntarily agree as follows:

1.   I, on behalf of myself, heirs, administrators, assigns and successors,
     release the Parties Released (as defined in paragraph 4) from any and all
     liability whatsoever for all claims, demands, and causes of action of every
     nature affecting me, which I may have or ever claim to have arising out of
     my employment by Maytag Appliances, Maytag Corporation, its divisions,
     companies and subsidiaries (collectively referred to as the "Company")
     including, but not limited to my recruitment, selection, retention,
     termination, payment of compensation, employee benefits or retirement, with
     the exception of:

          (a)  My rights under the Maytag Corporation Employees Retirement Plan
               and Salary Savings Plan (including E.S.O.P.), which have accrued
               through the end of my  employment with the Company; and

          (b)  My rights under the Maytag Corporation Deferred Compensation
               Plan, according to the terms of the Plan.

          (c)  Any rights to defense of or indemnification against third party
               claims (including third party claims such as shareholder
               derivative actions which are nominally treated as claims by the
               Company) to which I am, may or, except for this Agreement, would
               be entitled by law, the Company's Articles of Incorporation, the
               Indemnification Agreement dated January 1, 1997 between the
               Company and me per its terms or any existing insurance agreement,
               and I agree to cooperate with the Company in the defense of any
               such claims.

          (d)  Rights or claims that arise after the date this Separation
               Agreement and Release (Separation Agreement) is signed or rights
               that cannot be waived by law.

2.   Without limiting the generality of Section 1, I release the Parties
     Released from all claims, demands, and causes of action which were or could
     have been asserted under any legal theory,
<PAGE>

     statute or common law whatsoever, including, but not limited to, breach of
     any express or implied contract (whether intentional or otherwise); tort
     (whether negligent, reckless, intentional or otherwise); violation of
     public policy; violation of any federal, state or local law, regulation or
     ordinance (including, but not limited to, the Civil Rights Acts of 1866,
     1870, and 1871, as amended; the Civil Rights Act of 1964, as amended; the
     Americans with Disabilities Act of 1990, as amended; the Employee
     Retirement Income Security Act of 1974, as amended; the Worker Adjustment
     and Retraining Notification Act of 1988, as amended; the Family and Medical
     Leave Act of 1993, as amended; all state and local civil rights or other
     employment-related laws of Iowa, the state and local civil rights laws of
     Maytag Corporation headquarters; and any other United States federal, state
     or local laws.

3.   Without limiting the generality of Section 1, I also release the Parties
     Released from all claims, demands, and causes of action which could have
     been asserted under the Age Discrimination in Employment Act of 1967, as
     amended.

4.   The Parties Released are the Company; its predecessors, successors,
     divisions, subsidiaries, affiliates, and parent corporations; the insurers,
     administrators, trustees and fiduciaries of any employee benefit plan
     maintained by or on behalf of any of the foregoing; and the officers,
     directors, employees and agents of any of the foregoing.

5.   I agree never to sue any of the Parties Released for claims released herein
     and I understand and agree that I am waiving my right to all relief based
     on any claim released herein. If any claim is made by me or someone on my
     behalf with a state, federal or local civil rights agency such as the EEOC,
     I agree to indemnify the Parties Released for any monies I (or the EEOC on
     my behalf) receive.

6.   The parties further acknowledge and agree in the event that any party
     materially breaches any part of this Separation Agreement: (a) the non-
     breaching party will be entitled to apply for and receive an injunction to
     restrain any violation; and (b) the breaching party will be obligated to
     pay the non-breaching party its costs and expenses in enforcing this
     Separation Agreement (including court costs, expenses, and reasonable legal
     fees).

7.   This Release extends to any claims which I may have against the Parties
     Released for attorney's fees, expenses and court costs (if any) except as
     otherwise provided herein. I acknowledge that I am solely responsible for
     paying my attorney's fees, expenses and court costs (if any) except as
     otherwise provided herein.

8.   This Release extends to all claims which I do not know or suspect to exist
     in my favor and which, if known at the time of executing this Release, may
     have materially affected this settlement with the Parties Released.

9.   I have been given a list of job titles and ages of individuals in the
     organizational unit who are eligible for a Separation Benefit, as well as a
     list of ages of individuals who were not eligible.
<PAGE>

                              B.  CONFIDENTIALITY

As additional consideration for the benefits which I will receive in accordance
with the terms and conditions of this agreement, I agree to not disclose, use,
publish, or authorize anyone else to disclose, use or publish, any confidential
or secret technical or non-technical business information pertaining to the
Company, including any of their operations, without the express written consent
of the Company. I further agree to immediately return to Maytag Corporation,
unless otherwise agreed in writing, all confidential information and documents
in whatever media or form in my possession or under my control. Confidential
Information includes, but is not limited to, short and long-range plans, product
design and development plans, pricing and marketing strategies, promotional
programs, manufacturing equipment and processes, sales and distribution
networks, organization structure and personnel, and proprietary or confidential
information of third parties which is protected by non-disclosure agreements
between the Company or its operations and any third party.

I further agree that the terms and provisions of this Agreement are
confidential, as well as the circumstances and discussion leading to this
Agreement, and shall not be communicated in any manner to any person except to
my spouse, attorney, tax and financial advisor(s), outplacement firm or as
required by law or court order. My spouse and tax advisor will be advised that
these matters are confidential as well.

                                C.  NON-COMPETE

Because I am privy to the foregoing Confidential Information and as additional
consideration for the receipt of the Separation Benefits described in the
Letter, I agree to not work as an employee, contractor, consultant, or otherwise
for any competing home or commercial appliance manufacturer before the end of
two years from the date this agreement is signed in any capacity similar to my
employment with Maytag, unless the Company consents to such work in writing,
which consent will not be unreasonably withheld.

                                D.  CONCLUSION

1.   This Agreement shall be subject to the substantive laws (without regard to
     the conflicts of laws provision) of the State of Iowa. In case any portion
     of this Agreement shall be held to be invalid or unenforceable, the same
     are intended to be severable, shall be construed to be severable, and any
     such invalidity or unenforceability shall neither defeat nor impair the
     remaining provisions of this Agreement.

2.   I agree that neither the existence of this Separation Agreement nor
     anything contained in this Agreement shall constitute an admission of any
     liability on the part of the Parties Released; any and all such liability
     is expressly denied.

3.   I HAVE BEEN GIVEN A PERIOD OF FORTY-FIVE (45) DAYS WITHIN WHICH TO CONSIDER
     THIS AGREEMENT. I UNDERSTAND THAT I CAN REVOKE THIS AGREEMENT IN WRITING
     ANY TIME WITHIN SEVEN (7) CALENDAR DAYS OF ITS RECEIPT BY THE COMPANY'S
     HUMAN RESOURCE DEPARTMENT. WRITTEN NOTICE OF REVOCATION MUST BE RECEIVED BY
     THE COMPANY'S HUMAN RESOURCES DEPARTMENT WITHIN THE SEVEN (7) CALENDAR DAY
     PERIOD. IF I DO NOT REVOKE THIS AGREEMENT IT WILL BE EFFECTIVE AFTER THE
     SEVEN (7) DAY PERIOD HAS EXPIRED.
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4.   I AGREE THAT NO REPRESENTATION OF ANY FACT OR OPINION HAS BEEN MADE BY THE
     PARTIES RELEASED TO INDUCE THIS AGREEMENT AND I AGREE THAT THE PARTIES
     RELEASED HAVE MADE NO ADMISSIONS OF LIABILITY OF ANY SORT.


5.   I HAVE READ THIS AGREEMENT, UNDERSTAND ITS TERMS, AND FREELY AND
     VOLUNTARILY SIGN IT. NO ONE HAS MADE ANY PROMISES OR REPRESENTATIONS TO ME
     OTHER THAN WHAT IS REFERENCED IN THIS AGREEMENT.


THIS AGREEMENT INCLUDES A RELEASE. THE COMPANY ADVISES YOU TO CONSULT WITH AN
ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT.

                              Signed this 19th day of March, 2001

                                  /s/ Lawrence J. Blanford
                                  ------------------------
                                      Lawrence J. Blanford


Attachment:  Amended Letter from Jon Nicholas dated January 30, 2001 (amended
March 20, 2001)
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January 30, 2001              FAXED & DELIVERED OVERNIGHT MAIL
                              ---------------------------------
(Amended March 20, 2001)      ON MARCH 20, 2001
                              -----------------


Mr. Larry Blanford

Dear Larry:

As you and Len Hadley have discussed, your employment as President - Major
Appliances Division is terminated effective January 30, 2001. This letter will
outline the options and benefits available to you based on your last day of
employment, January 30, 2001, (the "Separation Date").

I. You will receive the following items:

    1. Salary continuation subject to normal withholding for two (2) months,
       payable by direct deposit on the last day of each month.

    2. A lump sum payout, less withholding, of your 2000 Incentive Compensation
       Plan (bonus) in February 2001, at whatever level is achieved by the
       Corporation and considering your target level.

    3. Vacation pay (less applicable withholding) based on accrued, but unused,
       vacation hours as of the Separation Date, payable after the Separation
       Date.

    4. The opportunity to request disbursement of all sums from the Maytag
       Corporation Salary Savings Plan, the Employee Stock Ownership Plan, the
       Employee Stock Purchase Plan, the Maytag Deferred Compensation Plan, or
       other similar plans as applicable under the particular plan requirements.
       Review these Plans carefully to determine applicable deadlines.

    5. The opportunity to continue health care coverage under COBRA (including
       medical, dental, vision, and prescription drugs, if applicable). You will
       receive a separate letter on your COBRA options.

    6. Outplacement services of your choice at Maytag's expense. Maytag will pay
       the provider directly. You must initiate these services by April 1, 2001.

II. Provided you sign the attached Separation Agreement and Release and return
    it to me by March 29, 2001, and you do not revoke your decision within
    seven (7) days (the "Revocation Period") after our receipt of that document,
    you will receive the following enhanced Separation Benefits, in addition to
    those stated above, except where otherwise indicated.

<PAGE>

Mr. Larry Blanford
Page Number Two
January 30, 2001
(Amended March 20, 2001)



   1.  Instead of Item No. 1 above, a payment of $312,000, subject to normal tax
       withholding, representing twelve (12) months of salary continuation,
       payable within fifteen (15) days after receipt of the Separation
       Agreement and Release.

   2.  Maytag will pay you a lump sum payment of 130% of the difference in your
       COBRA coverage cost and your current employee contribution for twelve
       (12) months, less with-holding. You may use these monies to purchase
       COBRA continuation coverage or not, at your option. It is your
       responsibility, however, to apply for COBRA, if you elect to do so, by
       making the necessary notifications to the Benefits Department and paying
       the appropriate premiums. Information will be contained in a letter you
       will receive from Benefits after your Separation Date about how to elect
       COBRA coverage.

   3.  Executive Appliances - You may keep any appliances you acquired under the
       Executive Appliance Test Program at no charge.

   4.  You will be entitled to receive the executive tax preparation service
       from Ernst & Young at Maytag's expense for the year 2000, up to a maximum
       of $2,000. The value of this service will be considered taxable income to
       you.

   5.  You will be entitled to receive financial planning services according to
       Maytag's Financial Planning Program up to a maximum of $7,000 during
       2001. The value of this service will be considered taxable income to you.

   6.  Maytag will pay for legal services in connection with your review and
       execution of the Separation Agreement and Release not to exceed $5,000.
       Payment to be made to the attorney or law firm.

These enhanced benefits are also contingent upon a letter of resignation of all
your offices and appointments, including all director or officer positions for
Maytag subsidiaries and your agreement that you will make yourself available for
two (2) years after the Separation Date, as may be requested at mutually
convenient times and places with respect to pending and future business or legal
matters, arbitrations, governmental investigations, or other dispute resolutions
relating to matters that arose during your employment. Maytag will reimburse you
for all reasonable expenses and costs you may incur as a result of providing
this assistance, upon receipt of proper documentation.
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Mr. Larry Blanford
Page Number Three
January 30, 2001
(Amended March 20, 2001)


Please note the enclosed copy of your signed Confidentiality and Intellectual
Property Rights Agreement. This Agreement continues in effect even after your
employment ends at Maytag.

Larry, we trust you will agree with this proposal to provide you with enhanced
benefits not otherwise available. If so, please sign and return the enclosed
Agreement to me on or before March 29, 2001, the date on which this offer will
expire if not accepted by you.

Should you have any questions, please let me know.

Sincerely,
/s/ John O. Nicholas


JON:aw

Enclosures: Confidentiality and Intellectual Property Rights Agreement
            Separation Agreement & Release with Attachments
            Letter of Resignation