Severance Agreement

SEVERANCE AND MUTUAL RELEASE AGREEMENT

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(d).

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

“Agreement” has the meaning set forth in the preamble.
“ADEA” means the federal Age Discrimination in Employment Act, as amended.
“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(a).
“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. In exchange for the release, 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. This consideration is in addition to anything Employee is already entitled to receive.
(b) Amounts Already Owed. The Severance Amount does not include wages, commissions, reimbursable expenses, vested benefits, or accrued leave already owed under a controlling plan, policy, or contract. If Employer discharged Employee, all wages due must be paid by the next regular payday under Ark. Code Ann. § 11-4-405. Employee identifies any known unpaid-compensation issue here: [________________________________].
(c) Health-Coverage Subsidy. Employer shall subsidize Employee’s eligible continuation-coverage premiums at the active-employee contribution rate for [NUMBER] months following the Termination Date, subject to timely election, the plan, and applicable law.

Section 3.2 Other Consideration

(a) Outplacement. Employer will provide outplacement services through [PROVIDER] for up to [NUMBER] months (the “Benefited Period”).
(b) No Additional Severance Promise. Except as expressly stated here, Employer makes no additional severance promise. This subsection does not waive or reduce amounts already owed under Section 3.1(b).

Section 3.3 Separate Duties

Employer’s duty to pay the Severance Amount is conditioned only on Employee’s timely execution and non-revocation. Employee’s duties in Article V are enforceable only through the lawful remedies in Article VI and do not convert amounts already earned or owed into release consideration.

Section 3.4 Withholding; Taxes

Employer will make required withholdings. Benefits and tax counsel must review the payment schedule before use; this template makes no tax-compliance representation to Employee.

Section 3.5 Future Employment

This Agreement does not promise future employment. It does not bar Employee from applying for work or permit retaliation for protected activity.

Section 3.6 ADEA/OWBPA Procedures

(a) Attorney Advice. Employer hereby advises Employee in writing to consult with an attorney of Employee’s choosing before signing this Agreement.
(b) Consideration Period. Employee has at least twenty-one (21) calendar days to consider this Agreement. If this waiver is offered in connection with an exit incentive or other employment termination program offered to a group or class of employees, replace 21 days with forty-five (45) calendar days and provide the written disclosures described below at the beginning of that period. Employee may sign sooner only by a knowing and voluntary choice not induced by Employer.
(c) Group Disclosures. For a group or class program, Employer must identify in writing the decisional unit, eligibility factors, applicable time limits, job titles and ages of all individuals eligible or selected, and the ages of all individuals in the same job classifications or organizational unit who were not eligible or selected.
(d) 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 revocation period expires.

ARTICLE IV – REPRESENTATIONS AND WARRANTIES

Section 4.1 Employee Representations

Employee represents and warrants that:

1. Employee has disclosed any pending claim against Employer here: [list if any].
2. Employee has not transferred or assigned any claims being released.
3. No prior restrictive covenant is automatically reaffirmed by this Agreement.

Section 4.2 Employer Representations

Employer represents and warrants that:

1. The execution of this Agreement has been duly authorized.
2. Employer has identified any known unpaid obligation to Employee here: [list if any].

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

During the [SEVERANCE PERIOD], neither Party shall knowingly make a false statement of fact intended to harm the other Party’s reputation. This Section does not restrict truthful statements, government communications, whistleblower reports, testimony, or other conduct protected by law.

Section 5.2 Confidential Information

Employee shall protect legitimate trade secrets and non-public proprietary information (“Confidential Information”). This Section does not restrict protected communications, government reports, testimony, or other conduct protected by law. Employee may disclose the payment amount to Employee’s attorney, tax advisor, spouse, or as required by law.

Section 5.3 Cooperation

Upon reasonable advance notice, Employee will provide reasonable factual cooperation concerning matters within Employee’s personal knowledge. Cooperation may not unreasonably interfere with other work, require protected or privileged disclosure, or restrict truthful testimony or government communications. Employer will reimburse reasonable out-of-pocket expenses and compensate substantial time at $[RATE] per hour.

Section 5.4 Return of Property

No later than the Termination Date, Employee shall return Employer property and delete Employer data from personal devices except material that must be preserved by law, litigation hold, or written instruction.

Section 5.5 Continuing Obligations

Any proposed noncompetition, customer nonsolicitation, or similar post-employment restraint requires separate Arkansas legal review and must be identified expressly here: [________________________________].

ARTICLE VI – DEFAULT; REMEDIES

Section 6.1 Events of Default

A Party defaults by materially breaching a lawful obligation under this Agreement.

Section 6.2 Cure Period

The non-defaulting Party shall provide written notice specifying the default. The defaulting Party has ten (10) days to cure if the breach can be cured.

Section 6.3 Remedies

A Party may pursue lawful contract remedies for a proven material breach. No remedy creates a release-challenge penalty, requires repayment merely for filing or participating in an agency matter, or restricts a protected communication. This template creates no prevailing-party fee shift.

ARTICLE VII – RISK ALLOCATION

Section 7.1 Mutual Release

(a) Employee Release. Subject to Section 7.2, and in exchange for the Severance Amount, 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, based on acts occurring on or before the date Employee signs this Agreement, including claims under the ADEA, the Arkansas Civil Rights Act employment provision (Ark. Code Ann. § 16-123-107), and other federal, state, or local employment laws.
(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.

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 Employee signs this Agreement.

Section 7.3 Protected Rights

Nothing in this Agreement prevents Employee from filing a charge, communicating with, providing information to, or participating in an investigation or proceeding before a government agency. Nothing interferes with agency enforcement authority. Any effect of the release on individual monetary recovery is governed by applicable law.

Section 7.4 No Employee Risk-Shifting

This Agreement does not impose employee indemnity, a liability cap, a force-majeure excuse for payment, a severance clawback, or a penalty for a good-faith challenge to the release. The rules governing ADEA waiver challenges remain controlled by 29 C.F.R. § 1625.22.

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

An action concerning this Agreement may be filed in an Arkansas state or federal court with subject-matter and personal jurisdiction and proper venue.

Section 8.3 Arbitration

No arbitration clause is included. If selected, use a separately reviewed addendum addressing formation, costs, discovery, remedies, and governing law.

Section 8.4 Jury Trial Waiver

No predispute jury waiver is included in this template.

Section 8.5 Protected Rights

Nothing in this Article restricts agency access, protected communications, or claims and remedies that cannot be waived privately.

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 remain enforceable to the extent permitted by law. This clause does not authorize expansion of a release or restraint.

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, which together constitute one agreement. The Parties agree to conduct this transaction electronically. Under Ark. Code Ann. §§ 25-32-103, 25-32-105, 25-32-107, and 25-32-109, a covered record or signature may not be denied legal effect solely because it is electronic; attribution and effect remain subject to the act of the person, context, the Parties' agreement, other applicable law, and the Act's scope exclusions.

ARTICLE X – EXECUTION

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

[Optional acknowledgment block if required by internal policy.]

Sources and References

• 29 U.S.C. § 626(f)
• 29 C.F.R. § 1625.22
• Arkansas Act 853 of 2019, § 7 (official enacted amendment to Ark. Code Ann. § 11-4-405)
• Ark. Code Ann. § 11-4-405 (2024 mirror; the state-provided public code interface was inaccessible through the required fetch tool)
• Ark. Code Ann. § 16-123-107 (2024 mirror; the state-provided public code interface was inaccessible through the required fetch tool)