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.

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

            (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
	 	
              

            
	 	
              C.James
                Judson

              Chairman of the Board of
                Directors

            


    

     

     

    
      	Accepted
              and
              Agreed	 	 	 
	/s/
              THOMAS D. MINO	 	 	 
	
              

            	 	 	
            
	Thomas
              D.
              Mino	 	 	 


    

     

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