DISCLAIMER
This template is provided for general informational purposes only and does not constitute legal advice. No attorney–client relationship is created by your use of this document. Always consult a qualified attorney licensed in the applicable jurisdiction to review, customize, and approve this agreement before it is executed.

Severance and Mutual Release Agreement

(“Agreement”)

[// GUIDANCE: Insert employer’s full legal name and state of organization; insert employee’s full legal name.]

This Severance and Mutual Release Agreement (the “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between [EMPLOYER LEGAL NAME], a [STATE OF ORG] [ENTITY TYPE] with its principal place of business at [ADDRESS] (“Employer”), and [EMPLOYEE FULL NAME], residing at [ADDRESS] (“Employee,” and together with Employer, the “Parties” and each a “Party”).

TABLE OF CONTENTS

1. Recitals
2. Definitions
3. Separation of Employment & Consideration
4. Severance Benefits & Tax Matters
5. Release of Claims
6. ADEA‐Specific Waiver Requirements
7. Representations & Warranties
8. Covenants & Continuing Obligations
9. Risk Allocation & Limited Remedies
10. Dispute Resolution
11. General Provisions
12. Execution Block

1. RECITALS

A. Employee’s employment with Employer will terminate effective [TERMINATION DATE] (the “Separation Date”).
B. Employer desires to provide Employee with certain severance benefits in exchange for Employee’s promises, releases, and covenants contained in this Agreement.
C. The Parties intend this Agreement to comply with, among other laws, the Age Discrimination in Employment Act, 29 U.S.C. §§ 621–634 (“ADEA”), the Older Workers Benefit Protection Act, 29 U.S.C. § 626(f) (“OWBPA”), the Montana Wrongful Discharge from Employment Act, Mont. Code Ann. § 39-2-901 et seq. (“WDEA”), and other applicable federal and Montana state employment laws.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein, and intending to be legally bound, the Parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, the following capitalized terms have the meanings set forth below. Defined terms may be used in the singular or plural form, as the context requires.

“ADEA” means the Age Discrimination in Employment Act, 29 U.S.C. §§ 621–634.
“Agreement” has the meaning set forth in the preamble.
“Claims” means any and all claims, demands, causes of action, complaints, liabilities, damages, costs, attorneys’ fees, or other relief of any nature, whether known or unknown, suspected or unsuspected, fixed or contingent, that a Party may have.
“Confidential Information” means any proprietary or non-public information of Employer, whether in tangible or intangible form.
“Consideration Period” has the meaning given in Section 6.1.
“Employee Protected Rights” has the meaning given in Section 5.2.
“Release Scope” has the meaning given in Section 5.1.
“Severance Amount” means U.S. $[AMOUNT] as set forth in Section 4.1.
[// GUIDANCE: Add or delete definitions to conform to deal specifics.]

3. SEPARATION OF EMPLOYMENT & CONSIDERATION

3.1 Termination of Employment. Employee’s employment with Employer shall terminate on the Separation Date. As of the Separation Date, Employee shall have no further authority to act on Employer’s behalf and shall resign from all offices, directorships, and fiduciary positions with Employer and its affiliates, except as otherwise agreed in writing.

3.2 Consideration. In exchange for (a) Employee’s timely execution and non-revocation of this Agreement, and (b) Employee’s continued compliance with its terms, Employer will provide the severance benefits described in Section 4, all of which Employee acknowledges are in addition to anything of value to which Employee is already entitled.

4. SEVERANCE BENEFITS & TAX MATTERS

4.1 Severance Payment. Employer shall pay Employee the Severance Amount, less applicable withholdings, in [lump-sum/installments] commencing on the first regular payroll date following the Effective Date and expiration of the Revocation Period (defined in Section 6.2).

4.2 COBRA/Health Benefits. Employer shall pay [NUMBER] months of COBRA premiums for continuation of Employee’s group health coverage, commencing the first day of the month following the Separation Date, provided Employee timely elects COBRA.

4.3 Outplacement Services. Employer shall provide outplacement assistance through [PROVIDER] for up to [NUMBER] months after the Separation Date.

4.4 Tax Withholding. All payments hereunder shall be subject to applicable federal, state, and local tax withholdings. Employee is solely responsible for any additional tax liabilities.

[// GUIDANCE: Insert any Section 409A language if deferred compensation is implicated.]

5. RELEASE OF CLAIMS

5.1 Scope of Release. Subject to Section 5.2, Employee, on behalf of Employee and Employee’s heirs, representatives, and assigns, irrevocably and unconditionally releases Employer and its parents, subsidiaries, affiliates, predecessors, successors, and all of their respective officers, directors, employees, and agents (collectively, the “Released Parties”) from any and all Claims (the “Release Scope”) arising on or before the Effective Date, including but not limited to Claims under:
a. ADEA and OWBPA;
b. Title VII of the Civil Rights Act of 1964;
c. Americans with Disabilities Act;
d. Family and Medical Leave Act;
e. WDEA and any other Montana employment statutes;
f. common-law tort or contract; and
g. any other federal, state, or local law.

5.2 Excluded Rights. Nothing in this Agreement releases or limits:
a. Employee’s right to enforce this Agreement;
b. claims that cannot be waived as a matter of law;
c. Employee’s vested benefits under Employer’s retirement plans;
d. Employee’s rights to unemployment or workers’ compensation; or
e. Employee’s right to file a charge or participate in an investigation with any government agency (collectively, “Employee Protected Rights”). However, Employee waives any right to individual monetary recovery from the Released Parties to the fullest extent permitted by law.

5.3 Mutual Release. Employer releases Employee from any and all Claims arising out of or relating to Employee’s employment or termination thereof, except for Claims arising from (a) criminal or fraudulent conduct, or (b) Employee’s breach of this Agreement.

6. ADEA-SPECIFIC WAIVER REQUIREMENTS

6.1 Consideration Period. Employee acknowledges that Employee has been given at least twenty-one (21) days to consider this Agreement (the “Consideration Period”). Employee may knowingly and voluntarily sign this Agreement at any time before the Consideration Period expires.

6.2 Revocation Period. Employee may revoke this Agreement within seven (7) days after signing by delivering written notice of revocation to [EMPLOYER CONTACT] at [ADDRESS/EMAIL] (“Revocation Period”). This Agreement becomes effective on the eighth (8th) day after Employee signs, provided no revocation has occurred.

6.3 Acknowledgments. By signing, Employee confirms that:
a. this Agreement is written in plain language;
b. Employee has read and understands it;
c. Employee is advised in writing to consult with an attorney before signing; and
d. Employee signs freely and without coercion.

7. REPRESENTATIONS & WARRANTIES

7.1 Mutual. Each Party represents that it has full authority to enter into and perform this Agreement and that the execution has been duly authorized.

7.2 Employee Specific. Employee represents that Employee (a) has returned all Employer property, (b) has not filed any Claim within the Release Scope, and (c) is not aware of any workplace injuries not previously reported.

7.3 Survival. The representations and warranties in this Section survive the Effective Date for a period of [12] months.

8. COVENANTS & CONTINUING OBLIGATIONS

8.1 Confidentiality of Employer Information. Employee shall not disclose Confidential Information, except as required by law or court order after providing prompt notice to Employer.

8.2 Non-Disparagement. Neither Party shall make statements that disparage the other, except truthful statements made in legal proceedings.

8.3 Return of Property. Employee confirms that all Employer property has been returned or will be returned within [NUMBER] days of the Separation Date.

8.4 Cooperation. Employee will reasonably cooperate with Employer in any investigations or litigation relating to events that occurred during employment, provided Employer reimburses reasonable out-of-pocket expenses.

9. RISK ALLOCATION & LIMITED REMEDIES

9.1 Limited Liability. Notwithstanding anything to the contrary, the maximum aggregate liability of Employer arising out of or related to this Agreement shall not exceed the Severance Amount actually paid.

9.2 Indemnification Procedure. A Party seeking indemnification for breach of this Agreement shall provide prompt written notice and a reasonable opportunity to cure.

9.3 Injunctive Relief. Each Party agrees that breach of Sections 8.1 or 8.2 may cause irreparable harm entitling the non-breaching Party to seek injunctive relief in accordance with Section 10.4; provided, however, any such injunction shall be narrowly tailored and limited in duration.

9.4 Force Majeure. Neither Party shall be liable for failure to perform due to causes beyond its reasonable control (e.g., acts of God, government orders, pandemics).

10. DISPUTE RESOLUTION

10.1 Governing Law. This Agreement shall be governed by the laws of the State of Montana, together with applicable federal employment laws, without regard to conflict-of-laws principles.

10.2 Forum Selection. Except as provided in Section 10.3, the Parties consent to exclusive jurisdiction in the state or federal courts located in [COUNTY], Montana, for any action arising out of this Agreement.

10.3 Optional Arbitration. [OPTIONAL—SELECT ONE]
a. ☐ Arbitration Elected. Any dispute not resolved informally shall be submitted to binding arbitration in [CITY], Montana, under the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and the rules of [ADMINISTERING BODY].
b. ☐ Arbitration Not Elected. Disputes shall be resolved in court as provided in Section 10.2.

10.4 Jury Waiver. [OPTIONAL: The Parties knowingly and voluntarily waive any right to a jury trial.]

10.5 Attorneys’ Fees. The prevailing Party in any action or arbitration shall be entitled to reasonable attorneys’ fees and costs.

11. GENERAL PROVISIONS

11.1 Amendment; Waiver. No amendment or waiver is effective unless in writing and signed by both Parties. A waiver on one occasion is not a waiver on any subsequent occasion.

11.2 Assignment. Employee may not assign any rights or delegate any obligations under this Agreement. Employer may assign to a successor in interest.

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

11.4 Severability. If any provision is held invalid, the remaining provisions remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to achieve its original intent.

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

11.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts (including via electronic signature), each of which is deemed an original and all of which together constitute one document.

12. EXECUTION BLOCK

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

[OPTIONAL NOTARY BLOCK, if required by Employer policy or MT law.]

[// GUIDANCE:
1. Confirm compliance with Montana constitutional wage assignment restrictions if wage offsets are contemplated.
2. Verify that Severance Amount structure does not inadvertently trigger Section 409A penalties.
3. Consider providing aggregate data disclosure if the severance program is part of a “group termination program” under OWBPA.
4. Update forum-selection county to Employer’s principal Montana location.
5. Review and tailor COBRA subsidy obligations in light of current federal and state continuation-coverage rules.]