SEVERANCE AND MUTUAL RELEASE AGREEMENT

[// GUIDANCE: Arkansas‐specific template drafted to comply with federal and Arkansas employment law, including the Age Discrimination in Employment Act (“ADEA”) waiver requirements found at 29 U.S.C. § 626(f). Adjust bracketed items before use and have the final document reviewed by counsel.]

TABLE OF CONTENTS

1. Article I – Parties; Effective Date; Recitals
2. Article II – Definitions
3. Article III – Operative Provisions
4. Article IV – Representations and Warranties
5. Article V – Covenants and Restrictions
6. Article VI – Default; Remedies
7. Article VII – Risk Allocation
8. Article VIII – Dispute Resolution
9. Article IX – General Provisions
10. Article X – Execution

ARTICLE I – PARTIES; EFFECTIVE DATE; RECITALS

Section 1.1 Parties

This Severance and Mutual Release Agreement (this “Agreement”) is entered into by and between [EMPLOYER LEGAL NAME], an [Arkansas] [corporation/limited liability company] (“Employer”), and [EMPLOYEE NAME] (“Employee” and, together with Employer, each a “Party” and, collectively, the “Parties”).

Section 1.2 Effective Date

The “Effective Date” means the eighth (8th) calendar day after Employee signs this Agreement, provided Employee does not revoke acceptance pursuant to Section 3.6(c).

Section 1.3 Recitals

A. Employee’s employment with Employer will terminate effective [TERMINATION DATE] (“Termination Date”).
B. Employer desires to provide, and Employee desires to accept, the severance consideration described herein in exchange for the promises, releases, and obligations set forth below.

INTENDING TO BE LEGALLY BOUND, the Parties agree as follows:

ARTICLE II – DEFINITIONS

[// GUIDANCE: Edit or supplement defined terms as needed.]

“Agreement” has the meaning set forth in the preamble.
“ADEA” means the federal Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.
“Applicable Law” means all federal, state, and local statutes, regulations, and ordinances, including Arkansas law.
“Benefited Period” has the meaning set forth in Section 3.2(b).
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Confidential Information” has the meaning set forth in Section 5.2.
“Severance Amount” has the meaning set forth in Section 3.1(a).

ARTICLE III – OPERATIVE PROVISIONS

Section 3.1 Severance Consideration

(a) Severance Payment. Employer shall pay Employee [AMOUNT] (the “Severance Amount”), less applicable withholdings, in [a lump sum/installments] commencing on the first regular payroll date following the Effective Date.
(b) Accrued Benefits. Employer shall pay all earned but unpaid salary, accrued but unused vacation, and any reimbursable business expenses through the Termination Date in accordance with Employer policy and Arkansas Code Annotated § 11-4-405.
(c) COBRA Subsidy. Employer shall subsidize Employee’s COBRA premiums at the active-employee contribution rate for [NUMBER] months following the Termination Date, subject to timely COBRA election.

Section 3.2 Other Consideration

(a) Outplacement. Employer will provide outplacement services through [PROVIDER] for up to [NUMBER] months (the “Benefited Period”).
(b) No Further Compensation. Except as expressly provided herein or required by Applicable Law, Employee shall not be entitled to any additional compensation, bonus, equity vesting, or benefits.

Section 3.3 Conditions Precedent

The obligations of Employer under this Article III are conditioned upon:
1. Employee’s execution and non-revocation of this Agreement;
2. Employee’s timely return of all Employer property under Section 5.4; and
3. Employee’s continued compliance with the covenants in Article V.

Section 3.4 Withholding; Taxes

All payments shall be subject to required tax withholdings. Employee is solely responsible for all taxes attributable to amounts received under this Agreement.

Section 3.5 No Re-Employment

Employee waives any right to future employment with Employer and agrees that any application for re-employment may be rejected without liability.

Section 3.6 ADEA Compliance

(a) Consideration Period. Employee is advised to consult with an attorney before executing this Agreement and acknowledges receipt of at least twenty-one (21) days to consider its terms. Employee may sign earlier but is not required to do so.
(b) Revocation Period. Employee may revoke acceptance within seven (7) calendar days after signing by delivering written notice to [CONTACT NAME & ADDRESS]. This Agreement shall not become effective until the expiration of the revocation period.
(c) Knowing and Voluntary. Employee affirms that the release of ADEA claims is knowing and voluntary, that this Agreement is written in a manner calculated to be understood, and that Employee has not been induced by any statement inconsistent with the terms herein.

ARTICLE IV – REPRESENTATIONS AND WARRANTIES

Section 4.1 Employee Representations

Employee represents and warrants that:
1. Employee has not filed, and is not aware of, any pending claims against Employer except those expressly released herein.
2. Employee has not transferred or assigned any claims being released.
3. Employee will continue to comply with any surviving fiduciary or contractual obligations to Employer.

Section 4.2 Employer Representations

Employer represents and warrants that:
1. The execution of this Agreement has been duly authorized.
2. Employer is not in breach of any material obligation owed to Employee as of the date of this Agreement.

Section 4.3 Survival

The representations and warranties in this Article IV shall survive the Effective Date for the maximum period permitted by Applicable Law.

ARTICLE V – COVENANTS AND RESTRICTIONS

Section 5.1 Non-Disparagement

Each Party agrees not to make statements that disparage or could reasonably be expected to harm the reputation of the other Party. This Section does not restrict truthful statements required by law or governmental inquiry.

Section 5.2 Confidential Information

Employee shall not, without Employer’s prior written consent, disclose or use any non-public information concerning Employer’s business, trade secrets, or personnel (“Confidential Information”), except as permitted by law (e.g., whistleblower rights under 18 U.S.C. § 1833).

Section 5.3 Cooperation

Employee shall reasonably cooperate with Employer in any investigation, litigation, or administrative proceeding relating to events that occurred during Employee’s employment.

Section 5.4 Return of Property

No later than the Termination Date, Employee shall return all Employer property, including documents and electronically stored information, and certify deletion of Employer data from personal devices.

ARTICLE VI – DEFAULT; REMEDIES

Section 6.1 Events of Default

(a) Employee’s breach of any covenant in Article V.
(b) Employer’s failure to pay the Severance Amount when due.

Section 6.2 Cure Period

The non-defaulting Party shall provide written notice specifying the default. The defaulting Party shall have ten (10) days to cure, except that breaches of Section 5.2 (Confidential Information) are not subject to cure.

Section 6.3 Remedies

(a) Specific Performance/Injunctive Relief. Each Party acknowledges that monetary damages may be inadequate and consents to injunctive relief in any court of competent jurisdiction, subject to the limitations in Section 8.4.
(b) Clawback. Upon Employee’s uncured breach, Employer may cease unpaid severance and demand repayment of severance previously paid, not to exceed the Severance Amount.
(c) Attorneys’ Fees. The prevailing Party in any action to enforce this Agreement shall be entitled to reasonable attorneys’ fees and costs.

ARTICLE VII – RISK ALLOCATION

Section 7.1 Mutual Release and Indemnification

(a) Employee Release. Subject to Section 7.2, Employee irrevocably releases Employer, its affiliates, and their respective officers, directors, employees, and agents (“Employer Released Parties”) from any and all claims, liabilities, and causes of action, known or unknown, arising on or before the Effective Date, including but not limited to claims under Title VII of the Civil Rights Act, the ADEA, the ADA, the FLSA, the Arkansas Civil Rights Act (Ark. Code Ann. § 16-123-101 et seq.), wrongful discharge, tort, and contract claims.
(b) Employer Release. Employer releases Employee from any and all claims arising out of Employee’s employment or termination thereof, excluding claims based on fraud, embezzlement, or intentional misconduct not known to Employer as of the Effective Date.
(c) Mutual Indemnification. Each Party shall indemnify, defend, and hold harmless the other Party from claims brought by any third party arising from a breach of this Agreement by the indemnifying Party.

Section 7.2 Excluded Claims

1. Rights under this Agreement;
2. Employee’s right to unemployment or workers’ compensation benefits;
3. Claims that cannot be waived as a matter of law;
4. Claims arising after the Effective Date.

Section 7.3 Limitation of Liability

The total liability of either Party to the other arising under this Agreement shall not exceed the Severance Amount, except for liability resulting from (i) willful misconduct, (ii) fraud, or (iii) obligations expressly stated to survive notwithstanding this limitation.

Section 7.4 Force Majeure

Neither Party shall be liable for failure to perform caused by events beyond its reasonable control, including natural disasters, acts of terrorism, or governmental action, provided the affected Party gives prompt notice and resumes performance as soon as practicable.

ARTICLE VIII – DISPUTE RESOLUTION

Section 8.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas and, where applicable, federal law.

Section 8.2 Forum Selection

Subject to Section 8.3, each Party irrevocably submits to the exclusive jurisdiction of (i) the state courts of Arkansas, and (ii) the United States District Court for the Eastern or Western District of Arkansas, as applicable.

Section 8.3 Arbitration (Optional)

[OPTIONAL – DELETE IF NOT USED] Any dispute arising under this Agreement shall be finally resolved by binding arbitration administered by the American Arbitration Association under its Employment Arbitration Rules in [CITY, AR]. Judgment on the award may be entered in any court having jurisdiction.
[// GUIDANCE: If arbitration is selected, revise Sections 6.3 and 8.2 accordingly.]

Section 8.4 Jury Trial Waiver (Optional)

[OPTIONAL – DELETE IF NOT USED] EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING UNDER THIS AGREEMENT.

Section 8.5 Injunctive Relief Limitation

Nothing in this Article VIII shall restrict either Party from seeking injunctive relief under Section 6.3(a) solely to enforce Article V.

ARTICLE IX – GENERAL PROVISIONS

Section 9.1 Amendment; Waiver

No amendment or waiver of this Agreement is effective unless in a writing signed by both Parties. A waiver on one occasion is not a waiver on any subsequent occasion.

Section 9.2 Assignment

Employee may not assign any right or delegate any obligation under this Agreement. Employer may assign this Agreement to any successor by merger, sale, or transfer of substantially all assets.

Section 9.3 Successors and Assigns

This Agreement is binding upon and inures to the benefit of each Party and its respective successors and permitted assigns.

Section 9.4 Severability

If any provision is held invalid, the remaining provisions shall be enforced to the fullest extent permitted, and the invalid provision shall be reformed to effectuate the Parties’ intent.

Section 9.5 Entire Agreement

This Agreement constitutes the entire understanding between the Parties regarding the subject matter and supersedes all prior oral or written agreements.

Section 9.6 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts, each of which constitutes an original, and all of which collectively constitute one instrument. Signatures delivered by facsimile, PDF, or electronic signature technology (e.g., DocuSign) shall be deemed originals.

ARTICLE X – EXECUTION

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates set forth below.

[OPTIONAL NOTARY BLOCK – include if required for additional enforceability]

[// GUIDANCE:
1. Confirm that notice addresses, dates, and dollar amounts are complete.
2. If terminating two or more employees within a 90-day window who are 40 years or older, consult 29 U.S.C. § 626(f)(1)(H) for “OWBPA group termination” disclosure obligations.
3. Verify that post-employment restrictive covenants (if any) comply with Arkansas public policy and recent legislative developments.
4. Provide Employee with the final Agreement on the Termination Date or earlier, together with the Notice of COBRA Rights and any state unemployment pamphlets.
]