SEVERANCE AND MUTUAL RELEASE AGREEMENT

(Tennessee-Law, Single-Employee Termination 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

[// GUIDANCE: Use Markdown’s built-in heading links or your word-processor’s automatic Table of Contents tool for page-numbered versions.]

1. DOCUMENT HEADER

This Severance and Mutual Release Agreement (this “Agreement”) is entered into effective as of [EFFECTIVE DATE] (the “Effective Date”) by and between [EMPLOYER LEGAL NAME], a [STATE OF INCORPORATION] [ENTITY TYPE] (the “Employer”), and [EMPLOYEE LEGAL NAME] (“Employee”). Employer and Employee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

1.1 Recitals

A. Employee’s employment with Employer will terminate effective [TERMINATION DATE] (the “Separation Date”).
B. Employer desires to provide Employee with severance pay and other benefits conditioned upon Employee’s execution (and non-revocation) of this Agreement.
C. The Parties wish to fully and finally settle any and all disputes that exist or may exist between them, subject to the terms and conditions set forth below.

1.2 Consideration

As consideration for the covenants, promises, and releases contained herein, and for 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 capitalized terms have the meanings set forth below. All other capitalized terms used but not defined herein shall have the meanings ascribed to them elsewhere in this Agreement.

“ADEA” means the federal Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§ 621-634.

“Agreement Effective Date” has the meaning set forth in Section 3.7(c).

“Business Day” means any day other than Saturday, Sunday, or any day on which banks located in [PRINCIPAL PLACE OF BUSINESS] are authorized or required by law to close.

“Confidential Information” means any non-public information belonging to or regarding Employer, its affiliates, clients, vendors, or employees that Employee acquired during employment and that is not generally known outside Employer.

“Covered Claims” has the meaning set forth in Section 3.2(a).

“Severance Amount” means the gross sum of $[SEVERANCE DOLLAR AMOUNT], less applicable withholdings, payable to Employee pursuant to Section 3.1(a).

[// GUIDANCE: Add or delete defined terms to align with company policies.]

3. OPERATIVE PROVISIONS

3.1 Severance Compensation and Benefits

(a) Severance Payment. Employer shall pay Employee the Severance Amount in [lump-sum/installments] on the first regular payroll date that occurs after the Agreement Effective Date (as defined in Section 3.7(c)).
(b) COBRA Subsidy. Employer shall subsidize Employee’s group health insurance premiums at the active-employee rate through the earlier of (i) [NUMBER] months following the Separation Date or (ii) the date Employee becomes eligible for other group coverage.
(c) Outplacement. Employer will provide up to $[AMOUNT] in outplacement services through [VENDOR] for a period of [NUMBER] months.

[// GUIDANCE: Confirm that any non-wage benefits comply with ERISA and COBRA where applicable.]

3.2 Mutual Release of Claims

(a) Employee Release. Subject to Sections 3.2(c)–(e), Employee, on behalf of Employee and Employee’s heirs, executors, administrators, and assigns, hereby releases and forever discharges Employer, its parents, subsidiaries, affiliates, predecessors, successors, and all of their respective officers, directors, employees, benefit plans, fiduciaries, and agents (collectively, the “Released Employer Parties”) from any and all claims, demands, actions, causes of action, complaints, grievances, liabilities, and damages of every kind whatsoever, whether known or unknown, suspected or unsuspected, that Employee ever had or now has through the Agreement Effective Date (collectively, “Covered Claims”).
(b) Employer Release. Employer, on behalf of itself and the Released Employer Parties, releases Employee and Employee’s heirs and assigns from any and all claims Employer could assert arising out of Employee’s employment or termination thereof, except for (i) claims based on willful misconduct, fraud, or criminal acts, (ii) claims that cannot be released by law, and (iii) the obligations expressly created by this Agreement.
(c) Statutory Carve-Outs. Nothing in this Section 3.2 waives:
 (i) Employee’s right to enforce this Agreement;
 (ii) Employee’s rights to unemployment insurance, workers’ compensation, or vested retirement benefits;
 (iii) Employee’s right to file a charge or participate in an investigation with the EEOC or any other government agency, provided that Employee waives any right to monetary recovery therefrom; or
 (iv) claims that cannot legally be released.
(d) ADEA Compliance. This release of ADEA claims is made in compliance with the Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. § 626(f), and is subject to the specific requirements in Section 3.7.
(e) Tennessee Waiver Limitations. Nothing herein prevents Employee from pursuing any administrative or judicial remedy expressly preserved by Tenn. Code Annotated § 50-1-304 (Public Protection Act) or any comparable public policy claim that may not be lawfully waived.

3.3 Taxes

Employee acknowledges that Employer will withhold applicable federal, state, and local taxes and report the Severance Amount on Form W-2. Employee shall be solely responsible for any additional tax liability. No Party makes any representation regarding the tax treatment of the payments contemplated herein.

3.4 No Re-Employment

Employee waives any right to employment or re-employment with Employer or any affiliate. Employer may rely on this Section as a complete bar to any application for employment.

3.5 Return of Property

On or before the Agreement Effective Date, Employee shall return all Employer property, including keys, access cards, documents (electronic or hard copy), and any Confidential Information in Employee’s possession.

3.6 Confidentiality & Non-Disparagement

(a) Confidentiality of Agreement. Employee shall not disclose the existence or terms of this Agreement to any third party, except (i) Employee’s spouse, tax or legal advisors, or (ii) as required by law.
(b) Non-Disparagement. Neither Party shall make any statement intended to disparage or harm the reputation of the other Party. This Section shall not restrict truthful testimony required by subpoena or lawful process.
(c) Limited Injunctive Relief. The Parties acknowledge that a breach of this Section may cause irreparable harm. Therefore, a Party may seek injunctive relief limited solely to enforcement of this Section, without posting bond, in any court of competent jurisdiction as permitted by Section 8.3.

3.7 OWBPA/ADEA Waiver Requirements

(a) Plain Language & Advice to Consult Counsel. Employee acknowledges that Employee has been advised in writing to consult with an attorney prior to signing this Agreement.
(b) Consideration Period. Employee has [21/45] days to review and consider this Agreement. Employee may sign this Agreement at any time during that period, but not before the Separation Date.
(c) Revocation Period & Agreement Effective Date. Employee may revoke this Agreement within seven (7) calendar days after signing by delivering written notice of revocation to [EMPLOYER CONTACT INFO]. This Agreement will not become effective or enforceable until the eighth (8th) day after Employee signs it, provided no revocation has been made (the “Agreement Effective Date”).
(d) Not Induced by Fraud or Coercion. Employee affirms that Employee signs this Agreement voluntarily, without fraud, coercion, or undue influence.

[// GUIDANCE: For group terminations, attach the OWBPA disclosure of job titles & ages as a Schedule.]

4. REPRESENTATIONS & WARRANTIES

4.1 Mutual Representations

Each Party represents and warrants that:
(a) it has full power and authority to enter into and perform this Agreement;
(b) entering into this Agreement does not violate any other agreement binding on such Party; and
(c) it has not assigned or transferred any claim released herein.

4.2 Employee Additional Representations

Employee further represents that:
(a) Employee has reported all work-related injuries and known violations of law to Employer;
(b) Employee has not filed any complaint or charge against Employer that has not been disclosed; and
(c) Employee is not aware of any wrongdoing by Employer that has not been previously reported through Employer’s compliance channels.

4.3 Survival

The representations and warranties in this Section shall survive the Agreement Effective Date for a period of twelve (12) months.

5. COVENANTS & RESTRICTIONS

5.1 Cooperation

Employee shall reasonably cooperate with Employer in connection with any investigation, litigation, or administrative proceeding relating to events that occurred during Employee’s employment. Employer shall reimburse reasonable out-of-pocket expenses incurred in rendering such cooperation.

5.2 Compliance With Post-Employment Obligations

Employee reaffirms any existing confidentiality, invention assignment, non-competition, or non-solicitation obligations contained in [REFERENCE PRIOR AGREEMENT], which remain in full force and effect according to their terms.

5.3 Notice & Cure

If either Party believes the other has breached this Agreement, it shall provide written notice detailing the breach. The breaching Party shall have ten (10) Business Days to cure, if curable, before the non-breaching Party may invoke remedies under Section 6.

6. DEFAULT & REMEDIES

6.1 Events of Default

The following constitute a default: (a) a material breach of any covenant, representation, or warranty set forth herein; (b) Employee’s failure to return property per Section 3.5; or (c) Employee’s revocation of this Agreement under Section 3.7(c).

6.2 Employer Remedies

If Employee defaults, Employer may:
(i) cease any unpaid portion of the Severance Amount;
(ii) seek repayment of any severance already paid, up to the Liability Cap in Section 7.2; and
(iii) pursue equitable relief as permitted under Section 3.6(c).

6.3 Employee Remedies

If Employer defaults by failing to timely pay the Severance Amount, Employee may:
(i) demand immediate payment with interest at [PRIME + ___%] per annum; and
(ii) recover reasonable attorneys’ fees and costs incurred in enforcing payment.

6.4 Attorneys’ Fees

In any action arising out of this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys’ fees and costs, except as prohibited by applicable law.

7. RISK ALLOCATION

7.1 Mutual Release (Indemnification Substitute)

The mutual releases in Section 3.2 are intended to operate as an indemnification-like risk allocation. To the fullest extent permitted by law, each Party shall bear its own losses arising from Released Claims, and neither Party shall seek contribution or indemnity from the other except as expressly reserved herein.

7.2 Limitation of Liability

Notwithstanding anything to the contrary, the maximum aggregate liability of either Party to the other arising out of or related to this Agreement shall not exceed the Severance Amount. This limitation does not apply to (i) claims for breach of confidentiality or restrictive covenants, or (ii) claims based on willful misconduct or fraud.

7.3 Force Majeure

Neither Party shall be liable for failure to perform its obligations (other than payment obligations) if such failure results from causes beyond its reasonable control, including natural disasters, war, terrorism, or governmental action, provided that the affected Party gives written notice within five (5) Business Days of the event and uses commercially reasonable efforts to resume performance.

8. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee, without regard to its conflicts-of-law principles, and, where applicable, federal law.

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], Tennessee, for any action arising under or related to this Agreement.

8.3 Arbitration (Optional)

[SELECT ONE:
☐ Arbitration Elected ☐ Arbitration Not Elected]

If “Arbitration Elected” is checked, any dispute not resolved informally within thirty (30) days shall be finally settled by confidential arbitration administered by the American Arbitration Association (“AAA”) under its Employment Arbitration Rules. Judgment on the award may be entered in any court having jurisdiction.

8.4 Jury Trial Waiver (Optional)

[SELECT ONE:
☐ Jury Waiver Applicable ☐ Jury Waiver Not Applicable]

If “Jury Waiver Applicable” is checked, the Parties knowingly and voluntarily waive any right to a trial by jury in any action relating to this Agreement.

8.5 Limited Injunctive Relief

Nothing in this Section limits a Party’s right to seek injunctive relief for breach of confidentiality or restrictive covenants, as provided in Section 3.6(c).

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. A waiver on one occasion shall not be deemed a waiver of any other breach.

9.2 Assignment

Employee may not assign any rights or delegate any obligations under this Agreement. Employer may assign this Agreement to any successor by merger, consolidation, or purchase of substantially all its assets, provided that such successor assumes Employer’s obligations herein.

9.3 Successors and Assigns

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

9.4 Severability

If any provision of this Agreement is held invalid or unenforceable, such provision shall be reformed to the minimum extent necessary to render it valid, and the remaining provisions shall remain in full force and effect.

9.5 Entire Agreement

This Agreement constitutes the entire agreement between the Parties regarding its subject matter and supersedes all prior or contemporaneous oral or written agreements, except for any restrictive covenants expressly reaffirmed herein.

9.6 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together constitute one instrument. Signatures delivered by facsimile, PDF, or electronic signature platform (e.g., DocuSign) shall be deemed original signatures for all purposes.

9.7 Headings

Section headings are included for convenience only and shall not affect the construction or interpretation of this Agreement.

9.8 Construction

The Parties have jointly negotiated and drafted this Agreement and, therefore, no presumption or rule of strict construction shall apply against either Party.

10. EXECUTION BLOCK

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

[// GUIDANCE: Determine whether notarization is required based on corporate policy; Tennessee law does not mandate notarization for severance agreements but notarization may add evidentiary value.]

(Optional) Notary Acknowledgment – Employee

State of __
County of __

On this ___ day of _, 20_, before me, the undersigned Notary Public, personally appeared ________, known to me (or satisfactorily proven) to be the person whose name is subscribed to the foregoing instrument, and acknowledged that he/she executed the same for the purposes therein contained.

Notary Public
My Commission Expires: ____

[END OF AGREEMENT]