SEPARATION AGREEMENT AND GENERAL RELEASE

EXHIBIT 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

     This Separation Agreement and General Release (hereinafter, “Separation Agreement”) is made and entered into by and between Lawrence A. Denton (“Denton”), on the one hand, and Dura Automotive Systems, Inc. and all of its subsidiaries, related entities and affiliates (collectively referred to as “Dura” and/or “Company”), on the other hand.

RECITALS

     A. Dura employed Denton as its Chief Executive Officer pursuant to a Letter Agreement dated December 23, 2002 (“Letter Agreement”), and amended May 8, 2008 (“Letter Agreement Amendment”).

     B. Dura and Denton entered into a Change of Control Agreement dated June 16, 2004 (“Change of Control Agreement”), and amended May 8, 2008 (“Change of Control Amendment”).

     C. Dura established the 2003 Supplemental Executive Retirement Plan, which was amended on and as of January 15, 2003 and further amended on May 8, 2008 (“2003 SERP”) which Plan covered Denton.

     On July 15, 2008, Denton’s employment at Dura as its CEO (as well as an Officer and Director in all capacities) ended, and his employment in any capacity with Dura will end on December 31, 2008. Dura acknowledges that Denton was not terminated for gross misconduct (as that term is used in the Letter Agreement) or Cause (as that term is used in the 2003 SERP), and was unrelated to either a Sale of the Company (as that term is defined in the Letter Agreement Amendment) or a Change of Control (as that term is defined in the Change of Control Agreement), nor in contemplation of a Change of Control (as that term is defined in the Change of Control Agreement).

     D. Denton is entitled to certain compensation, benefits and severance payments in connection with his termination of employment with Dura, and Denton is subject to certain non-competition, confidentiality and other restrictions; all of these entitlements and restrictions are solely as provided in this Separation Agreement.

     E. Denton and Dura desire to enter into this Seperation Agreement to settle fully and finally all differences between them, including those arising in any way out of Denton’s employment with Dura and the cessation thereof, including releases of claims against each other as set forth in this Separation Agreement.

     F. On July 16, 2008, Denton and Dura entered into a signed, written term sheet (“Term Sheet”) regarding Denton’s separation from Dura, which term sheet called for the parties to reduce the terms to this formal Separation Agreement.

     NOW, THEREFORE, in consideration of the premises and promises herein contained, IT IS AGREED AS FOLLOWS:

AGREEMENT

     1.  No Admission of Liabilit y: It is agreed that this Agreement is not to be construed in any way as an admission of any liability whatsoever by the Released Parties or Denton, and that any such liability has been expressly denied.

     2.  Transition Date/Separation Date : Dura and Denton agree that Denton’s employment at Dura as its CEO ended by July 15, 2008 (“Transition Date”), and Denton has transitioned to a consulting role within the Company which role shall continue until December 31, 2008 (“Separation Date”). As of the Separation Date, Denton will cease to be employed by the Company. His cessation of employment will be characterized as

a voluntary resignation. In conjunction with Denton’s transition, Denton has resigned his membership on Dura’s Board of Directors, as well as being a Director or Officer of any and all Dura entities/subsidiaries, and by signing this Separation Agreement hereby reiterates those resignations.

     3.  Consulting Position : Denton will continue as an employee consultant to Dura, and will continue to be paid his current monthly rate of base salary (annualized at a gross amount of $844,000.00 inclusive of flex pay) and to receive all employee benefits and executive perquisites (including flex pay), from the Transition Date through and including the Separation Date (the Transition Date through and including the Separation Date hereinafter being referenced as the “Consulting Period”). As a consultant during the Consulting Period, Denton will perform such duties as reasonably directed by Dura’s Board of Directors in its sole discretion; provided, however, Denton shall not be prohibited from obtaining new employment during the Consulting Period as long as it does not unreasonably prevent him from performing his duties as a consultant to Dura. During the Consulting Period, Denton agrees to reasonably cooperate with the Company and its Board of Directors. During the Consulting Period, Denton shall be permitted to maintain his current home offices and Dura shall continue to support such offices with its current level of office equipment, email address and access, and technology support, including secretarial assistance; provided, however, that if Denton obtains new employment during the Consulting Period, then Dura’s obligations to support such offices with its current level of office equipment, email address and access, and technology support, including secretarial assistance, shall immediately cease, and it shall be Dura’s sole option whether or not to continue such (with the understanding that if Dura does not so continue, then Denton will not be required to

perform consulting services that would require the use of such home equipment or services). At the Separation Date, Denton shall be entitled to retain any home office equipment at his discretion. As soon as practicable after the Transition Date, Denton shall return to Dura the two (2) Company-provided computers/laptops in his possession (the computers/laptops in his home offices in Birmingham, MI and Aspen, CO), and Dura shall contemporaneously provide Denton with two (2) equivalent computers/laptops.

     4.  Bonus : Dura will pay Denton a one-time bonus in the gross amount of $800,000.00 for having led the Company out of bankruptcy. This bonus will be paid on the next regularly scheduled Company pay date following the Transition Date.

     5.  Benefits : Upon the Separation Date, Dura will pay Denton all vested accrued employee benefits as of the Separation Date in accordance with their terms and conditions, including but not limited to his vested account balance under the Company’s 401K Plan and his vested accrued pension benefit under the Company’s qualified defined benefit plan. Denton shall retain the right to convert any Company-owned life insurance as of the Separation Date.

     6.  SERP : In consideration for Denton’s compliance with the conditions under Section 2.8 of the SERP (including the modified non-competition and non-solicitation restrictions), as well as the terms of this Separation Agreement, Denton will receive his vested accrued benefits under the 2003 SERP, in accordance with its terms and conditions, except as modified herein. Such benefits will be payable as a single life annuity (with 10 years certain) commencing on January 1, 2009. Notwithstanding the foregoing, such annuity payments will be delayed for a period not to exceed six months and one day; provided, such delayed payments shall be payable in a lump sum

payment immediately following the period of delay (which is July 2, 2009), and the remaining annuity payments shall continue to be paid on their original annuity payment schedule. In the event of a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, which qualifies as a “change in control event” as described in Treasury Regulation Section 1.409A-3(i)(5), the lump sum present value (calculated using the actuarial factors specified in the 2003 SERP for lump sum calculations) of Denton’s remaining unpaid vested accrued benefits under the 2003 SERP shall be paid to Denton in a lump sum on the date of such change in control event.

     7.  Severance Pay : Denton will receive a gross amount of $1,688,000.00 (twenty-four (24) months of base salary, at his current monthly rate of base salary, inclusive of flex pay) as severance pay. Of that amount, the gross amount of $626,667 will be payable in a lump sum on January 2, 2009, and the remainder will be payable in a lump sum on July 2, 2009.

     8.  Company Car: Dura will convey title to Denton’s company car to Denton on January 1, 2009, without charge.

     9.  Continuation of Group Health Plan Coverage: Denton will be eligible for COBRA group health plan continuation coverage as of January 1, 2009 for himself and his eligible covered dependents at the same coverage options then available to other active executive employees at the same group health plan coverage cost as other active executive employees for a period of up to (but not more than) 18 months.

     10.  Attorneys’ Fees : Dura will reimburse Denton his reasonable attorneys’ fees in connection with advice and counseling regarding the Term Sheet and this Separation Agreement. In addition, to the extent that Dura breaches the terms of this

Separation Agreement, then it will reimburse Denton his attorneys’ fees incurred in connection with the enforcement thereof.

     11.  Full Payment and Taxes : All payments required to be made by Dura hereunder shall be subject to any and all applicable withholdings, including any withholdings for any related federal, state or local taxes. Denton acknowledges that he shall be responsible for any and all income taxes or other taxes incurred by him as a result of his receipt of any payments from Dura pursuant to the terms of this Separation Agreement.

     12.  D&O Coverage : Prior to the Separation Date, Denton will remain covered by Dura’s current D&O insurance policy in accordance with its terms. Following the Separation Date and for a period of not less than six (6) years thereafter, Denton will remain covered as a former director and officer under Dura’s D&O insurance policies as in effect from time to time. If Dura terminates its D&O insurance during the foregoing six-year period, Dura will purchase tail coverage insuring claims involving Denton made prior to the expiration of such six-year period. In addition, Dura shall continue to indemnify Denton pursuant to the provisions contained in Dura’s bylaws as in effect as of the date of this Agreement (without amendment).

     13.  Non-Disparagement : Denton agrees and promises that he will not, at anytime hereafter, disparage (in any way) the Company and/or its Board of Directors, officers, employees, agents, and affiliates. Likewise, members of the Company’s Board of Directors, as well as the Company’s Section 16 officers, agree and promise that they will not disparage (in any way) Denton.

     14.  Non-Competition/Non-Solicitation : During the Transition Period, and for the consecutive twelve (12) month period immediately following the Separation Date,

Dent