Exhibit 10.2
LUNA INNOVATION
INCORPORATED
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”) is entered into as of July 16,
2009 (the “ Effective Date ”) by and between
Luna Innovations Incorporated, a Delaware Corporation (the “
Company ”), and Mark Froggatt (“
Executive ”).
1. Duties and Scope of
Employment .
(a) Positions and Duties .
During the Employment Term (as defined herein), Executive will
serve as the Company’s Chief Technology Officer. Executive
will render such business and professional services in the
performance of his or her duties, consistent with Executive’s
position within the Company, as shall reasonably be assigned to him
or her by the Company’s Chief Executive Officer (“
CEO ”).
(b) Reporting . Executive
shall report directly to the CEO.
(c) Obligations . During the
Employment Term, and excluding periods of vacation and sick leave
to which Executive is entitled, Executive shall devote all business
time and attention to the affairs of the Company necessary to
discharge the responsibilities assigned hereunder, and shall use
commercially reasonable efforts to perform faithfully and
efficiently such responsibilities. Notwithstanding anything herein
to the contrary, Executive may provide services as a volunteer,
member, director or officer of charitable, educational or civic
organizations or industry trade associations or groups, and may
serve as trustee, director or advisor to any family companies or
trusts, provided that such service does not materially interfere
with the performance of Executive’s duties to the Company as
required under this Agreement.
2. Term . The period of
Executive’s employment under this Agreement is referred to
herein as the “ Employment Term .” The Agreement
shall have an initial term from the Effective Date of the Agreement
through July 30, 2010 (“ Initial Term ”).
At the end of the Initial Term and on each annual anniversary of
such date thereafter, the Agreement automatically will renew for
successive additional one (1) year terms, unless either party
provides the other party with written notice of non-renewal at
least ninety (90) days prior to the date of the automatic
renewal.”
3. At-Will Employment . The
parties agree that Executive’s employment with the Company
will be “at-will” employment and may be terminated by
either party at any time, effective immediately, upon written
notice to the other party, with or without cause. However, as
described in this Agreement, Executive may be entitled to severance
benefits depending upon the circumstances of his or her termination
of employment. Executive understands and agrees that neither his or
her job performance nor promotions, commendations, bonuses or the
like from the Company give rise to or in any way serve as the basis
for modification, amendment, or extension, by implication or
otherwise, of his or her employment with the Company.
4. Compensation.
(a) Base Salary. During the
Employment Term, the Company will pay Executives compensation for
his or her services a base salary at the annualized rate of not
less than $158,750, as adjusted from time to time as provided
herein (the “ Base Salary ”). The Base Salary
will be paid periodically in accordance with the Company’s
normal payroll practices and be subject to standard federal, state
and local withholding. Executive’s performance will be
reviewed at least annually to determine if an increase in
compensation is appropriate, which increase shall be in the sole
discretion of the Company. “Executive shall have the right to
voluntarily and temporarily reduce the Base Salary with the ability
at any time to increase the Base Salary (prospectively, so that he
has no right to be paid any foregone salary) up to the amount
stated above.
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(b) Bonus . As additional
compensation for services hereunder, Executive shall be eligible
for an annual discretionary cash bonus to be determined by the
Company’s Board of Directors (the “ Board
”) or Compensation Committee thereof and contingent upon the
Company’s and/or Executive’s achievement of objectives
set by the Company from time to time. Executive shall also be
eligible to receive equity bonuses at such times and in such
amounts as determined by the Board. All bonuses shall be in the
discretion of the Board.
5. Employee Benefits . During
the Employment Term, Executive will be entitled to participate in
the employee benefit plans currently and hereafter maintained by
the Company of general applicability to other senior executives of
the Company, as such plans and terms may exist from time to time,
including, without limitation, group health insurance, 401(k), and
equity incentive plans. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees at
any time.
6. Expenses . The Company
will reimburse Executive for reasonable travel, entertainment or
other expenses incurred by Executive in the furtherance of or in
connection with the performance of Executive’s duties
hereunder, in accordance with the Company’s expense
reimbursement policy as in effect from time to time.
7. Severance in Connection with a
Change In Control . If Executive’s employment
relationship with the Company is terminated within twelve months
following a Change in Control, Executive may be entitled to payment
of severance in accordance with this Section 7.
(a) Termination Without Cause;
Termination for Good Reason . In the event (i) Executive
terminates his or her employment with the Company for Good Reason
(as defined herein) or (ii) Executive is terminated by the
Company without Cause (as defined herein), Executive shall be
entitled to receive the following severance benefits if Executive
executes a general release with language acceptable to the Company
on or before the effective date of termination, the standard form
of which is attached hereto as Exhibit A (the “
Release Agreement ”):
(i) Base Salary; Accrued
Vacation . Executive shall receive severance pay in an amount
equal to twelve (12) months of the Base Salary (at the rate in
effect immediately before the date of termination) paid in
accordance with the Company’s normal payroll practices and
subject to the usual required withholding, plus an amount equal to
all accrued and unpaid vacation or paid-time off outstanding on
Executive’s termination date. To the extent that all sums due
pursuant to this Section 7(a)(i) have not been paid by the
15 th
day of third month of the calendar
year following the calendar year of termination during which the
date of termination occurs, the remaining amount due will be paid
on that date.
(ii) Acceleration of Vesting
. Executive shall immediately receive twelve (12) months of
additional vesting of any unvested stock options and a cash payment
equal to the value of any unvested 401(k) Company match
amount.
(iii) COBRA Benefits . The
Company shall pay the group health continuation coverage premiums
for Executive and Executive’s covered dependents under Title
X of the Consolidated Budget Reconciliation Act of 1985, as amended
(“ COBRA ”) for a period of not less than twelve
(12) months from the date of Executive’s termination of
employment to the extent Executive is eligible for and elects such
continuation coverage under COBRA. Notwithstanding the above, the
Company shall only be responsible for the premiums for the same
type of coverage in which Executive participated at the time of his
or her termination.
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(iv) Notwithstanding any of the
foregoing to the contrary, Executive shall not receive the
severance pay or health care insurance reimbursement referenced
above unless and until the Release Agreement becomes effective and
can no longer be revoked under its terms.
8. Severance Not in Connection
with a Change In Control . If Executive’s employment
relationship with the Company is terminated and Executive is not
entitled to payment of severance in accordance with Section 7,
the provisions of this Section 8 will apply.
(a) Termination Without Cause;
Termination for Good Reason . In the event (i) Executive
terminates his or her employment with the Company for Good Reason
(as defined herein) or (ii) Executive is terminated by the
Company without Cause (as defined herein), Executive shall be
entitled to receive the following severance benefits if Executive
executes a general release with language acceptable to the Company
on or before the effective date of termination, the standard form
of which is attached hereto as Exhibit A :
(i) Base Salary; Accrued
Vacation . Executive shall receive severance pay in an amount
equal to nine (9) months of the Base Salary (at the rate in
effect immediately before the date of termination) paid in
accordance with the Company’s normal payroll practices and
subject to the usual required withholding, plus an amount equal to
all accrued and unpaid vacation or paid-time off outstanding on
Executive’s termination date. To the extent that all sums due
pursuant to this Section 8(a)(i) have not been paid by the
15 th
day of third month of the calendar
year following the calendar year of termination during which the
date of termination occurs, the remaining amount due will be paid
on that date.
(ii) Acceleration of Vesting
. Executive shall immediately receive twelve (12) months of
additional vesting of any unvested stock options and a cash payment
equal to the value of any unvested 401(k) Company match
amount.
(iii) COBRA Benefits . The
Company shall pay the group health continuation coverage premiums
for Executive and Executive’s covered dependents under Title
X of the Consolidated Budget Reconciliation Act of 1985, as
amended, for a period of not less than nine (9) months from
the date of Executive’s termination of employment to the
extent Executive is eligible for and elects such continuation
coverage under COBRA. Notwithstanding the above, the Company shall
only be responsible for the premiums for the same type of coverage
in which Executive participated at the time of his or her
termination.
(iv) Notwithstanding any of the
foregoing to the contrary, Executive shall not receive the
severance pay or health care insurance reimbursement referenced
above unless and until the Release Agreement becomes effective and
can no longer be revoked under its terms.
(b) Voluntary Termination;
Termination for Cause . If Executive’s employment with
the Company is terminated voluntarily by Executive without Good
Reason or Executive is terminated for Cause by the Company, he or
she will not receive severance pay or any other similar
compensation.
(c) Dissolution, Liquidation or
Insolvency of the Company . Notwithstanding the above, in the
event Executive’s employment is terminated by the Company in
connection with or as a result of the liquidation, dissolution,
insolvency or other winding up of the affairs of the Company
without the establishment of a successor entity to the Company, the
Company shall have no obligation to provide severance or further
financial consideration to Executive except for any reasonable
expense reimbursements or base salary that Executive has accrued
and earned at the time of such termination.
(d) Death or Disability .
Executive’s employment and this Agreement shall automatically
terminate, and Executive will receive the severance pay,
acceleration of vesting, benefits and other
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compensation set forth in Section 8(a)
above (i) upon Executive’s death or (ii) in the
event of any illness, disability or other incapacity as a result of
which Executive is rendered unable regularly to perform his or her
duties hereunder for a period in excess of ninety
(90) consecutive days or more than one hundred eighty
(180) days in any consecutive twelve (12) month period,
unless otherwise prohibited by any applicable federal, state, or
local law or ordinance. The determination regarding whether
Executive is unable regularly to perform his or her duties under
clause (ii) above shall be made by the Board in good faith.
Executive’s inability to be physically present on the
Company’s premises shall not constitute a
