Exhibit 10.1

Lumera Corporation
19910 North Creek Parkway, Suite 100
Bothell, Washington 98011
 
August 20, 2007

By hand delivery

Thomas D. Mino

Dear Tom:
 
    As we have discussed, your employment with Lumera Corporation (the
“Company”) has terminated, effective as of August 14, 2007 (the “Separation
Date”). You have also agreed to resign from the Company’s Board of Directors as
of the Separation Date. The purpose of this letter is to confirm the agreement
between you and the Company concerning your severance arrangements, as follows:
 
    1.         Final Salary and Vacation Pay.   You acknowledge that you have
received pay for all work you have performed for the Company during the current
payroll period, to the extent not previously paid, as well as pay, at your final
base rate of pay, for the 100.48 vacation hours you had earned, but not used, as
of the Separation Date determined in accordance with Company policy and as
reflected on the books of the Company.
 
    2.         Severance Benefits.   In consideration of your acceptance of this
Agreement and subject to your meeting in fhll your obligations under it and
under (i) Section 7 (Confidentiality), Section 9 (Restrictive Covenants) and
Section 10 (Inventions, Creations and Discoveries) of the First Amended and
Restated Employment Agreement between you and the Company, dated as of September
3, 2004 (the “Employment Agreement”), the Company will provide you the following
severance pay and benefits:
 
        (a)  As a special accommodation to you, the Company will pay you
$200,000.00 (less applicable withholdings) in a single lump sum on that date
which is five business days following the later of the effective date of this
Agreement (which shall be the eighth calendar day following your signing) or the
date one fully executed counterpart of this Agreement is received by the
Company. In addition, the Company will pay you an amount equal to your fInal
base salary less $200,000.00, which amount shall be paid to you in approximately
equal installments (less applicable withholdings) at the Company’s regular
payroll periods during the twelve month period immediately following the
Separation Date. The first such payment will be made on the Company’s next
regular payday which follows the date payment of the lump sum is made to you and
that first payment shall be retroactive to the day immediately following the
Separation Date.

 

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        (b)  If you were enrolled in the Company’s medical and dental plans on
the Separation Date, you may elect to continue your participation and that of
your eligible dependents inthose plans for a period of time under the federal
law known as “COBRA.” If you do so by signing and returning a COBRA election
form no later than the effective date of this Agreement, then, until the
conclusion of the Severance Pay Period or, if earlier, until the date you begin
new employment, the Company will contribute to the premium cost of your coverage
and that of your eligible dependents under those plans at the same rate that it
contributes to the premium cost of coverage of active employees and their
eligible dependents. To be eligible for these Company premium contributions,
however, you must pay the remainder of the premium cost by payroll deduction.
You agree to notify the Company immediately if you begin new employment during
the Severance Pay Period and to repay promptly any excess contributions made by
the Company. After the Company’s contributions end, you may continue coverage
for the remainder of the COBRA period, if any, by paying the full premium cost
plus a small administrative fee.
 
        (c)  Notwithstanding anything to the contrary contained in the Company’s
stock option plans or any option grant certificate issued to you, those options
to purchase shares of the common stock of the Company held by you that are
vested and exercisable as of the Separation Date shall remain exercisable
through and including that date which is 90 days following the termination of
your consulting relationship with the Company. Except as otherwise expressly
provided in this Section 2(c), the terms and conditions of your options shall
remain unchanged and shall be governed by the applicable terms of the Company’s
stock option plans, the certificate(s) of grant pursuant to which your options
were issued and any other restrictions or provisions generally applicable to the
Company options.

    3.         Consulting Arrangement.   Subject to the terms and conditions
herein, you shall serve as a consultant to the Company for an initial period of
ten months commencing September 1, 2007 (the “Initial Consulting Period”). In
your capacity as a consultant to the Company, you shall be available to provide
services to the Company up to 20 hours per month. In connection with providing
these services, you shall be paid $10,000.00 per month (less applicable
withholdings) at the Company’s regular payroll periods during the Initial
Consulting Period. In addition, the Company shall continue to provide you with a
cellular phone and a lumera.com email address. You will not be provided an
office at the Company’s headquarters, but you shall be given phone (including
maintenance of your current number and voicemail) and computer access at the
Company’s headquarters as your duties require. Following the Initial Consulting
Period, your consulting relationship with the Company shall continue until
terminated by you or the Company upon 5 business days’ notice to the other
party. No additional compensation shall be owed to you in respect of any
services you provide to the Company following the Initial Consulting Period.
Notwithstanding the foregoing, the Company may immediately terminate your
consulting arrangement at any time upon notice to you for Cause, at which time
no further payment will be due to you as a consultant other than payment in
respect of services you have provided to the Company and have not been
compensated for, payable at the rate of $500 per hour. “Cause” shall mean your
(a) conviction of a felony or other serious misconduct, (b) willful or
persistent failure to follow the direction of the Company’s executive officers
in the performance of your duties as a consultant to the Company, or (c)
material breach of this Agreement
 
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    4.        Withholding.   All payments made by the Company under this
Agreement shall be reduced by any tax or other amounts required to be withheld
by the Company under applicable law and all other deductions authorized by you.
 
    5.        Acknowledgement of Full Payment.   You acknowledge and agree that
the payments provided under paragraph 1 of this Agreement are in complete
satisfaction of any and all compensation due to you from the Company, whether
for services provided to the Company, services provided pursuant to Section 3 of
this Agreement or otherwise, through the Separation Date and that, except as
expressly provided under this Agreement, no further compensation is owed to you.
 
    6.         Status of Employee Benefits, Paid Time Off and Stock Options.  
Except as otherwise expressly provided in paragraph 2(b) of this Agreement, your
participation in all employee benefit plans of the Company has ended as of the
Separation Date, in accordance with the terms of those plans. You will not
continue to earn vacation or other paid time off after the Separation Date. For
the sake of clarity, your consulting relationship with the Company will not
entitle you to any compensation or benefits other than as explicitly set forth
in this Agreement. Your rights and obligations with respect to any stock options
granted to you by the Company which the Company has agreed pursuant to paragraph
2(c) to extend the time for exercise shall otherwise be governed by the
applicable stock option plan and any agreements or other requirements applicable
to those options. All stock options which are unvested as of the Separation Date
have been cancelled as of that date and you agree to return, no later than the
effective date of this Agreement, the stock option certificates for all stock
options granted to you which were unvested on the Separation Date. Please note
that you should consult with your own tax advisor regarding the tax implications
of your exercise of the option, which may result in taxable income to you as of
the date of exercise.
 
    7.         Non-Disparagement.   You agree that you will not disclose this
Agreement or any of its terms or provisions, directly or by implication, except
(i) to members of your immediate family and to your legal and tax advisors, and
then only on condition that they agree not to further disclose this Agreement or
any of its terms or provisions to others or (ii) as required by order of a court
of competent jurisdiction or to the extent necessary to comply with required
reporting of this Agreement to governmental administrative, regulatory or taxing
authorities or (iii) as otherwise required by law. You also agree that, during
the Severance Pay Period and thereafter, you will not disparage or criticize the
Company, its business, its management or its products, and that you will not
otherwise do or say anything that could disrupt the good morale of Company
employees or harm its interests or reputation.
 
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    8.         Return of Company Documents and Other Property.   In signing this
Agreement, you represent and warrant that you have returned to the Company any
and all documents, materials and information (whether in hardcopy, on electronic
media or otherwise) related to Company business (whether present or otherwise)
and all keys, access cards, credit cards, computer hardware and software,
telephones and telephone-related equipment and all other property of the Company
in your possession or control, other than those items that are reasonably
required to perform your duties as a consultant as determined by the Board.
Further, you represent and warrant that you have not retained any copy of any
Company documents, materials or information (whether in hardcopy, on electronic
media or otherwise), other than as set forth above. Recognizing that your
employment with the Company has ended, you agree that you will not for any
purpose, attempt to access or use any Company computer or computer network or
system, including without limitation its electronic mail system, other than to
access your lumera.com email account in connection with your consulting
activities. Further, you acknowledge that you have disclosed to the Company all
passwords necessary or desirable to enable the Company to access all information
which you have password-protected on any of its computer equipment or on its
computer network or system. No later than 5 business days following the
termination of your consulting relationship with the Company, or at any time
upon request of the Company, you will return to the Company any and all
documents, materials, information and other property of the Company, including
without limitation any such documents or materials created by you during the
term of your consulting relationship with the Company, still in your possession
or control,
 
    9.        Release of Claims.
 
        (a)  In consideration of the severance pay and other benefits to be
provided you in accordance with this Agreement, to which you are not otherwise
entitled, you hereby release and forever discharge the Company and its
subsidiaries and other affiliates, all of the respective past, present and
future officers, directors, shareholders, partners, members, managers,
employees, agents, representatives, successors and assigns of the foregoing and
all others connected with any of them (all, collectively, the “Company
Released”), both individually and in their official capacities, from any and all
causes of action, rights or claims which you have had in the past, now have, or
might now have, whether known or unknown, through the date of your signing of
this Agreement, in any way resulting from, arising out of or connected with your
employment by the Company or its termination or pursuant to any federal, state
or local law, regulation or other requirement (including without limitation
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act and the fair employment practices
statutes of the state or states in which you have worked for the Company or any
of its subsidiaries or other affiliates, each as amended).
 
        (b)  This Agreement, including the release of claims set forth in this
Section 8, creates legally binding obligations and the Company therefore advises
you to consult an attorney before signing this Agreement. In signing this
Agreement, you give the Company assurance that you have signed it voluntarily
and with a full understanding of its terms; that you have had sufficient
opportunity, before signing this Agreement, to consider its terms and to consult
with an attorney, if you wished to do so; and that, in signing this Agreement,
you have not relied on any promises or representations, express or implied, that
are not set forth expressly in this Agreement.
 
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    10.  Miscellaneous.
 
        (a)  This Agreement constitutes the entire agreement between you and the
Company and supersedes all prior and contemporaneous communications, agreements
and understandings, whether written or oral, with respect to your employment,
its termination and all related matters, excluding only Section 7, Section 9 and
Section 10 of the Employment Agreement, and your obligations with respect to the
securities of the Company, all of which shall remain in full force and effect in
accordance with their terms.
   
        (b)     This Agreement may not be modified or amended, and no breach
shall be deemed to be waived, unless agreed to in writing by you and the
Chairman of the Board of the Company or his expressly authorized designee. The
captions and headings in this Agreement are for convenience only and in no way
define or describe the scope or content of any provision of this Agreement.
 
        (c)     The obligation of the Company to make payments to you or on your
behalf under this Agreement is expressly conditioned on your continued full
performance of your obligations under this Agreement and under Section 7,
Section 9 and Section 10 of the Employment Agreement.
 
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If the terms of this Agreement are acceptable to you, please sign, date and
return it to me within twenty-one days of the date you reccivé it. You may
revoke this Agreement at any time during the seven-<lay period immediately
following the date ofyoursignhig. 1fyou do not revoke it, then, at the
expiration of that seven-day period, this letter will take effect as a legally-
binding agreement between you and the Company on the basis set forth above. The
enclosed copy of this letter, which you should also sign and date, is for your
records.

        LUMERA CORPORATION  
   
   
    By:   /s/ C. JAMES JUDSON  

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C.James Judson
Chairman of the Board of Directors

 
 

Accepted and Agreed       /s/ THOMAS D. MINO      

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    Thomas D. Mino      

 
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