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 [EFFECTIVE DATE] (the “Effective 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], which amount shall constitute the aggregate limitation of liability of Employer under Section 7.3.
“Severance Period” – The period commencing on the Payment Commencement Date and ending [NUMBER] weeks thereafter.
“Trade Secret” – Information defined as a “trade secret” under the Kentucky Uniform Trade Secrets Act, KRS § 365.880 et seq.

[// GUIDANCE: Definitions may be expanded or narrowed based on client specifics. Maintain internal consistency when altering defined terms.]

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 Accrued PTO. Employer shall pay Employee all earned but unpaid wages, accrued and unused paid time off (“PTO”), and reimbursable business expenses through the Separation Date in accordance with KRS § 337.055.

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].

3.3 ADEA / OWBPA Compliance

(a) Consideration Period. Employee acknowledges receipt of [21 / 45] days to consider this Agreement.
(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. Any changes to this Agreement, whether material or not, shall not restart the Consideration Period.

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 the severance benefits are conditioned upon: (i) Employee’s execution and non-revocation of this Agreement; (ii) timely return of Employer Property; and (iii) ongoing compliance with Sections 5 and 6.

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 agrees to maintain the confidentiality of all Confidential Information and to use such information solely for legitimate purposes authorized by Employer. This covenant survives indefinitely or for the maximum period allowed under applicable law with respect to Trade Secrets.

5.2 Non-Disparagement

Employee shall not make statements that are defamatory or materially detrimental to Employer or its Affiliates. This obligation does not preclude truthful testimony compelled by law or government agency inquiry.

5.3 Return of Employer Property

Employee shall, no later than the Separation Date (or promptly upon discovery thereafter), return all Employer Property and permanently delete any electronic Confidential Information in Employee’s possession.

5.4 Restrictive Covenants Incorporated by Reference

If Employee is party to any existing restrictive covenant agreement (e.g., non-competition, non-solicitation), such agreement remains in full force and is incorporated herein by reference.

[// GUIDANCE: Kentucky generally disfavors broad post-employment non-competes. Assess reasonableness under KRS § 365.160 and related common-law standards.]

6. DEFAULT & REMEDIES

6.1 Events of Default
(a) Employee Default. Any breach by Employee of Sections 5 or 7 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) Clawback. Upon Employee Default, Employer may cease unpaid severance benefits and recover previously paid Severance Amounts, not to exceed the Severance Amount cap.
(b) Equitable Relief. The Parties acknowledge that a breach of confidentiality or non-disparagement may cause irreparable harm. Accordingly, Employer may seek injunctive relief, limited to the minimum scope and duration necessary to protect legitimate business interests, without the necessity of posting bond, subject to Section 8.4.
(c) Fees & Costs. The prevailing Party in any action to enforce this Agreement is entitled to reasonable attorneys’ fees and costs.

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 any and all claims, whether known or unknown, arising on or before the Effective Date, including but not limited to claims under Title VII, the ADEA, the ADA, the FMLA, the Kentucky Civil Rights Act (KRS § 344.010 et seq.), and any other federal, state, or local statute, regulation, or common-law theory (“Covered Claims”).
(b) Employer Release. Employer releases Employee from any and all claims, known or unknown, arising on or before the Effective Date, excluding claims based on fraud, willful misconduct, or criminal acts.
(c) Excluded Claims. The releases do not encompass (i) claims arising after the Effective Date; (ii) Employee’s rights under this Agreement; (iii) vested benefits under Employer’s qualified retirement plans; (iv) rights to workers’ compensation or unemployment insurance; or (v) claims that cannot be waived as a matter of law.
(d) Government Filings. Nothing herein prohibits Employee from filing a charge with or participating in an investigation conducted by the EEOC, NLRB, SEC, or other governmental agency; however, Employee waives any right to monetary recovery pursuant to such claims, to the fullest extent permitted by law.

7.2 Indemnification

The Parties’ sole indemnity obligations are embodied in the mutual releases above. No additional indemnity is provided.

7.3 Limitation of Liability

Notwithstanding any provision herein, the aggregate liability of Employer to Employee for any claim arising out of or relating to this Agreement shall not exceed the Severance Amount.

7.4 Force Majeure

Neither Party shall be liable for failure to perform its obligations (other than payment of money) where such failure results from causes beyond its reasonable control, including natural disasters, war, or governmental action.

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

Subject to Section 8.3, the Parties consent to the exclusive jurisdiction of the state and federal courts located in [COUNTY], Kentucky for any action arising under or relating to this Agreement.

8.3 Arbitration (Optional)

[SELECT ONE]
☐ (a) Arbitration Elected. Any dispute, claim, or controversy arising out of or related to this Agreement shall be resolved by 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 consistent with Section 8.2.
☐ (b) Arbitration Not Elected. Section 8.2 applies.

[// GUIDANCE: To compel arbitration under the Federal Arbitration Act, ensure mutuality of obligation and inclusion of clear delegation clauses if desired.]

8.4 Jury Trial Waiver (Optional)

[INCLUDE IF DESIRED] TO THE EXTENT NOT PROHIBITED BY LAW, EACH PARTY HEREBY WAIVES ANY 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 herein shall preclude a Party from seeking temporary, preliminary, or permanent injunctive relief in a court of competent jurisdiction to enforce Sections 5 or 6.3(b), provided such relief is sought in accordance with the limitations in Section 6.3(b).

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 and Reformation. If any provision is held unenforceable, such provision shall be reformed to the minimum extent necessary to render it enforceable, and the remainder of the Agreement shall remain in full force.

9.5 Integration/Merger. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter and supersedes all prior oral and written agreements, except existing restrictive covenant agreements expressly incorporated herein.

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.

[OPTIONAL NOTARY BLOCK—KENTUCKY]
State of Kentucky
County of ______

Subscribed and sworn before me this _ day of _, 20, by ______.

Notary Public
My commission expires: ______

11. EXHIBITS & SCHEDULES

• Exhibit A – OWBPA Disclosure Statement (if employee part of group termination)
• Exhibit B – COBRA Premium Reimbursement Procedure
• Schedule 1 – Existing Restrictive Covenant Agreements

[// GUIDANCE: Attach Exhibit A when ten or more employees are terminated within a 90-day period, providing job titles and ages as required by 29 U.S.C. § 626(f)(1)(H).]