Document:

Exhibit 10.3

  
 Exhibit 10.3

 GENERAL RELEASE AGREEMENT 
 THIS GENERAL RELEASE AGREEMENT (the “Agreement”) is executed by and between Kent A. Murphy, Ph.D. (the “Consultant”) and Luna Innovations Incorporated (the “Company”) (as
used herein, the “Company” includes its parent, subsidiaries, successors, affiliates and assigns, and all of its present or former employees, officers, agents, and directors). The Consultant and the Company agree to the following:

 1. The Consultant and the Company desire to compromise and resolve any and all claims or potential claims that the Consultant may have
against the Company up to and including the Effective Date. 
 2. For and in consideration of the covenants contained herein and contingent upon
the Consultant’s compliance therewith, the Company and the Consultant agree to enter into a certain Luna Innovations Incorporated Separation and Consulting Agreement dated August 10, 2010, to which this Agreement is attached as Exhibit A.

 3. In return for the consideration and promises contained in paragraph 2 of this Agreement and for other consideration, the receipt and
sufficiency of which are hereby acknowledged, as set forth in the aforementioned Luna Innovations Incorporated Separation and Consulting Agreement, the Consultant shall and does hereby RELEASE and FOREVER DISCHARGE the Company, its parents,
subsidiaries, affiliates, divisions, successors and assigns, and all of the Company’s present or former employees, officers, servants, agents, members and directors from any and all claims, demands, actions or causes of action on account of,
arising out of or in any way connected in any way with (a) the Consultant’s employment, (b) the Consultant’s Luna Innovations Incorporated Employment Agreement, dated July 14, 2006, as amended December 31, 2008 and
March 31, 2009 (“Employment Agreement”), or the termination thereof; (c) the ending of or modification of the Consultant’s employment with the Company, (d) all matters alleged or which could have been alleged in a
complaint against the Company, (e) any and all injuries, losses or damages to the Consultant, including any claims for attorney’s fees, (f) any and all claims relating to the conduct of any employee, officer, director, or agent of the
Company, and (g) any and all other matters, transactions or things occurring prior to the date hereof, including any and all possible claims, known or unknown, which could have been asserted against the Company or the Company’s employees,
agents, officers, members or directors. 

  
 4. The release contained in paragraph
3 of this Agreement includes, but is not limited to, the release of any claims arising under federal, state or local laws relating to the Consultant’s employment with the Company, including any claims based on the Consultant’s age,
citizenship, disability, handicap, national origin, race, religion, veteran’s status, gender, or any other protected classification, any claims arising out of any legal restrictions on an employer’s right to separate or terminate its
employees and any claims for salary, leave or other benefits, personal injury, compensatory or punitive damages. This release includes, but is not limited to, any claims the Consultant may have under the Civil Rights Acts of 1866, 1964 and 1991, as
amended, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Uniformed Services Employment and Reemployment Rights Act, the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act, the Fair Labor Standards
Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, and any other federal, state or local statute, rule, regulation or common law cause of action. Further, the Consultant intends that this release shall discharge the
Company to the maximum extent permitted by law. The Consultant acknowledges that he has been paid all sums and received all leave and other benefits to which he may be entitled under applicable law or under his Employment Agreement. The Consultant
also warrants and represents that he is the owner of the matters released by him herein and he has not transferred or assigned all or any part thereof. 
 5. In return for the consideration and promises contained in paragraph 2 of this Agreement and for other consideration, the receipt and sufficiency of which are hereby acknowledged, the Company releases,
acquits and forever discharges the Consultant of and from any and all claims, actions, causes of action, judgments, grievances, obligations, rights, demands, debts, damages, sums of money, attorney’s fees, costs, losses, liabilities or
accountings of whatever nature, whether known or unknown, disclosed or undisclosed, asserted or unasserted, in law or equity, contract, tort or common law or otherwise, including, without limitation, any claims arising from violations of any
statute, constitutional provision, executive order, law or ordinance, and any claims arising out of any relationship between the Company and the Consultant, predating the execution of this Agreement. 

6. Each of the covenants herein contained shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, assigns and
successors in interest of each of the Parties. 

  
 2 

  
 7. This Agreement shall be governed by
and interpreted in accordance with the laws of the Commonwealth of Virginia, without regard to its choice of law provisions. 
 8. Should any
provision of this Agreement be declared or determined by any court or other reviewing forum to be illegal or invalid, the legality and validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid
part, term, or provision shall be severed and deemed not to be a part of this Agreement. 
 9. The Consultant acknowledges that pursuant to this
Agreement he is receiving value beyond and in addition to anything to which he already is entitled. The Consultant also represents that he has been advised that he should consult with an attorney prior to signing this Agreement. The Consultant
acknowledges that he has been given at least twenty-one (21) days within which to consider the terms of this Agreement. The Consultant also understands that he may revoke this Agreement within seven (7) days of his signing of the Agreement
and that the Agreement shall not become effective or enforceable until the seven (7) day revocation period has expired. Any such revocation must be in writing, addressed to the undersigned representative of the Company, and must be received by
the Company within the seven (7) day revocation period. 
 10. The Consultant represents that he understands all of the provisions herein,
and that he is entering into this Agreement voluntarily. The Consultant further represents and acknowledges that in executing this Agreement he does not rely, and has not relied, upon any representation or statement made by the Company or by any of
the Company’ employees, officers, agents, members, directors or attorneys with regard to the subject matter, basis or effect of this Agreement or otherwise. 
 11. This Agreement may be executed by facsimile transmission and in several counterparts, and all counterparts so executed shall constitute one agreement binding on all parties, notwithstanding the fact
that all the parties have not signed the original or the same counterpart. Any counterpart signed by the party against whom enforcement of this Agreement is sought shall be admissible into evidence as an original of this Agreement to prove its
contents. 
 [SIGNATURE PAGE FOLLOWS] 

  
 3 

  
 PLEASE READ
CAREFULLY. 
 THIS SETTLEMENT AND RELEASE AGREEMENT INCLUDES 

A COMPLETE RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. 
 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date(s) set forth below: 
  

			
	 /s/ Kent A. Murphy, Ph.D.
	 	August 10, 2010
	Kent A. Murphy, Ph.D.	 	Date

 LUNA INNOVATIONS INCORPORATED

  

					
	 /s/ Dale Messick
	 	August 10, 2010
	By	 	Dale Messick	 	Date
	Its	 	Interim President and Chief Operating Officer	 	

  
 4Exhibit 10.4

  
 Exhibit 10.4

 August 10, 2010 

Dr. Kent A. Murphy, Ph.D. 
 c/o Luna
Innovations Incorporated 
 1 Riverside Circle, Suite 400 
 Roanoke, VA 24016 
 Dear Kent: 

Reference is made to that certain Amended and Restated Investor Rights Agreement, dated as of January 13, 2010 (the
“Rights Agreement”), by and among Luna Innovations Incorporated, a Delaware corporation (the “Company”), Carilion Clinic and certain other stockholders of the Company, including you. The purpose of
this side letter agreement (this “Letter Agreement”) is to confirm our mutual agreement and understanding with respect to your registration rights under the Rights Agreement following the cessation of your role as the Chief
Executive Officer of the Company. Specifically, the Company and you (hereinafter, “Dr. Murphy”) agree as follows: 

1. All capitalized terms not defined in this Letter Agreement shall have the respective meanings ascribed to them in the Rights Agreement.

 2. This Letter Agreement is effective as of the date hereof. 
 3. Beginning the date hereof, and through the period ending at the close of business on December 31, 2011 (the “Restricted Period”), Dr. Murphy hereby agrees that
he shall not (a) make any permitted transfers of Registrable Securities in accordance with Rule 144 under the Securities Act as otherwise permitted under Section 2.8(b) of the Rights Agreement, (b) exercise any of his rights as an
“Initiating Holder” under Section 2.1 of the Rights Agreement or (c) exercise any of his rights as a “Holder” under Section 2.1 or 2.3 of the Rights Agreement; provided, however, that Dr. Murphy
may request one Form S-3 registration pursuant to, and in accordance with, Section 2.3 and other relevant provisions of the Rights Agreement during the Restricted Period for the registration of up to 800,000 shares of Common Stock (the
“Eligible Shares”) then held by Dr. Murphy (such registration the “Special Registration”). For the avoidance of doubt, the parties acknowledge and agree that a Special Registration may include a
“shelf” registration on Form S-3 relating to the offer and sale of all or any portion of the Eligible Shares from time to time pursuant to Rule 415 under the Securities Act. 
 4. If Dr. Murphy requests the Special Registration, Dr. Murphy may not transfer any Registrable Securities pursuant to the registration statement (the “Special Registration
Statement”) filed in connection with the Special Registration if, in the Company’s good faith and reasonable judgment, such disposition by Dr. Murphy would be reasonably likely to jeopardize the Company’s eligibility to
receive award funding under the U.S. Small Business Administration’s Small Business Innovation Research (SBIR) program, as set forth in 13 C.F.R. 121 as in effect from time to time; provided, however, that this limitation shall
cease to apply if the Company ceases to be eligible to receive award funding under the SBIR program for any reason other than as a result of actions taken by Dr. Murphy. The plan of distribution section of the Special Registration Statement
shall describe the limitations on transfer set forth in this paragraph 4. 

  
 5. During the Restricted
Period, if Dr. Murphy desires or proposes to make any non-registered sale, assignment, transfer or other disposition to any natural person who is a U.S. citizen of all or any portion of his Restricted Securities, or any beneficial interest
therein (e.g., pursuant to Section 2.8(a)(ii) of the Rights Agreement), the Company hereby agrees to (a) use its commercially reasonable efforts to cooperate in providing information reasonably requested by the proposed transferee in
connection with his or her due diligence investigation of the Company and (b) not unreasonably object to the proposed transfer; provided, however, that if the Company shall cease to be eligible to receive award funding under the
SBIR program for any reason other than as a result of actions taken by Dr. Murphy, the Company’s obligations under this paragraph 5 shall extend to any other transferee the proposed transfer to whom would be permissible under
Section 2.8(a)(ii) of the Rights Agreement, so long as Dr. Murphy has complied with the provisions of that section. 
 6.
Notwithstanding anything in the Rights Agreement or herein, Dr. Murphy hereby agrees that he will not, without the consent of the Company, take any action intended or reasonably likely to cause any Registrable Securities to be transferred
to (X) any current or potential competitor of the Company or (Y) any party Dr. Murphy actually knows is intending to effect a Change of Control of the Company. 
 7. The parties hereto acknowledge their mutual understanding that Section 3.14 of the Rights Agreement is not intended to permit the Company to alter the contractual rights of Dr. Murphy
under the Rights Agreement, as modified by this Letter Agreement, by amendment of the Company’s Bylaws or its Amended and Restated Certificate of Incorporation. Without limiting the foregoing sentence, Dr. Murphy and the Company agree to
act in good faith not to circumvent or otherwise frustrate the purpose and intent of this Letter Agreement. 
 8. Other than as set forth
in this Letter Agreement, all of the terms and conditions of the Rights Agreement are and shall continue in full force and effect. This Letter Agreement and the Rights Agreement collectively constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede any prior understanding, oral or written, between or among the parties (including the Second Amended and Restated Stock Sale Restriction Agreement dated as of February 27, 2008 by
and between the Company and Dr. Murphy) with respect thereto. To the extent there is a conflict between the terms of this Letter Agreement and the terms of the Rights Agreement, this Letter Agreement shall control. 

9. Each party hereto agrees to execute and deliver, by the proper exercise of its entity or individual powers, all such other and additional
instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this Letter Agreement. 

  
 10. This Letter Agreement may
be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 
 11. This Letter Agreement may be modified or amended only by a writing signed by each party hereto and may be waived only in a writing signed by the party or parties making such waiver. 

12. This Letter Agreement shall be governed by and construed in accordance with the internal, substantive laws of the Commonwealth of Virginia,
without regard to the conflicts of laws principles thereof. 
 If the foregoing accurately reflects our agreement with respect
to the matters addressed above, please so indicate by signing below. 
 Sincerely, 
 LUNA INNOVATIONS INCORPORATED 
  

			
	By:	 	 /s/ Dale Messick

	Name:	 	Dale Messick
	Title:	 	Interim President and Chief Operating Officer
	
	 /s/ Kent A. Murphy, Ph.D.

	KENT A. MURPHY, PH.D

 [Counterpart Signature Page to Letter Agreement]

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