Exhibit 10.1
LUNA INNOVATIONS
INCORPORATED
FORM OF INDEMNIFICATION
AGREEMENT
This Indemnification Agreement
(“ Agreement ”) is made as of
, 2006 by and between LUNA INNOVATIONS INCORPORATED, a Delaware
corporation (the “ Company ”), and
(“ Indemnitee ”).
WHEREAS , the Company and Indemnitee recognize the
increasing difficulty in obtaining directors’ and
officers’ liability insurance, the significant increases in
the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS , the Company and Indemnitee further recognize
the substantial increase in corporate litigation in general,
subjecting officers and directors to expensive litigation risks at
the same time as the coverage of liability insurance has been
limited;
WHEREAS , Indemnitee does not regard the current
protection available as adequate under the present circumstances,
and Indemnitee and other officers and directors of the Company may
not be willing to continue to serve as officers and directors
without additional protection; and
WHEREAS , the Company desires to attract and retain the
services of highly qualified individuals, such as Indemnitee, to
serve as officers and directors of the Company and to indemnify its
officers and directors so as to provide them with the maximum
protection permitted by law.
NOW, THEREFORE
, the Company and Indemnitee hereby
agree as follows:
1. Indemnification
.
(a) Third Party Proceedings .
The Company shall indemnify Indemnitee if Indemnitee is or was or
becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant
in, any threatened, pending or completed action, suit, proceeding
or any alternative dispute resolution mechanism, or any hearing,
inquiry or investigation, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company, or
any subsidiary of the Company, by reason of any action or inaction
on the part of Indemnitee while an officer or director or by reason
of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other
enterprise, against any and all expenses (including
attorneys’ fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing
to defend, be a witness in or participate in, any such action,
suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation), judgments, fines and amounts
paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with
such action, suit or proceeding if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to
any
criminal action or proceeding, had
no reasonable cause to believe Indemnitee’s conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of
itself, create a presumption that (i) Indemnitee did not act
in good faith, (ii) Indemnitee did not act in a manner which
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, or (iii) with respect to any
criminal action or proceeding, Indemnitee had no reasonable cause
to believe that Indemnitee’s conduct was unlawful.
(b) Proceedings By or in the
Right of the Company . The Company shall indemnify Indemnitee
if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a
judgment in its favor by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees) and, to the
fullest extent permitted by law, amounts paid in settlement, in
each case to the extent actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of such
action or proceeding if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company and its stockholders, except that
no indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged to be liable
to the Company in the performance of Indemnitee’s duty to the
Company and its stockholders unless and only to the extent that the
court in which such action or suit is or was pending shall
determine upon application that, in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such expenses and then only to the extent that the
court shall determine.
(c) Change in Control . The
Company agrees that if there is a Change in Control (as defined in
Section 10(c) hereof) of the Company (other than a Change in
Control which has been approved by a majority of the
Company’s Board of Directors who were directors immediately
prior to such Change in Control) then, with respect to all matters
thereafter arising concerning the rights of Indemnitees to payments
of expenses and advancement of expenses under this Agreement or any
other agreement or under the Company’s Certificate of
Incorporation or Bylaws as now or hereafter in effect, Independent
Legal Counsel (as defined in Section 10(d) hereof) shall be
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld). Such counsel, among other
things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law and the Company
agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above
and to fully indemnify such counsel against any and all expenses
(including attorneys’ fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement
pursuant hereto.
(d) Mandatory Payment of
Expenses . To the extent that Indemnitee has been successful on
the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this
Section 1, or in defense of any claim, issue or matter
therein,
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Indemnitee shall be indemnified
against expenses (including attorneys’ fees) actually and
reasonably incurred by Indemnitee in connection
therewith.
2. Agreement to Serve . In
consideration of the protection afforded by this Agreement, if
Indemnitee is a director of the Company, Indemnitee agrees to serve
at least for 30 days after the effective date of this Agreement as
a director and not to resign voluntarily during such period without
the written consent of a majority of the Board of Directors. If
Indemnitee is an officer of the Company not serving under an
employment contract, Indemnitee agrees to serve in such capacity at
least for 30 days and not to resign voluntarily during such period
without the written consent of a majority of the Board of
Directors. Following the applicable period set forth above,
Indemnitee (who serves in a capacity other than as a director)
agrees to continue to serve in such capacity at the will of the
Company (or under separate agreement, if such agreement exists) so
long as Indemnitee (who serves in a capacity other than as a
director) is duly appointed or elected and qualified in accordance
with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or until such time as the Indemnitee
tenders his or her resignation in writing. Nothing contained in
this Agreement is intended to or shall create in Indemnitee any
right to continued employment.
3. Expenses; Indemnification
Procedure .
(a) Advancement of Expenses .
The Company shall advance all expenses incurred by Indemnitee in
connection with the investigation, defense, settlement or appeal of
any civil or criminal action, suit or proceeding referenced in
Section 1(a) or (b) hereof (but not amounts actually paid
in settlement of any such action, suit or proceeding). Indemnitee
hereby undertakes to repay such expenses advanced only if, and to
the extent that, it shall ultimately be determined that Indemnitee
is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee within forty-five (45) days following
delivery of a written request therefore by Indemnitee to the
Company.
(b) Notice/Cooperation by
Indemnitee . Indemnitee shall, as a condition precedent to
Indemnitee’s right to be indemnified under this Agreement,
give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which indemnification will or
could be sought under this Agreement. Notice to the Company shall
be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to
Indemnitee). Notice shall be deemed received three
(3) business days after the date postmarked if sent by
domestic certified or registered mail, properly addressed;
otherwise notice shall be deemed received when such notice shall
actually be received by the Company. In addition, Indemnitee shall
give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee’s
power.
(c) Procedure . Any
indemnification and advances provided for in Section 1 and in
this Section 3 shall be made no later than forty-five
(45) days after receipt of the written request of Indemnitee.
If a claim under this Agreement, under any statute, or under any
provision of the Company’s Certificate of Incorporation or
Bylaws providing for indemnification, is not paid in full by the
Company within forty-five (45) days after a written request
for payment thereof has first been received by the Company,
Indemnitee may, but need not, at any time thereafter submit
Indemnitee’s
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claim to arbitration as described in
Section 14 to recover the unpaid amount of the claim and,
subject to Section 15 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys’
fees) of bringing such claim. It shall be a defense to any such
action (other than a claim brought for expenses incurred in
connection with any action or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Company to
indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company, and Indemnitee shall
be entitled to receive interim payments of expenses pursuant to
Section 3(a) unless and until such defense may be finally
adjudicated by court order or judgment from which no further right
of appeal exists or an arbitration panel as described in
Section 14. It is the parties’ intention that if the
Company contests Indemnitee’s right to indemnification, the
question of Indemnitee’s right to indemnification shall be
for the court or arbitration panel to decide, and neither the
failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal
counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct
required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has
or has not met the applicable standard of conduct.
(d) Notice to Insurers . If,
at the time of the receipt of a notice of a claim pursuant to
Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice
of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective
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