Severance Agreement - Kentucky

SEVERANCE AND MUTUAL RELEASE AGREEMENT

(Kentucky – Individual Employee)

TABLE OF CONTENTS

1. Document Header …………………………………………………………………………… [Page 2]
2. Definitions ……………………………………………………………………………………… [Page 3]
3. Operative Provisions ………………………………………………………………………… [Page 5]
4. Representations & Warranties …………………………………………………………… [Page 8]
5. Covenants & Restrictions ………………………………………………………………… [Page 9]
6. Default & Remedies ………………………………………………………………………… [Page 11]
7. Risk Allocation ………………………………………………………………………………… [Page 12]
8. Dispute Resolution …………………………………………………………………………… [Page 14]
9. General Provisions …………………………………………………………………………… [Page 16]
10. Execution Block ……………………………………………………………………………… [Page 18]
11. Exhibits & Schedules ……………………………………………………………………… [Page 19]

1. DOCUMENT HEADER

Severance and Mutual Release Agreement (this “Agreement”) is entered into as of [DATE SIGNED] (the “Execution Date”) by and between [EMPLOYER LEGAL NAME], a [STATE OF INCORPORATION] [corporation/LLC] (“Employer”), and [EMPLOYEE FULL LEGAL NAME] (“Employee,” and together with Employer, the “Parties,” and each, a “Party”).

Recitals

A. Employee’s employment with Employer will terminate effective [SEPARATION DATE] (the “Separation Date”).
B. Employer desires to provide Employee with certain severance benefits in exchange for Employee’s release of claims and other covenants set forth herein.
C. The Parties intend this Agreement to comply with the Older Workers Benefit Protection Act (“OWBPA”) amendments to the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 626(f), and other applicable federal and Kentucky law.

NOW, THEREFORE, in consideration of the mutual promises and covenants 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 have the meanings set forth below. Capitalized terms not defined in this Section shall have the meanings ascribed elsewhere herein. Terms defined herein include their singular and plural forms.

“Affiliate” – Any entity controlling, controlled by, or under common control with Employer.
“ADEA” – The federal Age Discrimination in Employment Act of 1967, as amended.
“Agreement” – This Severance and Mutual Release Agreement, including all Exhibits and Schedules.
“Confidential Information” – All non-public information concerning Employer or its Affiliates, in any form, including trade secrets, business plans, financial data, personnel information, and proprietary processes.
“Consideration Period” – The [21 / 45]-day period during which Employee may consider whether to sign this Agreement, as required by OWBPA.
“Covered Claims” – All claims released by Employee under Section 7.1, subject to the carve-outs therein.
“Employer Property” – All physical or electronic property of Employer, including keys, equipment, documents, and data.
“Good Reason” – [OPTIONAL—insert definition or delete if inapplicable].
“Severance Amount” – The total gross cash payment to Employee under Section 3.2(a), equal to $[AMOUNT].
“Severance Period” – The period commencing on the Payment Commencement Date and ending [NUMBER] weeks thereafter.

3. OPERATIVE PROVISIONS

3.1 Separation of Employment

(a) Employment Termination. Employee’s employment with Employer shall terminate on the Separation Date.
(b) Final Wages and Other Amounts Already Owed. Employer shall pay all earned wages or salary no later than the next normal pay period following separation or fourteen (14) days after separation, whichever occurs later. KRS § 337.055. Final earned wages, reimbursable expenses, vested benefits, and accrued leave owed under applicable law or a controlling plan, policy, or contract are not severance consideration and are not conditioned on signing this Agreement. Employee identifies any known unpaid-compensation issue here: [________________________________].

3.2 Severance Consideration

(a) Severance Payment. Subject to Employee’s timely execution, non-revocation, and compliance with this Agreement, Employer shall pay the Severance Amount in [lump sum / equal installments] commencing on the first regular payroll date after the Revocation Period (the “Payment Commencement Date”).
(b) COBRA Subsidy. Employer shall reimburse Employee for [all / ___%] of Employee’s COBRA premiums for [_____ months] following the Separation Date, or until Employee becomes eligible for alternative group health coverage, whichever occurs first.
(c) Outplacement. Employer shall provide outplacement services through [VENDOR] for up to [_____ months] or an aggregate cost not to exceed $[AMOUNT].

The severance consideration is in addition to anything Employee is already entitled to receive and is exchanged for the release and lawful promises in this Agreement.

3.3 ADEA / OWBPA Compliance

(a) Consideration Period. Employee has at least twenty-one (21) calendar days to consider the final Agreement. If the waiver is offered in connection with an exit incentive or other employment termination program offered to a group or class of employees, replace twenty-one days with at least forty-five (45) calendar days and, at the beginning of that period, provide a written disclosure calculated to be understood by the average eligible employee that identifies:

i. the decisional unit, class, or group covered by the program;
ii. the program's eligibility factors and applicable time limits;
iii. the job titles and individual ages of all employees eligible or selected for the program; and
iv. the individual ages of employees in the same job classification or organizational unit who are not eligible or selected.
(b) Advice to Consult Counsel. Employee is hereby advised, in writing, to consult with an attorney prior to executing this Agreement.
(c) Revocation Period. Employee may revoke this Agreement within seven (7) days after execution by delivering written notice to Employer (“Revocation Period”). This Agreement shall not become enforceable until the eighth (8th) day after Employee’s execution without revocation (the “Effective Date” for ADEA purposes).
(d) Negotiations and Early Signature. Material changes to the final offer restart the applicable consideration period unless the Parties agree otherwise. Employee may sign sooner only by a knowing and voluntary choice that Employer has not induced through fraud, misrepresentation, a threat to withdraw or change the offer before the period ends, or better terms for early signature.

(e) ADEA-Specific Terms. The ADEA waiver is written to be understood, specifically names the ADEA, excludes later-arising claims, and is supported by consideration in addition to anything Employee is already entitled to receive. See 29 U.S.C. § 626(f) and 29 C.F.R. § 1625.22.

3.4 Tax Treatment

Employee acknowledges that Employer has made no representations regarding the tax consequences of any payment hereunder. All amounts payable shall be subject to lawful withholdings. The Parties intend that payments comply with, or be exempt from, Internal Revenue Code Section 409A.

3.5 Conditions Precedent

Employer’s obligations to provide severance consideration are conditioned on Employee’s timely execution and non-revocation of this Agreement. Final wages and other amounts already owed are not conditioned on return of property or compliance with another covenant.

4. REPRESENTATIONS & WARRANTIES

4.1 By Employer.
(a) Authority. Employer has full corporate authority to enter into and perform this Agreement.
(b) No Breach. Execution of this Agreement does not breach any other agreement to which Employer is a party.

4.2 By Employee.
(a) Voluntary Execution. Employee has read this Agreement, understands its terms, and signs it voluntarily.
(b) No Assignment of Claims. Employee has not assigned or transferred any Covered Claim.
(c) Accurate Expense Reports. Employee represents that all expense reports submitted to Employer are true and complete.

4.3 Survival. The representations and warranties contained in this Section shall survive the execution of this Agreement.

5. COVENANTS & RESTRICTIONS

5.1 Confidentiality

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

5.2 Non-Disparagement

During [TIME 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.

5.3 Return of Employer Property

Employee shall, no later than [DATE], return Employer Property and delete Employer data from personal devices, except material that must be preserved by law, litigation hold, or written instruction. Return of property does not delay final wages or other amounts already owed.

5.4 Restrictive Covenants Incorporated by Reference

No prior restrictive covenant is automatically reaffirmed or incorporated by this Agreement. Any proposed noncompetition, customer nonsolicitation, confidentiality, or similar post-employment restraint requires separate Kentucky legal review and must be identified expressly here: [________________________________].

6. DEFAULT & REMEDIES

6.1 Events of Default
(a) Employee Default. A material breach by Employee of a lawful obligation in this Agreement constitutes a default.
(b) Employer Default. Failure of Employer to timely pay the Severance Amount after written notice and a ten (10)-day cure period constitutes a default.

6.2 Notice & Cure
The non-defaulting Party shall provide written notice specifying the default. The defaulting Party shall have ten (10) days to cure, except breaches of confidentiality, which are not subject to cure.

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, restricts a protected communication, or creates a prevailing-party fee shift.

7. RISK ALLOCATION

7.1 Mutual Release of Claims

(a) Employee Release. Subject to subsections (c) and (d), Employee irrevocably and unconditionally releases Employer, its Affiliates, and their officers, directors, employees, and agents from claims, whether known or unknown, based on acts occurring on or before the date Employee signs this Agreement, including claims under the ADEA, the Kentucky Civil Rights Act identified in KRS § 344.020, and any other federal, Kentucky, or local law to the extent the claim may lawfully be waived (“Covered Claims”).
(b) Employer Release. Employer releases Employee from any and all claims, known or unknown, based on acts occurring on or before the date Employee signs this Agreement, excluding claims based on fraud, willful misconduct, or criminal acts.
(c) Excluded Claims. The releases do not encompass (i) claims arising after Employee signs this Agreement; (ii) Employee’s rights under this Agreement; or (iii) rights or claims that cannot lawfully be waived.
(d) Government Filings. Nothing herein prohibits Employee from filing a charge or complaint, communicating with or providing information to a governmental agency, or participating in an agency investigation or proceeding. Nothing interferes with agency enforcement authority. Any effect of the release on individual monetary recovery is governed by applicable law.

7.2 ADEA Waiver Challenges

Nothing imposes a condition precedent, penalty, attorney-fee liability, damages, or another limitation that adversely affects Employee's right to challenge the validity of the ADEA waiver.

7.3 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.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement shall be governed by, and construed in accordance with, (i) federal law with respect to ADEA and other federal statutory claims, and (ii) the laws of the Commonwealth of Kentucky, without regard to its conflict-of-laws principles.

8.2 Forum Selection

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

8.3 Arbitration

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

8.4 Jury Trial Waiver

No predispute jury waiver is included in this template.

8.5 Protected Rights

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

9. GENERAL PROVISIONS

9.1 Amendment and Waiver. No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by both Parties. No waiver shall constitute a waiver of any subsequent breach.

9.2 Assignment. Employee may not assign or delegate any rights or obligations under this Agreement. Employer may assign this Agreement to any successor or Affiliate with notice to Employee.

9.3 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

9.4 Severability. If a provision is held invalid or unenforceable, the remaining provisions remain in effect to the extent permitted by law. This clause does not authorize expansion of a release or restraint.

9.5 Integration/Merger. This Agreement constitutes the entire understanding concerning its subject matter and supersedes prior oral or written understandings concerning that subject matter. No separate restrictive covenant or other prior obligation is incorporated unless expressly identified in Section 5.4.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together constitute one instrument. Signatures transmitted via PDF, DocuSign, or similar electronic means shall be deemed original signatures.

9.7 Headings. Headings are for convenience only and shall not affect interpretation.

9.8 Construction. The Parties acknowledge that each has had the opportunity to negotiate this Agreement with counsel of its choice and that no provision shall be construed against either Party as drafter.

10. EXECUTION BLOCK

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

11. EXHIBITS & SCHEDULES

• Exhibit A – OWBPA Disclosure Statement (if employee is part of a group termination program)
• Exhibit B – COBRA Premium Reimbursement Procedure

Sources and References

• 29 U.S.C. § 626(f)
• 29 C.F.R. § 1625.22
• KRS § 337.055
• KRS § 344.020