SEVERANCE AND RELEASE AGREEMENT

A State of Arizona Template – Court-Ready Draft

[// GUIDANCE: This template is designed for a single employee separation. For group terminations, expand § III(D)(5) to provide the 45-day consideration period and OWBPA disclosure schedule.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

Severance and Release Agreement (“Agreement”), entered into as of [EFFECTIVE DATE] (the “Effective Date”), by and between [EMPLOYER LEGAL NAME], an [ENTITY TYPE & STATE OF FORMATION] with its principal place of business at [ADDRESS] (“Company”), and [EMPLOYEE NAME], a resident of [STATE] (“Employee”). Company and Employee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals

A. Employee’s employment with Company will terminate effective [TERMINATION DATE] (“Termination Date”).
B. To facilitate an orderly separation and to resolve all matters arising out of the employment relationship, the Parties desire to enter into this Agreement.
C. In exchange for the promises and consideration set forth herein, the sufficiency of which the Parties acknowledge, the Parties agree as follows.

II. DEFINITIONS

For purposes of this Agreement, capitalized terms have the meanings set forth below. Terms defined in the singular include the plural and vice-versa.

“Agreement” has the meaning set forth in the Document Header.

“Applicable Law” means all federal, state, and local laws, statutes, regulations, and ordinances, including without limitation the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“ADEA”), the Older Workers Benefit Protection Act (“OWBPA”), the Arizona Civil Rights Act, and any implementing regulations.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any state analogs.

“Confidential Information” means all non-public information regarding Company’s business, customers, finances, trade secrets, or proprietary data, whether oral, written, or electronic, that Employee acquired during employment.

“Consideration Period” has the meaning set forth in § III(D)(5).

“Release” means the mutual release of claims in § VII(A).

“Severance Payment” means the gross sum of $[AMOUNT], less required withholdings, payable pursuant to § III(B)(1).

“Severance Benefits” has the meaning set forth in § III(B)(2).

III. OPERATIVE PROVISIONS

A. Termination of Employment
1. Employment ends on the Termination Date.
2. Employee confirms receipt of all wages, commissions, and accrued PTO earned through the Termination Date, except as expressly provided herein.

B. Consideration to Employee
1. Severance Payment. Company shall pay the Severance Payment in [number] equal installments in accordance with normal payroll cycles, commencing on the first payroll date following the Effective Date, provided the Revocation Period (defined below) has expired without revocation.
2. Severance Benefits.
a. COBRA Subsidy. Company will pay [percentage]% of Employee’s COBRA premiums for [number] months.
b. Outplacement. Company will provide outplacement services for [number] months through [provider].
3. Accrued Benefits. Vested 401(k) and other qualified plan benefits, if any, shall be administered in accordance with plan terms.
4. Tax Withholding. All payments are subject to lawful deductions. Employee is solely responsible for individual tax liabilities.
5. Adequate Consideration. Employee acknowledges the above consideration exceeds anything owed absent this Agreement.

C. Company Consideration
1. Mutual Release. See § VII(A).
2. Non-Disparagement Commitment. See § V(B).

D. Statutory Compliance – ADEA/OWBPA
1. Written in Plain Language. The Parties agree this Agreement is written in a manner calculated to be understood by Employee.
2. No Prospective Waiver. Nothing herein waives claims arising after Employee signs this Agreement.
3. Attorney Consultation. Employee is advised to consult with an attorney prior to executing this Agreement.
4. Consideration Period. Employee has [21] days (“Consideration Period”) to review and decide whether to sign. Signing prior to expiration is voluntary.
5. Revocation Period. Employee may revoke this Agreement within seven (7) calendar days after signing (“Revocation Period”) by delivering written notice to [Company Contact & Address]. This Agreement is not effective until the Revocation Period expires without revocation.
6. OWBPA Disclosures. [// GUIDANCE: Insert group-termination disclosure schedule if required under 29 U.S.C. § 626(f)(1)(H).]

E. Conditions Precedent
1. Execution and non-revocation of this Agreement.
2. Return of all Company property per § V(C).

IV. REPRESENTATIONS & WARRANTIES

A. Mutual Representations
1. Authority. Each Party has full authority to enter into and perform this Agreement.
2. No Assignment of Claims. Each Party represents that it has not assigned any claim released herein.

B. Employee Representations
1. Understanding. Employee has read this Agreement and understands its terms.
2. Voluntariness. Employee enters into this Agreement freely and voluntarily, without coercion.
3. No Pending Claims. Employee has not filed or initiated any complaint, charge, or claim against Company, except as disclosed in [Schedule A] (if any).

C. Survival. The representations and warranties survive the Effective Date for the applicable statute of limitations.

V. COVENANTS & RESTRICTIONS

A. Confidentiality
1. Non-Disclosure. Employee shall not disclose Confidential Information, except as required by law or with Company’s prior written consent.
2. Permitted Disclosures. Nothing herein prohibits disclosures protected by whistleblower statutes or the National Labor Relations Act.

B. Mutual Non-Disparagement
Employee and Company (through its C-Suite and HR executives) agree not to make any statement intended to harm the other Party’s reputation, except in legal proceedings or as required by law.

C. Return of Property
On or before the Termination Date, Employee will return all Company property (including documents and electronic information) and permanently delete any Company data from personal devices.

D. Future Cooperation
Employee agrees to cooperate reasonably with Company in connection with any investigation, audit, or litigation relating to events that occurred during employment.

E. Post-Employment Restrictions
[// GUIDANCE: Insert non-compete or non-solicit provisions only if compliant with A.R.S. § 23-494 and current federal enforcement trends.]

VI. DEFAULT & REMEDIES

A. Events of Default
1. Material breach of §§ V(A)–(D).
2. Failure to deliver Release under § VII(A).

B. Notice and Cure
The non-breaching Party shall provide written notice and a ten (10) day cure period before exercising remedies, except breaches of confidentiality are immediately actionable.

C. Remedies
1. Recoupment. Company may cease unpaid Severance Payments/Benefits upon Employee’s uncured breach.
2. Specific Performance & Limited Injunctive Relief. Either Party may seek specific performance or injunctive relief to enforce §§ V(A)–(C); injunctive relief is limited to preservation of the status quo and shall not extend to claims released herein.
3. Attorneys’ Fees. The prevailing Party in any action to enforce this Agreement is entitled to reasonable attorneys’ fees and costs.

VII. RISK ALLOCATION

A. Mutual Release of Claims
1. Released Claims. Except as set forth in § VII(A)(3), each Party irrevocably releases the other Party and its affiliates, officers, directors, employees, and agents from any and all claims, demands, liabilities, and causes of action, whether known or unknown, arising from any event occurring on or before the Effective Date, including but not limited to claims under Title VII, ADEA (29 U.S.C. § 626(f)), the ADA, FMLA, the Arizona Civil Rights Act, and any common-law claims.
2. Scope. The Release extends to claims arising out of Employee’s employment or termination thereof.
3. Exclusions. The Release does NOT include:
a. Rights under this Agreement;
b. Unemployment or workers’ compensation benefits;
c. Vested benefits under employee pension or welfare plans;
d. Claims that cannot be waived by law.

B. Limitation of Liability
Company’s aggregate liability under this Agreement shall not exceed the Severance Payment actually paid, except for (i) claims excluded from the Release, or (ii) Company’s willful misconduct or gross negligence.

C. Indemnification
Each Party shall indemnify, defend, and hold harmless the other Party from any breach of its warranties or covenants herein.

D. Force Majeure
Neither Party shall be liable for non-performance caused by events beyond its reasonable control, provided that the affected Party gives prompt notice and resumes performance as soon as practicable.

VIII. DISPUTE RESOLUTION

A. Governing Law
This Agreement is governed by the laws of the State of Arizona and applicable federal law, without regard to conflict-of-law principles.

B. Forum Selection
Any action arising under or relating to this Agreement shall be brought exclusively in (i) the state courts of Maricopa County, Arizona, or (ii) the U.S. District Court for the District of Arizona, except as provided in § VIII(C).

C. Arbitration [Optional]
[ARBITRATION OPTION: If selected, the Parties agree to final and binding arbitration administered by the American Arbitration Association under its Employment Arbitration Rules. Judgment on the award may be entered in any court of competent jurisdiction. The Company shall pay all arbitration filing and administrative fees beyond the first $200 paid by Employee.]

D. Jury Trial Waiver [Optional]
[JURY WAIVER OPTION: If arbitration is not selected, each Party irrevocably waives the right to a trial by jury in any proceeding arising out of this Agreement.]

E. Limited Injunctive Relief
Nothing in this Article limits either Party’s right to seek injunctive relief as expressly permitted in § VI(C)(2).

IX. GENERAL PROVISIONS

A. Amendments & Waivers
No amendment or waiver is effective unless in a writing signed by both Parties. A waiver on one occasion is not a waiver on any other occasion.

B. Assignment
Employee may not assign or delegate any rights or obligations without Company’s prior written consent. Company may assign to a successor in interest.

C. Successors & Assigns
This Agreement binds and benefits the Parties and their respective successors and permitted assigns.

D. Severability & Reformation
If any provision is held unenforceable, the remainder shall remain in effect, and the invalid provision shall be modified to the minimum extent necessary to be enforceable.

E. Entire Agreement
This Agreement constitutes the entire understanding of the Parties and supersedes all prior agreements relating to the subject matter.

F. Counterparts & Electronic Signatures
The Parties may execute this Agreement in counterparts, each of which is deemed an original. Signatures delivered electronically or by facsimile are binding.

X. EXECUTION BLOCK

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

[Optional Notary Acknowledgment block if required for recordability or to enhance enforceability under state law.]

[// GUIDANCE:
1. Verify that the Severance Payment is adequate consideration under both Arizona contract law and federal age-discrimination standards.
2. For employees under age 40, delete or modify § III(D) as appropriate.
3. Review current NLRB guidance before inserting any confidentiality or non-disparagement clause affecting concerted activity.
4. Confirm COBRA subsidy structure complies with IRC § 4980B and applicable ACA rules.
5. Tailor arbitration language to reflect chosen provider and current state/federal arbitration-enforceability trends.]