SEVERANCE AND RELEASE AGREEMENT

[Illinois – Comprehensive Template]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
4. Representations & Warranties
5. Covenants & Restrictions
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block

1. DOCUMENT HEADER

This Severance and Release Agreement (this “Agreement”) is entered into and made effective as of [EFFECTIVE DATE] (the “Effective Date”) by and between [EMPLOYER LEGAL NAME], a [STATE OF INCORPORATION] [corporation/LLC/etc.] with its principal place of business at [ADDRESS] (“Employer”), and [EMPLOYEE FULL LEGAL NAME], residing at [ADDRESS] (“Employee,” and together with Employer, each a “Party” and collectively, the “Parties”).

Recitals

A. Employee’s employment with Employer will terminate effective [TERMINATION DATE] (the “Termination Date”).
B. Employer wishes to provide Employee with severance benefits in exchange for a comprehensive release of claims and other covenants, and Employee desires to accept such severance benefits on the terms set forth herein.
C. The Parties intend that this Agreement be construed in accordance with applicable federal and Illinois law, including the Age Discrimination in Employment Act (“ADEA”) and the Older Workers Benefit Protection Act, 29 U.S.C. § 626(f) (collectively, “OWBPA”).

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below. Any term not defined in this Section shall have the meaning ascribed to it elsewhere in the Agreement.

“Agreement” has the meaning set forth in the Preamble.

“ADEA” means the federal Age Discrimination in Employment Act of 1967, as amended.

“Claim” means any and all actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, accrued or unaccrued.

“Confidential Information” means all non-public, proprietary or confidential information of Employer, in any form, whether or not marked or designated as confidential.

“Consideration Period” has the meaning assigned in Section 3.4(a).

“Employee” has the meaning set forth in the Preamble.

“Employer” has the meaning set forth in the Preamble.

“Payment” has the meaning assigned in Section 3.1.

“Release” has the meaning assigned in Section 3.3.

“Revocation Period” has the meaning assigned in Section 3.4(b).

“Separation Benefits” means collectively the Payment and any additional benefits provided under Section 3.2.

“Termination Date” has the meaning set forth in the Recitals.

[// GUIDANCE: Add any additional defined terms (e.g., “Arbitration Rules,” “COBRA Benefits,” etc.) if you include corresponding provisions.]

3. OPERATIVE PROVISIONS

3.1 Severance Payment

Subject to Employee’s timely execution and non-revocation of this Agreement, Employer shall pay Employee a lump-sum cash payment in the gross amount of $[SEVERANCE AMOUNT] (the “Payment”), less applicable deductions and withholdings, within [NUMBER] business days following the Effective Date.

3.2 Additional Separation Benefits

a. COBRA Subsidy: Employer shall directly pay the full premium for Employee’s continued group health coverage under COBRA for [NUMBER] months following the Termination Date, or until Employee becomes eligible for comparable coverage, whichever occurs first.
b. Outplacement Services: Employer shall provide professional outplacement services for a period of [NUMBER] months at a cost not to exceed $[CAP].
[// GUIDANCE: Delete or modify subsections (a)–(b) as appropriate.]

3.3 Mutual Release of Claims

a. Employee Release. In exchange for the Separation Benefits, Employee unconditionally and irrevocably releases and forever discharges Employer, its past and present parents, subsidiaries, affiliates, and each of their respective officers, directors, employees, agents, successors, and assigns (collectively, the “Released Parties”) from any and all Claims arising on or before the Effective Date, including but not limited to:
i. claims under federal, state, or local statutes (including, without limitation, Title VII of the Civil Rights Act, ADEA/OWBPA, ADA, FMLA, Illinois Human Rights Act, and Illinois Wage Payment and Collection Act);
ii. common-law claims (including breach of contract and tort); and
iii. claims for attorneys’ fees, costs, and expenses.
b. Employer Release. Employer, on behalf of itself and the Released Parties, hereby releases Employee from any and all Claims arising on or before the Effective Date, excluding (i) Claims arising from fraudulent or criminal conduct, (ii) Claims arising from willful or grossly negligent acts, and (iii) Claims that cannot be waived as a matter of law.

3.4 ADEA/OWBPA Consideration and Revocation

a. Consideration Period. Employee acknowledges that Employer has advised Employee to consult with an attorney prior to executing this Agreement and that Employee has twenty-one (21) days (or forty-five (45) days in the event of an exit incentive or group termination program) from receipt of this Agreement to consider its terms (the “Consideration Period”).
b. Revocation Period. Employee may revoke this Agreement within seven (7) calendar days after executing it (the “Revocation Period”) by delivering written notice of revocation to Employer as set forth in Section 9.9. This Agreement shall not become effective or enforceable until the Revocation Period has expired without timely revocation.
c. Knowing and Voluntary Waiver. Employee affirms that the Release of ADEA claims is knowing and voluntary and complies in all respects with OWBPA requirements.

3.5 Conditions Precedent

Employer’s obligations under Sections 3.1 and 3.2 are conditioned on (i) Employee’s execution and non-revocation of this Agreement, (ii) Employee’s return of all Employer property pursuant to Section 5.3, and (iii) Employee’s material compliance with the covenants herein.

4. REPRESENTATIONS & WARRANTIES

4.1 Employee Representations

a. Capacity; Authority. Employee has full legal capacity and authority to enter into this Agreement.
b. No Unpaid Wages. Employer has paid Employee all wages, overtime, bonuses, commissions, and other compensation due through the Termination Date, except as expressly provided herein.
c. No Reliance. Employee has not relied on any statement or representation not set forth in this Agreement.

4.2 Employer Representations

a. Authority. Employer has duly authorized execution of this Agreement.
b. No Pending Claims. To Employer’s knowledge, no lawsuits or administrative charges have been filed against Employee by Employer arising out of Employee’s employment, except as indicated on [DISCLOSURE SCHEDULE] (if any).
c. No Reliance. Employer has not relied on any statement or representation not set forth in this Agreement.

4.3 Survival

The representations and warranties in this Section 4 shall survive the Effective Date for a period of [TWO (2)] years.

5. COVENANTS & RESTRICTIONS

5.1 Confidentiality

a. Employee Covenant. Employee shall keep the terms of this Agreement and any Confidential Information strictly confidential, except as permitted in subsection (c).
b. Employer Covenant. Employer shall not disclose the financial terms of this Agreement except as required by law or to those with a need to know.
c. Permitted Disclosures. Nothing herein prohibits either Party from (i) disclosing to legal or tax advisors; (ii) responding truthfully to a subpoena or governmental inquiry; (iii) filing a charge or participating in an investigation with the EEOC, IDHR, NLRB, or other agency; or (iv) exercising rights under the Illinois Workplace Transparency Act.

[// GUIDANCE: Illinois law requires that confidentiality clauses regarding harassment/discrimination claims include mutuality, written preference of the employee, and carve-outs for lawful disclosures.]

5.2 Non-Disparagement

Each Party agrees to refrain from making any statement that disparages or is reasonably likely to harm the reputation of the other Party or any Released Party. This Section does not restrict truthful testimony or legally protected speech.

5.3 Return of Property

Employee shall return to Employer, no later than the Effective Date (or such later date as Employer may specify), all property, documents, and data belonging to Employer, including but not limited to keys, ID badges, computers, mobile devices, and all Confidential Information in any medium.

5.4 Cooperation

Following the Termination Date, Employee shall cooperate reasonably with Employer in any internal or external investigation, dispute, or litigation relating to matters within Employee’s knowledge.

5.5 Restrictive Covenants (Optional)

[PLACEHOLDER—Insert non-competition or non-solicitation covenants, ensuring compliance with Illinois Freedom to Work Act thresholds.]

6. DEFAULT & REMEDIES

6.1 Events of Default

a. Employee Default. Any material breach by Employee of Sections 5.1–5.4.
b. Employer Default. Failure to make the Payment within the time prescribed in Section 3.1.

6.2 Notice and Cure

The non-defaulting Party shall provide written notice specifying the default. The defaulting Party shall have [10] days to cure, except that breaches of confidentiality or non-disparagement are not subject to cure.

6.3 Remedies

a. Specific Performance/Injunctive Relief. Because money damages may be inadequate to remedy a breach of Sections 5.1–5.4, the non-breaching Party may seek equitable relief; provided, however, any injunction shall be narrowly tailored and limited in duration to the extent necessary to prevent irreparable harm.
b. Claw-Back. If Employee materially breaches Sections 5.1–5.4, Employer may cease unpaid Separation Benefits and recover the gross amount of the Payment already made, subject to Section 7.2.
c. Attorneys’ Fees. The prevailing Party in any action to enforce this Agreement is entitled to recover reasonable attorneys’ fees and costs.

7. RISK ALLOCATION

7.1 Mutual Release

See Section 3.3.

7.2 Limitation of Liability

In no event shall Employer’s aggregate liability under this Agreement exceed the gross amount of the Payment. Neither Party shall be liable for incidental, consequential, punitive, or special damages, except for (i) breaches of Sections 5.1–5.4, or (ii) an award of such damages in favor of a third party.

7.3 Insurance

[PLACEHOLDER—Insert any required directors’ and officers’ runoff coverage or other insurance obligations.]

7.4 Force Majeure

No Party shall be liable for nonperformance caused by events beyond its reasonable control, including natural disasters, war, acts of terrorism, pandemic, or governmental order, provided that such Party gives prompt notice and resumes performance as soon as practicable.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement shall be governed by and construed in accordance with (i) federal law applicable to employment matters, and (ii) the internal laws of the State of Illinois, without regard to conflict-of-laws principles.

8.2 Forum Selection

Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in [COUNTY], Illinois for any action arising out of or relating to this Agreement, subject to Section 8.3.

8.3 Arbitration (Optional)

[OPTION 1 – REMOVE IF NOT DESIRED]
Any dispute, claim, or controversy arising out of or relating to this Agreement shall be resolved by final and binding arbitration administered by [ARBITRATION ADMINISTRATOR] in accordance with its [RULES]. Judgment on the award may be entered in any court of competent jurisdiction.

[// GUIDANCE: Ensure the arbitration clause complies with the Federal Arbitration Act and the Illinois Workplace Arbitration Act, if applicable.]

8.4 Jury Trial Waiver (Optional)

TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

8.5 Injunctive Relief Preservation

Nothing in this Article 8 precludes a Party from seeking provisional injunctive relief under Section 6.3(a); provided, however, any such relief shall be limited as stated therein.

9. GENERAL PROVISIONS

9.1 Amendment and Waiver

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

9.2 Assignment

Employee may not assign or delegate any of Employee’s rights or obligations under this Agreement. Employer may assign this Agreement to any successor in interest; provided, the assignee assumes Employer’s obligations herein.

9.3 Successors and Assigns

This Agreement binds and inures to the benefit of the Parties and their respective permitted successors and assigns.

9.4 Severability

If any provision of this Agreement is held unenforceable, such provision shall be reformed to the minimum extent necessary, and the remaining provisions shall continue in full force and effect.

9.5 Integration / Merger

This Agreement constitutes the entire understanding between the Parties and supersedes all prior agreements, whether written or oral, concerning the subject matter herein.

9.6 No Admission of Liability

The Parties agree that this Agreement does not constitute an admission of liability or wrongdoing by either Party.

9.7 Taxes

Employee shall be solely responsible for any taxes owed on the Separation Benefits, other than Employer’s statutory withholding obligations. Employer makes no representation regarding tax consequences.

9.8 Section 409A Compliance

Payments under this Agreement are intended to be exempt from Section 409A of the Internal Revenue Code as “short-term deferrals” and shall be interpreted and administered accordingly.

9.9 Notices

All notices shall be in writing and delivered by (i) personal delivery, (ii) nationally recognized overnight courier, or (iii) certified U.S. mail (return receipt requested) to the addresses set forth below (or such other addresses designated in writing). Notice is deemed given upon receipt.

Employer Notice Address:
[EMPLOYER NOTICE ADDRESS]

Employee Notice Address:
[EMPLOYEE NOTICE ADDRESS]

9.10 Counterparts; Electronic Signatures

This Agreement may be executed in one or more counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered by electronic means (including .pdf) are deemed originals.

10. EXECUTION BLOCK

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

[NOTARY ACKNOWLEDGMENT – attach if Employer requires notarization under Illinois law or company policy.]

[// GUIDANCE:
1. Remove or adjust any bracketed placeholders before finalizing.
2. Verify that the Severance Benefits exceed any statutory minimums and that restrictive covenants comply with the Illinois Freedom to Work Act thresholds.
3. For group terminations, attach the OWBPA “decisional unit” disclosure as a separate exhibit.
4. Ensure the Consideration Period and Revocation Period are populated with correct dates before delivery to the employee.]