Agora 8-K API and Luna Innovations Agree to Merge

Exhibit 2.1

AGREEMENTAND PLAN OF MERGER AND REORGANIZATION

THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION(“Agreement”) is made and entered into as of January 30, 2015, by and amongLUNA INNOVATIONS INCORORATED, a Delaware corporation (“Parent”);API MERGER SUB, INC., a Delaware corporation and a wholly owned subsidiary ofParent (“Merger Sub”); andADVANCED PHOTONIX, INC., a Delaware corporation (the “Company”). Certain capitalized terms used in thisAgreement are defined inExhibitA.

RECITALS

A.     Parent,Merger Sub and theCompany intend to engage in a strategic business combination to advance their long-term strategies to be effected by a merger ofMerger Sub into theCompany in accordance with thisAgreement and theDGCL (the “Merger”). Upon consummation of theMerger,Merger Sub will cease to exist, and theCompany will become a wholly owned subsidiary ofParent.

B.     It is intended that theMerger qualify as a “reorganization” within the meaning ofSection 368(a) of theCode and that thisAgreement qualifies as a “plan of reorganization” within the meaning ofSections 1.368-2(g) and 1.368-3(a) of theUnited States Treasury Regulations.

C.     The respective boards of directors ofParent,Merger Sub and theCompany have approved, adopted and declared advisable thisAgreement and theMerger.

D.     In order to induceParent to enter into thisAgreement and cause theMerger to be consummated, the directors and executive officers of theCompany are executing voting agreements in favor ofParent concurrently with the execution of thisAgreement (the “Company Stockholder Voting Agreements”).

E.      In order to induce theCompany to enter into thisAgreement and consummate theMerger, the directors and executive officers ofParent are executing voting agreements in favor of theCompany concurrently with the execution of thisAgreement (the “Parent Stockholder Voting Agreements”).

AGREEMENT

The parties to thisAgreement, intending to be legally bound, agree as follows:

Section 1.DESCRIPTION OF TRANSACTION

1.1     MergerofMerger Subinto theCompany. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company. By virtue of the Merger, at the Effective Time, the separate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation in the Merger (the “Surviving Corporation”).

1.2     Effectsof theMerger. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL.

1.3     Closing;Effective Time. The consummation of the Merger (the “Closing”) shall take place at the offices of Cooleyllp, 500 Boylston Street, Boston, Massachusetts, on a date to be designated jointly by Parent and the Company, which shall be no later than the second business day after the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth in Sections 6 and 7 (other than the conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of each of such conditions). The date on which the Closing actually takes place is referred to as the “Closing Date.” Subject to the provisions of this Agreement, a certificate of merger satisfying the applicable requirements of the DGCL shall be duly executed by the Company and concurrently with or as soon as practicable following the Closing shall be filed with the Secretary of State of the State of Delaware. The Merger shall become effective at the time of the filing of such certificate of merger with the Secretary of State of the State of Delaware or at such later time as may be designated jointly by Parent and the Company and specified in such certificate of merger (the time as of which the Merger becomes effective being referred to as the “Effective Time”).

1.4Certificate of Incorporation and Bylaws; Directors and Officers.

(a)     TheCertificate of Incorporation of theSurviving Corporation shall be amended and restated at theEffective Time to read as set forth onExhibit B;

(b)     The Bylaws of theSurviving Corporation shall be amended and restated at theEffective Time to read as set forth onExhibit C; and

(c)     The directors and officers of theSurviving Corporation immediately after theEffective Time shall be as mutually agreed between theCompany andParent prior to theEffective Time.

1.5     Conversion of Shares.

(a)     Subject to the terms and conditions of thisAgreement, at theEffective Time, by virtue of theMerger and without any further action on the part ofParent,Merger Sub, theCompany or any stockholder of theCompany:

(i)     any shares ofCompany Common Stock owned by any wholly owned Subsidiary of theCompany immediately prior to theEffective Time (or held in theCompany’s treasury) shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor;

(ii)     any shares ofCompany Common Stock owned byParent,Merger Sub or any other wholly owned Subsidiary ofParent immediately prior to theEffective Time shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor;

(iii)     except as provided in clauses “(i)” and “(ii)” above and subject to Sections 1.5(c), 1.5(d) and 1.5(e), each share of Company Common Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive 0.31782 of a share of Parent Common Stock (such number as may be adjusted in accordance with Section 1.5(b), the “Exchange Ratio”); and

(iv)     each share of the Common Stock, $0.001 par value per share, ofMerger Sub outstanding immediately prior to theEffective Time shall be converted into one share of common stock of theSurviving Corporation.

2

(b)     If, during the period from the date of thisAgreement through theEffective Time, the outstanding shares ofCompany Common Stock orParent Common Stock are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, combination of shares, reclassification, recapitalization or other similar transaction, or if a stock dividend is declared by theCompany orParent during such period, then theExchange Ratio shall be adjusted to the extent appropriate to provide the same economic effect as contemplated by thisAgreement prior to such action.

(c)     If any shares ofCompany Common Stock outstanding immediately prior to theEffective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchaseagreement or otherContract with theCompany or under which theCompany has any rights, then (except to the extent provided in any bindingagreement between theCompany and the holder thereof): (i) the shares ofParent Common Stock issued in exchange for such shares ofCompany Common Stock will also be unvested and subject to the same repurchase option, risk of forfeiture or other condition; and (ii) the certificates representing such shares ofParent Common Stock may accordingly be marked with appropriate legends. Prior to theEffective Time,the Company shall use commercially reasonable efforts to ensure that, from and after theEffective Time,Parent or the Surviving Corporation is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchaseagreement or otherContract.

(d)     All warrants to acquire Company Common Stock or Company Preferred Stock outstanding immediately prior to the Effective Time (“Company Warrants”) will, by virtue of this Agreement and without any action on the part of any holder of a Company Warrant, be assumed or substituted by the Parent in accordance with the terms of such Company Warrants, unless provided on Schedule 1.5(d), and will therefore become a warrant to purchase the number of shares of Parent Common Stock, with appropriate adjustments made to the exercise price, number of shares and other terms of the options to reflect this Merger and the Exchange Ratio.

(e)     No fractional shares ofParent Common Stock shall be issued in connection with theMerger, and no certificates or scrip for any such fractional shares shall be issued. Any holder ofCompany Common Stock who would otherwise be entitled to receive a fraction of a share ofParent Common Stock (after aggregating all fractional shares ofParent Common Stock issuable to such holder) shall, in lieu of such fraction of a share and upon surrender of such holder’sCompany Stock Certificate(s) (as defined below), or non-certificated shares ofCompany Common Stock represented by book entry (“Book Entry Shares”), be paid in cash the dollar amount (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by theclosing price of a share ofParent Common Stock on the NASDAQ Capital Market on the lastbusiness day prior to the date on which the Merger becomes effective.

1.6Closingof theCompany’s Transfer Books. At the Effective Time: (a) all shares of Company Common Stock outstanding immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and all holders of Book Entry Shares or of certificates representing shares of Company Common Stock that were outstanding immediately prior to the Effective Time (each, a “Company Stock Certificate”) shall cease to have any rights as stockholders of the Company, except the right to receive shares ofParent Common Stock as contemplated bySection 1.5, cash in lieu of any fractional share ofParent Common Stock pursuant toSection 1.5(e) and any dividends or other distributions pursuant toSection 1.7(c); and (b) the stock transfer books of the Company shall be closed with respect to all shares of Company Common Stock outstanding immediately prior to the Effective Time. No further transfer of any such shares of Company Common Stock shall be made on such stock transfer books after the Effective Time. If, after the Effective Time, a valid Company Stock Certificate or a Book Entry Share is presented to the Exchange Agent or to the Surviving Corporation or Parent, such Company Stock Certificate or Book Entry Share shall be canceled and shall be exchanged as provided in Section 1.7.

3

1.7Exchange of Certificates.

(a)     Prior to theClosing Date,Parent shall select a reputable bank or trustcompany reasonably satisfactory to theCompany to act as exchange agent in theMerger (the “Exchange Agent”). Prior to theEffective Time,Parent shall issue and cause to be deposited with theExchange Agent: (i) non-certificated shares ofParent Common Stock represented by book entry issuable pursuant toSection 1.5; and (ii) cash sufficient to make payments in lieu of fractional shares in accordance withSection 1.5(e). The shares ofParent Common Stock and cash amounts so deposited with theExchange Agent, together with any dividends or distributions received by theExchange Agent with respect to such shares ofParent Common Stock, are referred to collectively as the “Exchange Fund.”

(b)     Promptly after theEffective Time, theExchange Agent will mail to thePersons who were record holdersof Company Stock Certificates or Book Entry Shares immediately prior to theEffective Time: (i) a letter of transmittal in customary form and containing such provisions asParent may reasonably specify and theCompany shall reasonably approve prior to theEffective Time (including a provision confirming that deliveryof Company Stock Certificates or Book Entry Shares shall be effected, and risk of loss and titleto Company Stock Certificates or Book Entry Shares shall pass, only upon deliveryof such Company Stock Certificates or Book Entry Shares to theExchange Agent); and (ii) instructions for use in effecting the surrenderof Company Stock Certificates or Book Entry Shares in exchange for non-certificated shares ofParent Common Stock in book entry form. Upon surrender of aCompany Stock Certificate orBook Entry Shares to theExchange Agent for exchange, together with a duly executed letter of transmittal and such other documents as may be reasonably required by theExchange Agent orParent: (A) the holder of suchCompany Stock Certificate orBook Entry Shares shall be entitled to receive, and theExchange Agent shall (andParent shall cause theExchange Agent to) in exchange therefor transfer from theExchange Fund to such holder the number of whole shares ofParent Common Stock that such holder has the right to receive pursuant to the provisions ofSection 1.5 (and cash in lieu of any fractional share ofParent Common Stock pursuant toSection 1.5(e) and any dividends or other distributions pursuant toSection 1.7(c)); and (B) theCompany Stock Certificate orBook Entry Shares so surrendered shall be canceled. Until surrendered as contemplated by this Section1.7(b), each Company Stock Certificate and Book Entry Share shall be deemed, from and after theEffective Time, to represent only the right to receive shares ofParent Common Stock (and cash in lieu of any fractional share ofParent Common Stock) as contemplated bySection 1.5 and any dividends or other distributions pursuant toSection 1.7(c). If anyCompany Stock Certificate shall have been lost, stolen or destroyed,Parent may, in its discretion and as a condition to the issuance of any non-certificated shares ofParent Common Stock in book entry form, require the owner of such lost, stolen or destroyedCompany Stock Certificate to post a bond, in such reasonable and customary amount asParent may direct, as indemnity against any claim that may be made againstExchange Agent,Parent or the Surviving Corporation with respect to suchCompany Stock Certificate.

(c)     No dividends or other distributions declared or made with respect toParent Common Stock with a record date after theEffective Time shall be paid or otherwise delivered to the holder of any unsurrendered Company Stock Certificate or Book Entry Share with respect to the shares ofParent Common Stock that such holder has the right to receive in theMerger until such holder surrenders such Company Stock Certificate or Book Entry Share in accordance with thisSection 1.7 (at which time such holder shall be entitled, subject to the effect of applicable abandoned property, escheat or similar laws, to receive all such dividends and distributions, without interest).

4

(d)     Any portion of theExchange Fund that remains undistributed to holdersof Company Stock Certificates and Book Entry Shares as of the date that is one yearafter the date on which the Merger becomes effective shall be delivered toParent upon demand, and any holdersof Company Stock Certificates or Book Entry Shares who have not theretofore surrenderedtheir Company Stock Certificates or Book Entry Shares in accordance with thisSection 1.7 shall thereafter look only toParent for satisfaction of their claims forParent Common Stock, cash in lieu of fractional shares ofParent Common Stock and any dividends or distributions with respect to shares ofParent Common Stock.

(e)     Each of theExchange Agent,Parent and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to thisAgreement to any holder or former holder ofCompany Common Stock such amounts as may be required to be deducted or withheld from such consideration under theCode or any provision of state, local or foreign tax law or under any other applicableLegal Requirement. To the extent such amounts are so deducted or withheld and paid to the appropriateGovernmental Body, such amounts shall be treated for all purposes under thisAgreement as having been paid to thePerson to whom such amounts would otherwise have been paid.

(f)     NeitherParent nor the Surviving Corporation shall be liable to any holder or former holder ofCompany Common Stock or to any otherPerson with respect to any shares ofParent Common Stock (or dividends or distributions with respect thereto), or for any cash amounts, required to be delivered to any public official pursuant to any applicable abandoned property law, escheat law or otherLegal Requirement.

1.8TaxConsequences. For U.S. federal income tax purposes, the Merger is intended to constitute a reorganization within the meaning of Section 368(a) of the Code. The parties to this Agreement adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.

1.9     Further Action. If, at any time after the Effective Time, any further action is determined by Parent or the Surviving Corporation to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with full right, title and possession of and to all rights and property of Merger Sub and the Company, the officers and directors of the Surviving Corporation and Parent shall be fully authorized (in the name of Merger Sub, in the name of the Company and otherwise) to take such action.

Section 2.REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants toParent andMerger Sub as follows (it being understood that each representation and warranty contained in thisSection 2 is subject to:(a) the exceptions and disclosures set forth in the part or subpart of theCompany Disclosure Schedule corresponding to the particularSection or subsection in thisSection 2 in which such representation and warranty appears; and(b) any exception or disclosure set forth in any other part or subpart of theCompany Disclosure Schedule to the extent it is reasonably obvious that such exception or disclosure would qualify such representation and warranty; and(c) any information set forth in theCompany SEC Documents filed on the SEC’s EDGAR database and publicly availablefor at least 10 business days prior to the date of thisAgreement, other than information set forth therein under the headings “Risk Factors” or “Forward-Looking Statements” and any other information set forth therein that is predictive or forward-looking in nature):

5

2.1Subsidiaries; Due Organization; Etc.

(a)     Part 2.1(a) of theCompany Disclosure Schedule identifies each Subsidiary of theCompany and indicates its jurisdiction of organization. Neither the Company nor any of Company’s Subsidiaries owns any capital stock of, or any equity interest of any nature in, any otherEntity, other than theCompany’s Subsidiaries. NoAPI Corporation has agreed or is obligated to make, or is bound by anyContract under which it may become obligated to make, any future investment in or capital contribution to any otherEntity.

(b)     Each of theAPI Corporations is a corporation or other business organization duly organized, validly existing and in good standing (to the extent that the laws of the jurisdiction of its formation recognize the concept of good standing) under the laws of the jurisdiction of its incorporation and has all necessary organizational power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under allContracts by which it is bound.

(c)     Each of theAPI Corporations is qualified to do business as a foreign corporation, and is in good standing, under the laws of all jurisdictions where the nature of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or in good standing, individually or in the aggregate, would not have aCompany Material Adverse Effect.

2.2     Certificate of Incorporation and Bylaws. The Company has delivered or Made Available to Parent accurate and complete copies of the certificate of incorporation, bylaws, memorandum of association and articles of association or equivalent governing documents of each of the API Corporations, including all amendments thereto.

2.3     Authority; Binding Nature ofAgreement. Assuming the representations set forth in the last sentence of Section 3.23 are true: the Company has the corporate right, power and authority to enter into and perform its obligations under this Agreement and, subject to obtaining the Required Company Stockholder Vote, consummate the transactions contemplated hereby. The Company Board (at a meeting duly called and held) has: (a) determined that this Agreement and the Merger are advisable and fair to, and in the best interests of, the Company and its stockholders; (b) authorized and approved the execution, delivery and performance of this Agreement by the Company and approved the Merger; and (c) recommended the adoption of this Agreement by the holders of Company Common Stock and directed that this Agreement and the Merger be submitted for consideration by the Company’s stockholders at the Company Stockholders’ Meeting. Assuming the due authorization, execution and delivery of this Agreement by Parent and Merger Sub, this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency, the relief of debtors and creditors’ rights generally; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

2.4     Non-Contravention;Consents. Assuming compliance with the applicable provisions of theDGCL and the listing requirements of theNew York Stock Exchange MKT, except as set forth in Part 2.4 of the Company Disclosure Schedule, neither(1) the execution, delivery or performance of thisAgreement, nor(2) the consummation of theMerger or any of the otherContemplated Transactions, will, directly or indirectly (with or without notice or lapse of time):

6

(a)     contravene, conflict with or result in a violation of: (i) any of the provisions of the certificate of incorporation, bylaws or other charter or organizational documents of any of theAPI Corporations; or (ii) any resolution adopted by the stockholders, the board of directors or any committee of the board of directors of any of theAPI Corporations;

(b)     contravene, conflict with or result in a violation of, anyLegal Requirement or anyOrder to which any of theAPI Corporations, or any of the assets owned or used by any of theAPI Corporations, is subject;

(c)     contravene, conflict with or result in a violation of any of the terms or requirements of, or give anyGovernmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, anyGovernmental Authorization that is held by any of theAPI Corporations or that otherwise relates to the business of any of theAPI Corporations or to any of the assets owned or used by any of theAPI Corporations;

(d)     contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any Company Material Contract, or give anyPerson the right to: (i) declare a default or exercise any remedy under any suchCompany Material Contract; (ii) accelerate the maturity or performance of any such Company Material Contract; or (iii) cancel, terminate or modify any right, benefit, obligation or other term of such Company Material Contract; or

(e)     result in the imposition or creation of anyEncumbrance upon or with respect to any asset owned or used by any of theAPI Corporations (except for minor liens that will not, in any case or in the aggregate, materially detract from the value of the assetssubject thereto or materially impair the operations of any of the API Corporations); or

(f)     constitute the occurrence of an event listed in MCL 125.2088(c)(4) for which grants or loans shall not be used.

Except as may be required by theSecurities Act, theExchange Act, theDGCL and the listing requirements of the New York Stock Exchange MKT, none of theAPI Corporations is or will be required to make any filing with or give any notice to, or to obtain anyConsent from, anyGovernmental Body in connection with:(x) the execution, delivery or performance of thisAgreement; or(y) the consummation of theMerger or any of the otherContemplated Transactions, except where the failure to make any such filing or give any such notice or to obtain any suchConsent would not, individually or in the aggregate, be material to theAPI Corporations.

2.5Capitalization, Etc.

(a)     The authorized capital stock of theCompany consists of: (i) 100,000,000 shares ofCompany Common Stock,$0.001 par value per share, of which37,381,413 shares are outstanding as of the date of thisAgreement; and (ii) 10,000,000 shares ofCompany Preferred Stock, of which 780,000 have been designated as Class A Redeemable Convertible Preferred Stock,$0.001 par value per share, of which no shares ofCompany Preferred Stock or Class A Redeemable Convertible Preferred Stock are outstanding. All of the outstanding shares ofCompany Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. None of theAPI Corporations (other than theCompany) holds any shares ofCompany Common Stock or any rights to acquire shares ofCompany Common Stock.

7

(b)     Except as set forth in Part 2.5(b) of the Company Disclosure Schedule: (i) none of the outstanding shares ofCompany Common Stock is entitled or subject to any preemptive right, right of repurchase or forfeiture (other than theCompany Restricted Stock), right of participation, right of maintenance or any similar right; (ii) none of the outstanding shares ofCompany Common Stock is subject to any right of first refusal in favor of theCompany; and (iii) there is noCompany Contract relating to the voting or registration of, or restricting anyPerson from purchasing, selling, pledging or otherwise disposing of (or from granting any option or similar right with respect to), any shares ofCompany Common Stock. None of theAPI Corporations is under any obligation, or is bound by anyContract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares ofCompany Common Stock or other securities, except for theCompany’s right to repurchase or reacquireshares of Company Restricted Stock held by an employee of theCompany upon termination of such employee’s employment or upon any other forfeiture of a vesting condition.

(c)     As of the date of thisAgreement: (i)1,939,235 shares ofCompany Common Stock are subject to issuance pursuant toCompany Options; (ii)43,280 shares ofCompany Restricted Stock are subject to vesting after the date of thisAgreement; and (iii)266,095 shares ofCompany Common Stock are reserved for future issuance pursuant to equity awards not yet granted under theCompany Option Plans.

(d)     TheCompany has delivered orMade Available toParent a complete and accurate list that sets forth with respect to eachCompany Equity Award outstanding as of the date of thisAgreement the following information: (i) the particular plan (if any) pursuant to which suchCompany Equity Award was granted; (ii) the name of the holder of suchCompany Equity Award; (iii) the type ofCompany Equity  Award (whether aCompany Option,Company Restricted Stock, or another type ofCompany Equity Award); (iv) the number of shares ofCompany Common Stock subject to suchCompany Equity Award; (v)the per share exercise price (if any) of suchCompany Equity Award; (vi) the applicable vesting schedule, and the extent to which suchCompany Equity Award is vested and exercisable, if applicable; (vii) the date on which suchCompany Equity Award was granted; (viii) the date on which suchCompany Equity Award expires (if applicable); (ix) if suchCompany Equity Award is aCompany Option, whether suchCompany Option is an “incentive stock option” (as defined in theCode) or a non-qualified stock option; and (x) if suchCompany Equity Award is in the form ofCompany Restricted Stock, the dates on which shares ofCompany Common Stock with respect to suchCompany Restricted Stock, are scheduled to vest. TheCompany has delivered orMade Available toParent accurate and complete copies of all equity plans pursuant to which any outstandingCompany Equity Awards were granted by theCompany, and the forms of all agreements evidencing suchCompany Equity Awards. Theexercise price of eachCompany Option is not less than the fair market value of a share ofCompany Common Stock as determined on the date of grant of suchCompany Option. All grants ofCompany Equity Awards were recorded on theCompany’s financial statements (including any related notes thereto) contained in theCompany SEC Documents in accordance withGAAP, and no such grants involved any “back dating” or similar practices with respect to the effective date of grant (whether intentional or otherwise). There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights or similar equity-based awards with respect to any of theAPI Corporations.

(e)     Except as set forth inSections 2.5(a), 2.5(c) and 2.5(d), or as permitted from and after the date of thisAgreement pursuant toSection 4.2, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of thecapital stock or other securities of any of the API Corporations; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of thecapital stock or other securities of any of the API Corporations or that has the right to vote on any matter on which the stockholders of theCompany have the right to vote; (iii)Contract under which any of theAPI Corporations is or may become obligated to sell or otherwise issue any shares of itscapital stock or any other securities; or (iv) condition or circumstance thatwould reasonably be expected to give rise to or provide a basis for the assertion of a claim by anyPerson to the effect that suchPerson is entitled to acquire or receive any shares ofcapital stock or other securities of any of the API Corporations. All outstanding warrants or similar rights to acquire any shares of thecapital stock or other securities of any of the API Corporation allow for assumption byParent as set forth inSection 1.5(d) of thisAgreement in accordance with their terms.

8

(f)     All outstanding shares ofCompany Common Stock, and all options and otherCompany Equity Awards and other securities of theAPI Corporations, have been issued and granted in compliance in all material respects with: (i) all applicable securities laws and other applicableLegal Requirements; and (ii) all requirements set forth in applicableContracts.

(g)    All of the outstanding shares of capital stock of each of theCompany’s Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, and are owned beneficially and of record by theCompany, free and clear of anyEncumbrances, other than restrictions under applicable securities laws.

2.6SECFilings; Financial Statements.

(a)    TheCompany has delivered orMade Available (or made available on theSEC website) toParent accurate and complete copies of all registration statements, proxy statements,Company Certifications and other statements, reports,schedules, forms and other documents filed by theCompany with theSEC,including all amendments thereto, sinceJanuary 1, 2014 (collectively, the “Company SEC Documents”). All statements, reports,schedules, forms and other documents required to have been filed by theCompany or to the best of the knowledge of theCompany, its officers with theSEC since January 1, 2014 have been so filed on a timely basis. None of theCompany’s Subsidiaries is required tofile any documents with theSEC. As of the time it was filed with theSEC (or, if amended or superseded by a filing prior to the date of thisAgreement, then on the date of such filing): (i) each of theCompany SEC Documents complied as to form in all material respects with the applicable requirements of theSecurities Act or theExchange Act (as the case may be); and (ii) none of theCompany SEC Documents containedany untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the certifications and statements relating to theCompany SEC Documents required by: (A) Rule 13a-14 or Rule 15d-14 under theExchange Act; (B) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act); or (C) any other rule or regulation promulgated by theSEC or applicable to theCompany SEC Documents (collectively, the “Company Certifications”) is accurate and complete, and complies as to form in all material respects with all applicableLegal Requirements. As used in the introduction to thisSection 2 and in thisSection 2.6, the term “file” and variations thereof shall be broadly construed toinclude any manner in which a document or information is filed, furnished, submitted, supplied or otherwise made available to theSEC or any member of its staff.

(b)    TheCompany maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under theExchange Act. Such disclosure controls and procedures are designed to ensure that all material information concerning theAPI Corporations required to be disclosed by theCompany in the reports that it is required tofile, submit or furnish under theExchange Act is recorded, processed, summarized and reported within the time periods specified in theSEC’s rules and forms. TheCompany is in compliance in all material respects with the applicable listing requirements of the New York Stock Exchange MKT, and has not since January 1, 2014 received any notice asserting any non-compliance with the listing requirements of the New York Stock Exchange MKT.

9

(c)     The financial statements (including any related notes) contained or incorporated by reference in theCompany SEC Documents: (i) complied as to form in all material respects with the published rules and regulations of theSEC applicable thereto; (ii) were prepared in accordance withGAAP applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements or, in the case of unaudited financial statements, as permitted by Form 10-Q, Form 8-K or any successor form under theExchange Act, and except that the unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments, none of which will be material); and (iii) fairly present, in all material respects, the consolidated financial position of theCompany and its consolidated Subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of theCompany and its consolidated Subsidiaries for the periods covered thereby. No financial statements of anyPerson other than theAPI Corporations are required byGAAP to be included in the consolidated financial statements of theCompany. There are no comments from theSEC or its staff pending with respect to any statements, reports,schedules, forms or other documents filed by theCompany with theSEC that remain outstanding and unresolved.

(d)     TheCompany’s auditor has at all times since the date of enactment of theSarbanes-Oxley Act been: (i) a registered public accounting firm (as defined inSection 2(a)(12) of theSarbanes-Oxley Act); (ii) “independent” with respect to theCompany within the meaning ofRegulation S-X under theExchange Act; and (iii) to the knowledge of theCompany, in compliance with subsections (g) through (l) ofSection 10A of theExchange Act and the rules and regulations promulgated by theSEC and the Public Company Accounting Oversight Board thereunder. All non-audit services performed by theCompany’s auditors for theAPI Corporations that were required to be approved in accordance withSection 202 of theSarbanes-Oxley Act were so approved.

(e)     TheCompany maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under theExchange Act) which is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withGAAP, and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of theAPI Corporations; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity withGAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of theCompany; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of theAPI Corporations that could have a material effect on theCompany’s consolidated financial statements. TheCompany’s management has completed an assessment of the effectiveness of theCompany’s system of internal controls over financial reporting in compliance with the requirements ofSection 404 of theSarbanes-Oxley Act for the fiscal year ended March 31, 2014, and, except as set forth in theCompany SEC Documents filed prior to the date of thisAgreement, such assessment concluded that such controls were effective. To the knowledge of theCompany, except as set forth in theCompany SEC Documents filed prior to the date of thisAgreement, since March 31, 2014, neither theCompany nor any of its Subsidiaries has identified or been made aware of: (A) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by theAPI Corporations; (B) any illegal act or fraud, whether or not material, that involves theCompany’s management or other employees; or (C) any claim or allegation regarding any of the foregoing.

(f)     Part 2.6(f) of theCompany Disclosure Schedule lists, and theCompany has delivered orMade Available toParent accurate and complete copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K under theExchange Act) currently in effect or effected by any of theAPI Corporations since January 1, 2014. None of theAPI Corporations has any obligation or other commitment to become a party to any such “off-balance sheet arrangements” in the future.

10

2.7Absence of Changes. Exceptas set forth in Part 2.7 of the Company Disclosure Schedule, since March 31, 2014 through the date of thisAgreement:

(a)     there has not been anyCompany Material Adverse Effect, and no event has occurred or circumstance has arisen that, in combination with any other events or circumstances,would reasonably be expected to have or result in a Company Material Adverse Effect;

(b)     there has not been any material loss, damage or destruction to, or any material interruption in the use of, any of the material assets of any of theAPI Corporations (whether or not covered by insurance);

(c)     none of theAPI Corporations has: (i) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of capital stock; or (ii) repurchased, redeemed or otherwise reacquired any shares ofcapital stock or other securities of the API Corporations (other than repurchases ofshares of Company Restricted Stock in connection with termination of employment of the previous holder of suchCompany Common Stock that were madein the ordinary course of business and consistent with past practices, or upon the cashless or net exercise of outstandingCompany Options);

(d)     none of theAPI Corporations has sold, issued or granted, or authorized the issuance of: (i)any capital stock or other security (except forCompany Common Stock issued upon the valid exercise of outstandingCompany Options); (ii) any option, warrant or right to acquireany capital stock or any other security (except forCompany Options identified in Part 2.5(e) of theCompany Disclosure Schedule); or (iii) any instrument convertible into or exchangeable forany capital stock or other security;

(e)     theCompany has not amended or waived any of its rights under, or permitted the acceleration of vesting under: (i) any provision of any of theCompany Option Plans; (ii) any provision of anyContract evidencing any outstandingCompany Option; (iii) anyrestricted stock unit agreement; or (iv) any otherContract evidencing or relating to any equity award (whether payable in cash or stock);

(f)     (i) there has been no amendment to the certificate of incorporation or bylaws of theCompany, (ii) none of theAPI Corporations has effected or been a party to anymerger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction and (iii) none of theAPI Corporations has acquired or disposed of any business or a material amount of assets;

(g)     theAPI Corporations have not made any capital expenditures that in the aggregate exceed $1,000,000;

(h)     none of theAPI Corporations has written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other indebtedness in excess of $100,000;

11

(i)     none of theAPI Corporations has: (i) lent money to anyPerson (other than routine travel advances made to employees in the ordinary course of business); or (ii) incurred or guaranteed any indebtedness for borrowed money;

(j)     none of theAPI Corporations has: (i) adopted, established or entered into anyCompany Employee Plan orCompany Employee Agreement; (ii) caused or permitted anyCompany Employee Plan orCompany Employee Agreement to be amended in any material respect; or (iii) increased the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to any of its directors, officers or other employees by greater than $50,000 in any individual case;

(k)     none of theAPI Corporations has changed any of its methods of accounting or accounting practices in any material respect except as required by concurrent changes inGAAP orSEC rules and regulations;

(l)     none of theAPI Corporations has made any materialTax election, made any material amendments toTax Returns previously filed, or settled or compromised any materialTax liability or refund;

(m)   none of theAPI Corporations has commenced or settled anyLegal Proceeding;

(n)    none of theAPI Corporations has amended, terminated or granted any waiver under any “standstill” or similaragreement; and

(o)    none of theAPI Corporations has agreed or committed to take any of the actions referred to in clauses “(c)” through “(n)” above.

2.8Title to Assets. The API Corporations own, and have good and valid title to, all assets (excluding, for purposes of this Section 2.8, Intellectual Property and Intellectual Property Rights) purported to be owned by them, including: (a) all of said assets reflected on the Company Audited Balance Sheet (except for inventory sold or otherwise disposed of in the ordinary course of business since the date of the Company Audited Balance Sheet); and (b) all other of said assets reflected in the books and records of the API Corporations as being owned by the API Corporations. All of said assets are owned by the API Corporations free and clear of any Encumbrances, except for: (i) any lien for current Taxes not yet due and payable; (ii) minor liens that have arisen in the ordinary course of business and that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of any of the API Corporations; and (iii) liens described in Part 2.8 of the Company Disclosure Schedule. The API Corporations are the lessees of, and hold valid leasehold interests in, all assets purported to have been leased by them, including: (A) all assets reflected as leased on the Company Audited Balance Sheet; and (B) all other assets reflected in the books and records of the API Corporations as being leased to the API Corporations, and the API Corporations enjoy undisturbed possession of such leased assets.

2.9     Loans; Customers; Suppliers.

(a)    Part 2.9(a) of theCompany Disclosure Schedule contains an accurate and complete list as of the date of thisAgreement of all outstanding loans and advances made by any of theAPI Corporations to anyCompany Associate, other than routine travel advances made to directors or officers or other employees in the ordinary course of business.

12

(b)    Part 2.9(b) of theCompany Disclosure Schedule accurately identifiesAPI Corporations’ top five (5) customers for each of its three business units (namely, HSOR, Optoelectronics and Terahertz) in the fiscal year ended on March 31, 2014 based on the revenues received byAPI Corporations in that year (excluding, for these purposes, the U.S. Government). TheCompany has not received any notice or other communication, and has not been sent any other written communication, indicating that any of its customers or otherPerson identified or required to be identified in Part 2.9(b) of theCompany Disclosure Schedule may cease dealing with or materially reduce its orders from any of theAPI Corporations.

(c)    Part 2.9(c) of theCompany Disclosure Schedule accurately identifiesAPI Corporations’ key suppliers of materials or components for each of its two main factories (namely, in Camarillo, CA and Ann Arbor, MI) (“Company Key Suppliers”). For this purpose, a Company Key Supplier would be one that, if it ceased supplying theCompany, the cessation would cause a material disruption to the operations of such business unit. TheCompany has not received any notice or other communication, and has not been sent any other written communication, indicating that any Company Key Supplier may cease dealing with any of theAPI Corporations or materially change the business terms of the supply relationship.

2.10Real Property; Leasehold.

(a)    Except as set forth in Part 2.10(a) of the Company Disclosure Schedule, noAPI Corporation owns any real property. AnAPI Corporation owns fee simple title to all of the real properties set forth on Part 2.10(a) of theCompany Disclosure Schedule (the “Company Owned Real Property”), in each case free and clear of allEncumbrances except for (i) minorEncumbrances that will not, in any case or in the aggregate, materially detract from the value of the real propertysubject thereto or materially impair the operations of any of the API Corporations, (ii) allEncumbrances disclosed on existing title policies or surveysMade Available toParent prior to the date of thisAgreement, and (iii) real estateTaxes and special assessments with respect to suchCompany Owned Real Property that are not yet due and payable. NoPerson other than anAPI Corporation has any ownership interest in anyCompany Owned Real Property. None of theAPI Corporations has received written notice to the effect that there are any condemnation proceedings that are pending or, to the knowledge of theCompany, threatened with respect to any material portion of theCompany Owned Real Property. NoAPI Corporation has received written notice of (A) any structural defects or any material violation ofLegal Requirements relating to anyCompany Owned Real Property or (B) any physical damage to anyCompany Owned Real Property that is not covered by insurance and that would materially detract from the value of theCompany Owned Real Property subject thereto or materially impair the operations of any of the API Corporations.

(b)    Part 2.10(b) of theCompany Disclosure Schedule sets forth an accurate and complete list of each lease pursuant to which any of theAPI Corporations leases real property from any otherPerson (“APIReal Estate Leases”). (All real property leased to theAPI Corporations pursuant to the real property leases identified or required to be identified in Part 2.10(b) of theCompany Disclosure Schedule,including all buildings, structures, fixtures and other improvements leased to theAPI Corporations, is referred to as the “API Leased Real Property.”) To the knowledge of theCompany, there is no existing plan or study by anyGovernmental Body or by any otherPerson that challenges or otherwise adversely affects the continuation of the use or operation of anyAPI Leased Real Property. Part 2.10(b) of theCompany Disclosure Schedule contains an accurate and complete list of all active subleases, occupancy agreements and otherCompany Contracts granting to anyPerson (other than anyAPI Corporation) a right of use or occupancy of any of theAPI Leased Real Property. Except as set forth in the leases or subleases identified in Part 2.10(b) of theCompany Disclosure Schedule, there is noPerson in possession of anyAPI Leased Real Property other than anAPI Corporation. Since January 1, 2010, none of theAPI Corporations has received any written notice (or, to the knowledge of theCompany, any other communication, whether written or otherwise) of a default, alleged failure to perform, or any offset or counterclaim with respect to any occupancyagreement with respect to anyAPI Leased Real Property which has not been fully remedied and withdrawn.

13

2.11Intellectual Property.

(a)    Part 2.11(a) of theCompany Disclosure Schedule accurately identifies the following (and all of the following have beenMade Available toParent):

(i)     in Part 2.11(a)(i) of theCompany Disclosure Schedule anyRegistered IP in which any of theAPI Corporations has or purports to have an ownership interest of any nature (whether solely or jointly with anotherPerson) (the “API Registered IP”),including (A) the jurisdiction in which suchAPI Registered IP has been registered or filed and the applicable registration or serial number; and (B) any otherPerson that has an ownership interest in such item ofAPI Registered IP and the nature of such ownership interest; and

(ii)     in Part 2.11(a)(ii) of the Company Disclosure Schedule: (A) anyContract pursuant to whichRegistered IP is in-licensed to any of theAPI Corporations; (B) eachContract pursuant to which any otherIntellectual Property Rights or Intellectual Property is in-licensed to any of theAPI Corporations (other than commercially available third party software); (C) anyContract pursuant to whichRegistered IP is out-licensed from any of theAPI Corporations (other than the license of software included inCompany’s commercial products); and (D) anyContract pursuant to which any otherIntellectual Property Rights or Intellectual Property are out-licensed from any of theAPI Corporations; provided that in each case (I) specifying whether these licenses are exclusive or nonexclusive (for purposes of thisAgreement, a covenant not to sue or not to assert infringement claims shall be deemed to be equivalent to a nonexclusive license),(II) whether these licenses are assignable, (III) any option to license shall be listed specifying as such, (IV) notwithstanding the foregoing, any standard non-exclusive in-licenses or out-licenses or unexercised options to in-license pursuant to government contracts or subcontracts need not be included and (V) notwithstanding the foregoing, language in standard customer terms and conditions for the purchase of goods purporting to give the customer any non-exclusive license from the supplier need not be included.

(b)    TheCompany has delivered orMade Available toParent an accurate and complete copy of the following documents andContracts used by anyAPI Corporation at any time since January 1, 2012: (i) terms and conditions with respect to the distribution, sale, or provisioning of anyCompany Product; (ii)  employeeagreement(s) or similarContract(s) containing any assignment or license ofIntellectual Property orIntellectual Property Rights or any confidentiality provision; and (iii) consulting or independent contractoragreement(s) or similarContract(s) containing any assignment or license ofIntellectual Property orIntellectual Property Rights or any confidentiality provision.

(c)    TheAPI Corporations own all right, title and interest to and in theCompany IP (other thanIntellectual Property Rights orIntellectual Property licensed to theCompany, as identified in Part 2.11(a)(ii) of theCompany Disclosure Schedule or pursuant to commercially available third party software and material transfer agreements entered into in the ordinary course of business) free and clear of anyEncumbrances (other than non-exclusive licenses granted by anyAPI Corporation in connection with the sale or license ofCompany Products or conduct of work under government contracts or subcontracts in the ordinary course of business). Without limiting the generality of the foregoing, noCompany Associate, to the knowledge of theCompany, has any claim, right (whether or not currently exercisable) or interest to or in anyCompany IP and eachCompany Associate who is or was involved in the creation or development of anyCompany IP has signed a valid, enforceableagreement containing an assignment ofIntellectual Property Rights to theAPI Corporations and confidentiality provisions protecting theCompany IP.

14

(d)    Neither the execution, delivery or performance of thisAgreement nor the consummation of any of theContemplated Transactions will, orwould reasonably be expected to, with or without notice or the lapse of time, result in or give any otherPerson the right or option to cause, create, impose or declare: (i) a loss of, orEncumbrance on, anyCompany IP; or (ii) the grant, assignment or transfer to any otherPerson of any license or other right or interest under, to or in any of theCompany IP.

(e)    TheCompany has not concluded that anyPerson has infringed, misappropriated or otherwise violated, or that anyPerson is infringing, misappropriating or otherwise violating, anyCompany IP in any material respect. Part 2.11(e) of theCompany Disclosure Schedule: (i) accurately identifies (and theCompany has provided toParent an accurate and complete copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to any of the API Corporations or anyRepresentative of any of theAPI Corporations between January 1, 2011, and the date of thisAgreement regarding any alleged or suspected infringement or misappropriation of anyCompany IP; and (ii) provides a brief description of the current status of the matter referred to in such letter, communication or correspondence.

(f)     TheCompany has not concluded that any of theAPI Corporations or theCompany Products has infringed (directly, contributorily, by inducement or otherwise), misappropriated or otherwise violated anyIntellectual Property Right of any otherPerson in any material respect. Part 2.11(f) of theCompany Disclosure Schedule accurately identifies (and theCompany has provided toParent an accurate and complete copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to any of theAPI Corporations or, to the knowledge of theCompany, anyRepresentative of any of theAPI Corporations, between January 1, 2011 and the date of thisAgreement regarding any alleged or suspected infringement or misappropriation of anyIntellectual Property Right of any otherPerson by any of theAPI Corporations.

(g)    No infringement, misappropriation or similar claim orLegal Proceeding involving infringement or misappropriation of anyIntellectual Property Right of any otherPerson is or, since January 1, 2011, has been pending and served or, to the knowledge of theCompany, pending and not served or threatened against anyAPI Corporation or against any otherPerson who is, or has asserted orwould reasonably be expected to assert that it is, entitled to be indemnified, defended, held harmless or reimbursed by anyAPI Corporation with respect to such claim orLegal Proceeding (including any claim orLegal Proceeding that has been settled, dismissed or otherwise concluded).

(h)    Except as set forth in Part 2.11(h) of the Company Disclosure Schedule, since January 1, 2011,none of the API Corporations has received any notice or other communication relating to any actual or alleged infringement, misappropriation or violation of anyIntellectual Property Right of anotherPerson by any of theCompany Products.

(i)     Except as set forth in Part 2.11(i) of the Company Disclosure Schedule, none of theAPI Corporations has transferred title to, or granted any exclusive license with respect to, any materialCompany IP.

15

2.12Contracts.

(a)    Part 2.12(a) of theCompany Disclosure Schedule identifies eachCompany Contract that is executory as of the date of thisAgreement and that constitutes aCompany Material Contract, except those that are filed by theCompany as an exhibit pursuant to Item 601(b)(10) of Regulation S-K under theSecurities and Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of thisAgreement, “Company Material Contract” shall mean:

(i)     anyContract which is in effect and which has been filed (or is required to be filed) by theCompany as an exhibit pursuant to Item 601(b)(10) of Regulation S-K under theExchange Act, or that theCompany is required to disclose under Item 404 of Regulation S-K under theExchange Act;

(ii)    anyContract: (A) constituting aCompany Employee Agreement; (B) pursuant to which any of theAPI Corporations is or may become obligated to make any severance, termination or similar payment to anyCompany Associate or any spouse, heir orRepresentative of anyCompany Associate except for severance, termination or similar payments required by applicableLegal Requirements that does not exceed $50,000 per employee; (C) pursuant to which any of theAPI Corporations is or may become obligated to make any bonus or similar payment (other than payments constituting base salary, incentive bonuses or commissions paid in the ordinary course of business) in excess of $50,000 to anyCompany Associate; or (D) pursuant to which any of theAPI Corporations is or may become obligated to grant or accelerate the vesting of, or otherwise modify, any stock option, restricted stock, stock appreciation right or other equity interest in any of theAPI Corporations (other than pursuant to a standard form of stock option agreement);

(iii)   anyContract identified or required to be identified in Part 2.11 of theCompany Disclosure Schedule;

(iv)    anyContract with any distributor and anyContract with any other reseller or sales representative, in each case that provides exclusivity rights to any third party;

(v)     anyContract that is with a supplier of products, product candidates,raw materials or any intermediate form of any drug product, or any services, which supplier is the only source or only supplier of such product, product candidate,raw material, intermediate form of drug product or service in the market place that is in excess of $100,000 per year;

(vi)    anyContract imposing any restriction on the right or ability of anyAPI Corporation: (A) to compete with any otherPerson; (B) to acquire any product or other asset or any services from any otherPerson; (C) to develop, sell, supply, distribute, offer, support or service any product or any technology or other asset to or for any otherPerson; (D) to perform services for any otherPerson; or (E) to transact business with any otherPerson, in each case which restriction would orwould reasonably be expected to materially and adversely affect: (x) the conduct of the business of theAPI Corporations as currently conducted or as currently is proposed to be conducted; or (y) the design, development, manufacturing, reproduction, marketing, licensing, sale, offer for sale, importation, distribution, performance, display, creation of derivative works with respect to and/or use of anyCompany Product;

(vii)   anyContract relating to any currency hedging;

16

(viii)  anyContract requiring that any of theAPI Corporations give any notice or provide any information to anyPerson prior to responding to or prior to accepting anyAcquisition Proposal or similar proposal, or prior to entering into any discussions,agreement, arrangement or understanding relating to anyAcquisition Transaction;

(ix)    API Real Estate Leases;

(x)     anyContract that: (A) involves the payment or delivery of cash or other consideration in an amount orhaving a value in excess of $1,000,000 in the fiscal year ending March 31, 2015 or the following fiscal years; (B) requires by its terms the payment or delivery of cash or other consideration in an amount orhaving a value in excess of $1,000,000 in the fiscal year ending March 31, 2015 or the following fiscal years; (C) involves the performance of serviceshaving a value in excess of $1,000,000 in the fiscal year ended March 31, 2015; (D) requires by its terms the performance of serviceshaving a value in excess of $1,000,000 in the fiscal year ending March 31, 2015 or the following fiscal years; (E) in which theCompany or any API Corporation has agreed to purchase a minimum quantity of goods relating to anyCompany Product or has agreed to purchase goods relating to anyCompany Product exclusively from a certain party; (F) is with a Company Key Supplier who supplies more than $100,000 worth of product per year, and relates to the supply or manufacture of anyCompany Product; or (G) relates to the lease by anAPI Corporation of material tangible personal property with an annual payment of $100,000 or greater;

(xi)    anyContract, the termination of whichwould reasonably be expected to have a Company Material Adverse Effect;

(xii)   eachContract relating to indebtedness for borrowed money or invested money; and

(xiii) eachContract relating to the creation of anyEncumbrance with respect to any asset of any of theAPI Corporations.

TheCompany has delivered orMade Available toParent an accurate and complete copy of eachCompany Contract that constitutes a Company Material Contract.

(b)     EachCompany Contract that constitutes a Company Material Contract is validand in full force and effect, and is enforceable in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors;and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

(c)     Except as set forth in Part 2.12(c) of the Company Disclosure Schedule: (i) none of theAPI Corporations has violated or breached in any material respect, or committed any default in any material respect under, any Company Material Contract; (ii) to the knowledge of theCompany, no otherPerson has violated or breached in any material respect, or committed any default in any material respect under, any Company Material Contract; (iii) to the knowledge of theCompany, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time)would reasonably be expected to: (A) result in a violation or breach in any material respect of any of the provisions of any Company Material Contract; (B) give anyPerson the right to declare a default in any material respect under any Company Material Contract; (C) give anyPerson the right to accelerate the maturity or performance of any Company Material Contract; or (D) give anyPerson the right to cancel, terminate or modify any Company Material Contract; and (iv) since January 1, 2012,none of the API Corporations has received any notice or other communication regarding any actual or possible violation or breach of, or default under, any Company Material Contract.

17

(d)     Government Contracts; Security Clearances.A true and correct list of each Government Contract to which the Company is a party and each outstanding Government Bid, if the actual or potential award amount is $500,000 or greater, is set forth in Part 2.12(d) of the Company Disclosure Schedule (a “Company Listed Government Contract”).  Except as set forth on Part 2.12(d) of the Company Disclosure Schedule:

(i)     No Company Listed Government Contract is based on the Company having 8(a) status, small business status, small disadvantaged business status, service-disabled veteran-owned small business status, protégé status, or other preferential status afforded by statute or regulation.

(ii)    The Company has not made a mandatory disclosure under FAR 52.203-13(b)(3)(i), FAR Part 9, or any other requirement of law, or any voluntary disclosure, to any Governmental Body with respect to any alleged unlawful conduct, misstatement, or omission arising under or relating to any Company Listed Government Contract, and there are no facts that would require mandatory disclosure under FAR 52.203-13(b)(3)(i), FAR Part 9, or any other statute or regulation.

(iii)   The Company has complied in all material respects with the terms and conditions of each Company Listed Government Contract to which it is a party.  The Company has complied in all material respects with all Laws applicable and pertaining to each Company Listed Government Contract and each scheduled Government Bid (and in any certificate, statement, list, schedule or other documents submitted or furnished in connection with the foregoing).  All representations, warranties and certifications made by the Company with respect to any Company Listed Government Contract were current, accurate, and complete as of their effective date and the Company has complied in all material respects with all such representations, warranties and certifications.  No termination for convenience, termination for default, cure notice or show cause notice is currently in effect, has been issued or, to the Company’s Knowledge, is threatened or expected with respect to any Company Listed Government Contract.

(iv)    No cost incurred by the Company pertaining to any Government Contract is: (1) currently being questioned or challenged by the U.S. Government, any Governmental Body, or any other Person; or (2) has been disallowed by any Governmental Body, or has been, or now is, the subject of an investigation. No amount of money due to the Company under any Government Contract or Government Bid has been withheld or set off, nor has any claim been made to withhold or set off money.  Neither any Governmental Body nor any prime contractor, subcontractor or other Person has notified the Company in writing, or to the Company’s Knowledge, orally that the Company has breached or violated any Law, certification, representation, warranty, covenant, clause, provision or requirement in any material respect pertaining to any Government Contract or Government Bid.

(v)     There are (1) no outstanding claims or requests for equitable adjustment against the Company by the U.S. Government, any other Governmental Body or by any prime contractor, higher or lower tier subcontractor, vendor or other third party arising under or relating to any Government Contract, and (2) no outstanding material disputes between the Company, on the one hand, and the U.S. Government or any other Governmental Body, on the other hand, under the Contract Disputes Act (41 U.S.C. §§ 7101-7109) or any other statute or between the Company, on the one hand, and any prime contractor, higher or lower tier subcontractor, vendor or other third party, on the other hand, arising under or relating to any such Government Contract or Government Bid.  To the Knowledge of the Company, the Company has no interest in any pending or potential claim against the U.S. Government, any Governmental Body or any prime contractor, higher or lower tier subcontractor or vendor arising under or relating to any Government Contract or Government Bid.

18

(vi)    Neither the Company nor any of its respective directors, officers, employees, consultants, or agents (1) is, has been in the past six (6) years, or, to the Knowledge of the Company, is threatened with being, debarred, suspended, or excluded from participation in, or the award of, Contracts or doing business with the U.S. Government or any Governmental Body, (2)  is (or was, during the past six (6) years) the subject of a finding of non-compliance, non-responsibility, or ineligibility for government contracting (excluding for this purpose ineligibility to bid on certain contracts due to generally applicable bidding requirements) for any reason or is listed on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs, (3)  has committed in the past six (6) years (or taken any action to conceal) any violation of any applicable Law relating to procurement in respect of any Government Contract or Government Bid, or (4) is currently proposed for, or has been subject to, suspension, debarment or exclusion proceedings.  No payment, contribution, gift, or discount has been offered, made, or given by the Company or by any Person on behalf of the Company in the past six (6) years in connection with any Government Contract or Government Bid, in violation of such Government Contract or Government Bid or applicable Law.

(vii)   The cost accounting system and procurement systems of the Company with respect to the Government Contracts and Government Bids are in material compliance with applicable Laws.  There has not been, and there is no basis for, a finding of fraud or any claim of any material Liability as a result of defective pricing, mischarging, or improper payments on the part of the Company.  The Company has neither undergone nor received any communication that it will be subject to any audit, and there is no basis for any audit, whether arising under or relating to any Government Contract or otherwise, other than routine audits conducted by the U.S. Government or the Company in the Ordinary Course of Business. 

(viii)  None of the current Company Listed Government Contracts require security or facilities clearances.

2.13Liabilities. None of the API Corporations has any accrued, contingent or other liabilities of the type required to be disclosed, accrued or reserved in the liabilities column of a balance sheet prepared in accordance with GAAP, except for: (a) liabilities identified as such, or specifically reserved against, in the Company Audited Balance Sheet; (b) liabilities that have been incurred by the API Corporations since the date of the Company Audited Balance Sheet in the ordinary course of business and consistent with past practices; (c) liabilities for performance of obligations of the API Corporations pursuant to the express terms of Company Contracts; (d) liabilities under this Agreement or incurred in connection with the Contemplated Transactions; and (e) liabilities that are not, individually or in the aggregate, material to the API Corporations, or that are described in Part 2.13 of the Company Disclosure Schedule.

2.14     Compliance with Legal Requirements; Regulatory Matters.

(a)     Unless provided onSchedule 2.14(a), each of theAPI Corporations is, and has during the past two years been, in compliance in all material respects with all applicableLegal Requirements,including Environmental Laws and Legal Requirements relating to employment, privacy law matters, exportation of goods and services, securities law matters andTaxes, and all applicableHealth Care Laws, which affect the business, properties, assets and activities of theAPI Corporations. During the past five years,none of the API Corporations has received any notice or other communication from anyGovernmental Body or otherPerson regarding any actual or possible violation in any material respect of, or failure to comply in any material respect with, anyLegal Requirement.

19

(b)     As of the date hereof, no claims, actions, proceedings or investigations thatwould reasonably be expected to result in such a material debarment or exclusion are pending or, to the knowledge of theCompany, threatened against any of theAPI Corporations or their officers, consultants, employees or agents.

(c)     TheAPI Corporations are not a party to any corporate integrity agreements, deferred prosecution agreements, monitoring agreements, consent decrees, settlement orders, or similar agreements with or imposed by anyGovernmental Body.

2.15Certain Business Practices. Neither the Company nor any of its directors, employees or officers, and to the Company’s knowledge, no agents, consultants or distributors engaged by the Company (a) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) has used or is using any corporate funds for any direct or indirect unlawful payments to any official or employee of a foreign or domestic Governmental Body, (c) has violated or is violating any provision of the US Foreign Corrupt Practices Act of 1977, as amended (including the rules and regulations issued thereunder) or any other law, rule, regulation, or other legally binding measure of any jurisdiction that relates to bribery or corruption (collectively, “Anti-Bribery Laws”), (d) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties, (e) has made any bribe, unlawful rebate, unlawful payoff, influence payment, kickback or other unlawful payment of any nature in furtherance of an offer, payment, promise to pay, authorization, or ratification of the payment, directly or indirectly, of any gift, money or anything of value to any official or employee of a foreign or domestic Governmental Body to secure any improper advantage (within the meaning of such term under any applicable Anti-Bribery Law) or to obtain or retain business, or (f) has otherwise taken any action that has caused, or would reasonably be expected to cause the Company to be in violation of any applicable Anti-Bribery Law. The Company has established and maintains a compliance program, internal controls and procedures appropriate for compliance with the Anti-Bribery Laws.

2.16     Governmental Authorizations.

(a)     TheAPI Corporations hold all materialGovernmental Authorizations necessary to enable theAPI Corporations to conduct their respective businesses in the manner in which such businesses are currently being conducted,including allGovernmental Authorizations required underEnvironmental Laws. All suchGovernmental Authorizations are validand in full force and effect. EachAPI Corporation is, and at all times since January 1, 2012 has been, in compliance in all material respects with the terms and requirements of suchGovernmental Authorizations. Since January 1, 2012,none of the API Corporations has received any notice or other communication from anyGovernmental Body regarding: (i) any actual or possible violation of or failure to comply with any term or requirement of any materialGovernmental Authorization; or (ii) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any materialGovernmental Authorization.

(b)     Part 2.16(b) of theCompany Disclosure Schedule describes the terms of each material active grant, incentive or subsidy provided or made available to or for the benefit of any of theAPI Corporations by any U.S. federal, state or localGovernmental Body or any foreignGovernmental Body. Each of theAPI Corporations is in full compliance with all of the material terms and requirements of each grant, incentive and subsidy identified or required to be identified in Part 2.16(b) of theCompany Disclosure Schedule. Neither the execution, delivery or performance of thisAgreement, nor the consummation of theMerger or any of the otherContemplated Transactions, does, will or could reasonably be expected to (with or without notice or lapse of time) give anyPerson the right to revoke, withdraw, suspend, cancel, terminate or modify any grant, incentive or subsidy identified or required to be identified in Part 2.16(b) of theCompany Disclosure Schedule.

20

2.17TaxMatters.

(a)     Each of theTax Returns required to be filed by or on behalf of the respectiveAPI Corporations with anyGovernmental Body with respect to any taxable period ending on or before theClosing Date (the “API Corporation Returns”): (i) has been or will be filed on or before the applicable due date (including any extensions of such due date); and (ii) has been, or will be when filed, prepared in all material respects in compliance with all applicableLegal Requirements. All amounts shown on theAPI Corporation Returns to be due on or before theClosing Date have been or will be paid on or before theClosing Date, except with respect to matters contested in good faith in appropriate proceedings and for which adequate reserves have been established in accordance withGAAP.

(b)     TheCompany Audited Balance Sheet fully accrues all actual and contingent liabilities for materialTaxes with respect to all periods through the date of theCompany Audited Balance Sheet. NoAPI Corporation has incurred any material liability forTaxes since the date of theCompany Audited Balance Sheet other than in the ordinary course of business.

(c)     To the knowledge of theCompany, no API Corporation has received notice of an audit and no API Corporation Return since January 1, 2012 has been subject to an audit with respect toTaxes by anyGovernmental Body. No extension or waiver of the limitation period applicable to any of theAPI Corporation Returns has been granted (by theCompany or any otherPerson), and no such extension or waiver has been requested from anyAPI Corporation.

(d)     No claim orLegal Proceeding is pending or, to the knowledge of theCompany, has been threatened against or with respect to anyAPI Corporation in respect of any materialTax. There are no unsatisfied liabilities for materialTaxes with respect to any notice of deficiency or similar document received by anyAPI Corporation with respect to any materialTax (other than liabilities forTaxes asserted under any such notice of deficiency or similar document which are being contested in good faith by theAPI Corporations and with respect to which adequate reserves for payment have been established on theCompany Audited Balance Sheet). There are no liens for materialTaxes upon any of the assets of any of theAPI Corporations except liens for currentTaxes not yet due and payable. None of theAPI Corporations has been, and none of theAPI Corporations will be, required toinclude any adjustment in taxable income for U.S. federal incomeTax purposes for anyTax period (or portion thereof) pursuant toSection 481 or 263A of theCode as a result of transactions or events occurring, or accounting methods employed, prior to theClosing.

(e)     No written claim has ever been made by anyGovernmental Body in a jurisdiction where anAPI Corporation does notfile aTax Return that it is or may be subject to taxation by that jurisdiction which has resulted orcould reasonably be expected to result in an obligation to payTaxes.

(f)     There are noContracts relating to the allocating, sharing or indemnification ofTaxes to which any API Corporation is a party, other than (i)Contracts containing customary gross-up, allocation, sharing or indemnification provisions in credit agreements, derivatives, leases, and similar agreements entered into in the ordinary course of business or (ii) commercially reasonableContracts for the allocation or payment of personal propertyTaxes, sales or useTaxes or value addedTaxes with respect to personal property leased, used, owned or sold in the ordinary course of business.

21

(g)     NoAPI Corporation has constituted either a “distributing corporation” or a “controlled corporation” within the meaning ofSection 355(a)(1)(A) of the Code.

(h)     NoAPI Corporation is or has been aUnited States real property holding corporation within the meaning ofSection 897(c)(2) of theCode during the applicable period specified inSection 897(c)(1)(A)(ii) of theCode.

(i)     NoAPI Corporation has been a member of an affiliated group of corporations within the meaning ofSection 1504 of theCode or within the meaning of any similar Legal Requirement to which an API Corporation may be subject, other than the affiliated group of which theCompany is the commonparent. NoAPI Corporation has any liability forTaxes of a predecessor or transferor that became a liability of the successor or transferee by operation of law or by contract.

(j)     TheCompany has disclosed on its federal incomeTax Returns all positions that could give rise to a material understatement penalty within the meaning ofSection 6662 of theCode or any similarLegal Requirement.

(k)     NoAPI Corporation has participated in, or is currently participating in, a “listed transaction” within the meaning ofTreasury Regulation Section 1.6011-4(b)(1).

(l)     TheAPI Corporations have withheld and paid allTaxes required to have been withheld and paid in connection with amounts paid or owning to any employee, independent contractor, creditor, stockholder or otherPerson.

(m)    NoAPI Corporation has waived any statute of limitations in respect ofTaxes or agreed to any extension of time with respect to aTax assessment or deficiency, which waiver or extension is still in effect.

(n)     NoAPI Corporation has taken any action or knows of any fact thatwould reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning ofSection 368(a) of theCode.

2.18Employee and Labor Matters; Benefit Plans.

(a)     Except as set forth in Part 2.18(a) of the Company Disclosure Schedule or as required by applicableLegal Requirements, the employment of each of theAPI Corporations’ employees is terminable by the applicableAPI Corporation at will.

(b)     Except as set forth in Part 2.18(b) of the Company Disclosure Schedule, none of theAPI Corporations is a party to, or has a duty to bargain for, any collective bargainingagreement or otherContract with a labor organization or works council representing any of its employees and there are no labor organizations or works councils representing, purporting to represent or, to the knowledge of theCompany, seeking to represent any employees of any of theAPI Corporations. There has not been any strike, slowdown, work stoppage, lockout, job action, picketing, labor dispute, question concerning representation, union organizing activity, or any threat thereof, or any similar activity or dispute, affecting any of theAPI Corporations or any of their employees. There is not now pending, and, to the knowledge of theCompany, noPerson has threatened to commence, any such strike, slowdown, work stoppage, lockout, job action, picketing, labor dispute, question regarding representation or union organizing activity or any similar activity or dispute. There is no claim or grievance pending or, to the knowledge of theCompany, threatened against anyAPI Corporation relating to any employmentContract, wages and hours, leave of absence, plantclosing notification, employment statute or regulation, privacy right, labor dispute, workers’ compensation policy or long-term disability policy, safety, retaliation, immigration or discrimination matters involving anyCompany Associate,including charges of unfair labor practices or harassment complaints.

22

(c)     TheCompany has delivered orMade Available toParent an accurate and complete list, by country and as of the date hereof, of eachCompany Employee Plan and each Company Employee Agreement. None of theAPI Corporations intends, and none of theAPI Corporations has committed, to establish or enter into any newCompany Employee Plan orCompany Employee Agreement, or to modify anyCompany Employee Plan orCompany Employee Agreement (except to conform any suchCompany Employee Plan orCompany Employee Agreement to the requirements of any applicableLegal Requirements, in each case as previously disclosed toParent in writing or as required by thisAgreement).There has been no amendment to, announcement by any API Corporation relating to, or change in employee participation or coverage under, any Company Employee Plan that would materially increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year with respect to any director, officer, employee, independent contractor or consultant, as applicable.

(d)     TheCompany has delivered orMade Available toParent accurate and complete copies of: (i) all documents setting forth the terms of eachCompany Employee Plan and each Company Employee Agreement,including all amendments thereto; (ii) the two most recent annual reports (Form Series 5500 and allschedules and financial statements attached thereto), if any, required under applicableLegal Requirements in connection with eachCompany Employee Plan; (iii) if theCompany Employee Plan is subject to the minimum funding standards of Section 302 ofERISA, the most recent annual and periodic accounting ofCompany Employee Plan assets, if any; (iv) the most recent summary plan description together with the summaries of material modifications thereto, if any, required underERISA or any similarLegal Requirement with respect to eachCompany Employee Plan; and (v) all material correspondence in its possession regarding anyCompany Employee Plan regarding any audit, investigation or proceeding regarding suchCompany Employee Plan or any fiduciary thereof.

(e)     Each of theAPI Corporations andCompany Affiliates has performed in all material respects all obligations required to be performed by it under eachCompany Employee Plan and Company Employee Agreement, and each Company Employee Plan and Company Employee Agreement has been established and maintained in all material respects in accordance with its terms and applicableLegal Requirements. AnyCompany Employee Plan intended to be qualified underSection 401(a) of theCode has obtained a favorable determination letter (or opinion letter, if applicable) as to its qualified status under theCode. AllCompany Pension Plans required to have been approved by any foreignGovernmental Body have been so approved, no such approval has been revoked (or, to the knowledge of theCompany, has revocation been threatened) and no event has occurred since the date of the most recent approval or application therefor relating to any suchCompany Pension Plan thatwould reasonably be expected to materially affect any such approval relating thereto or materially increase the costs relating thereto. EachCompany Employee Plan intended to be tax qualified under applicableLegal Requirements is so tax qualified, and no event has occurred and no circumstance or condition exists thatwould reasonably be expected to result in the disqualification of any suchCompany Employee Plan. No “prohibited transaction,” within the meaning ofSection 4975 of theCode orSections 406 and 407 ofERISA, and not otherwise exempt under Section 408 ofERISA, has occurred with respect to anyCompany Employee Plan. EachCompany Employee Plan (other than anyCompany Employee Plan to be terminated prior to theEffective Time in accordance with thisAgreement) can be amended, terminated or otherwise discontinued after theClosing in accordance with its terms, without liability toParent, any of theAPI Corporations or anyCompany Affiliate (other than any liability for ordinary administrationexpenses). There are no audits or inquiries pending or, to the knowledge of theCompany, threatened by theIRS, theDOL or any otherGovernmental Body with respect to anyCompany Employee Plan or any fiduciary thereof. None of theAPI Corporations, and noCompany Affiliate, has ever incurred: (i) any material penalty orTax with respect to anyCompany Employee Plan under Section 502(i) ofERISA orSections 4975 through 4980 of theCode; or (ii) any material penalty orTax under applicableLegal Requirements. Each of theAPI Corporations andCompany Affiliates has made all contributions and other payments required by and due under the terms of eachCompany Employee Plan and each Company Employee Agreement.

23

(f)     None of theAPI Corporations, and noCompany Affiliate, has ever maintained, established, sponsored, participated in or contributed to any: (i)Company Pension Plan subject toTitle IV of ERISA; (ii) “multiemployer plan” within the meaning ofSection (3)(37) ofERISA; or (iii) plan described inSection 413 of theCode. NoCompany Employee Plan is or has been funded by, associated with or related to a “voluntary employees’ beneficiary association” within the meaning ofSection 501(c)(9) of theCode. None of theAPI Corporations, and noCompany Affiliate, has ever maintained, established, sponsored, participated in or contributed to anyCompany Pension Plan in which stock of any of theAPI Corporations or anyCompany Affiliate is or was held as a plan asset. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide in full for the accrued benefit obligations, with respect to all current and former participants in such Foreign Plan according to the reasonable actuarial assumptions and valuations most recently used to determine employer contributions to and obligations under such Foreign Plan, and noContemplated Transaction will cause any such assets or insurance obligations to be less than such benefit obligations. There are no material liabilities of theAPI Corporations with respect to anyCompany Employee Plan that are not properly accrued and reflected in the financial statements of theCompany in accordance withGAAP. Nothing has occurred that could result in a material increase in the benefits under or the expense of maintaining anyCompany Employee Plan from the level of benefits or expense incurred for the most recently completed fiscal year.

(g)     None of theAPI Corporations, and noCompany Affiliate, maintains, sponsors or contributes to anyCompany Employee Plan that is an employee welfare benefit plan (as such term is defined in Section 3(1) ofERISA) and that is, in whole or in part, self-funded or self-insured. NoCompany Employee Plan provides (except at no cost to theAPI Corporations or anyCompany Affiliate), or reflects or represents any liability of any of theAPI Corporations or anyCompany Affiliate to provide, post-termination or retiree life insurance, post-termination or retiree health benefits or other post-termination or retiree employee welfare benefits to anyPerson for any reason, except as may be required byCOBRA or other applicableLegal Requirements. Other than commitments made that involve no future costs to any of theAPI Corporations or anyCompany Affiliate, none of theAPI Corporations nor anyCompany Affiliate has ever represented, promised or contracted (whether in oral or written form) to anyCompany Associate (either individually or to Company Associates as a group) or any otherPerson that suchCompany Associate(s) or otherPerson would be provided with post-termination or retiree life insurance, post-termination or retiree health benefit or other post-termination or retiree employee welfare benefits, except to the extent required by applicableLegal Requirements.

(h)     Except as set forth in Part 2.18(h) of the Company Disclosure Schedule, and except as expressly required or provided by thisAgreement, neither the execution of thisAgreement nor the consummation of theContemplated Transactions will orwould reasonably be expected to (either alone or upon the occurrence of termination of employment) constitute an event under anyCompany Employee Plan,Company Employee Agreement, trust or loan that will or may result (either alone or in connection with any other circumstance or event) in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to anyCompany Associate.

24

(i)     Except as set forth in Part 2.18(i) of the Company Disclosure Schedule, each of theAPI Corporations andCompany Affiliates: (i) is, and has been, in compliance in all material respects with anyOrder or arbitration award of any court, arbitrator or anyGovernmental Body respecting employment, employment practices, terms and conditions of employment, wages, hours or other labor related matters; (ii) has withheld and reported all material amounts required by applicableLegal Requirements or byContract to be withheld and reported with respect to wages, salaries and other payments toCompany Associates; (iii) is not, to the knowledge of theCompany, liable for any material arrears of wages or any materialTaxes or any material interest or penalty for failure to comply with theLegal Requirements applicable of the foregoing; and (iv) is not liable for any material payment to any trust or other fund governed by or maintained by or on behalf of anyGovernmental Body with respect to unemployment compensation benefits, social security, social charges or other benefits or obligations forCompany Associates (other than routine payments to be madein the normal course of business and consistent with past practices).

(j)     There is noagreement, plan, arrangement or otherContract covering anyCompany Associate, and no payments have been made or will be made in connection with theMerger to anyCompany Associate,that, considered individually or considered collectively with any other suchContracts or payments, will, orwould reasonably be expected to, be characterized as a “parachute payment” within the meaning ofSection 280G(b)(2) of theCode or give rise directly or indirectly to the payment of any amount that would not be deductible pursuant toSection 162(m) of theCode (or any comparable provision under state or foreignTax laws). NoAPI Corporation is a party to or has any obligation under anyContract to compensate anyPerson for excise taxes payable pursuant toSection 4999 of theCode or for additionalTaxes payable pursuant toSection 409A of theCode. TheCompany has made available toParent true and complete copies of anySection 280G calculations prepared (whether or not final) with respect to any disqualified individual in connection with the transactions contemplated by thisAgreement.

(k)     Since January 1, 2012, none of theAPI Corporations has effectuated a “plantclosing,” partial “plantclosing,” “relocation”, “mass layoff” or “termination” (as defined in theWorker Adjustment and Retraining Notification Act (the “WARN Act”) or any similarLegal Requirement) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of any of theAPI Corporations.

(l)     Each Company Employee Plan and Company Employee Agreement that is a “nonqualified deferred compensation plan” (as defined underCode Section 409A) has been operated in compliance in all material respects withCode Section 409A and has complied in all material respects with applicable document requirements of 409A. No stock right or other equity option or appreciation right granted under any benefit plan has an exercise price that is less than the fair market value of the underlying stock or equity units (as the case may be) as of the date of such option or right was granted, or has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option or right. Neither the terms nor the performance of anyCompany Employee Agreement orCompany Employee Plan would reasonably be expected to result in gross income inclusion after theEffective Time pursuant to Section 409A(a)(1)(A) of the Code.

25

2.19Environmental Matters.

(a)     None of the API Corporations has received any notice or other communication, whether from aGovernmental Body, citizens group,Company Associate or otherwise, that alleges that any of theAPI Corporations is not or might not be in compliance with anyEnvironmental Law, and, to the knowledge of theCompany, there are no circumstances that may prevent or interfere with the compliance by any of theAPI Corporations with anyEnvironmental Law in the future.

(b)     To the knowledge of theCompany: (i) allAPI Leased Real Property and any other property that is or was leased to or owned, controlled or used by any of theAPI Corporations, and all surface water, groundwater and soil associated with or adjacent to such property, is free of anyMaterials of Environmental Concern or material environmental contamination of any nature; (ii) none of theAPI Leased Real Property or any other property that is or was leased to or owned, controlled or used by any of theAPI Corporations contains any underground storage tanks, asbestos, equipment using PCBs or underground injection wells; and (iii) none of theAPI Leased Real Property or any other property that is or was leased to or owned, controlled or used by any of theAPI Corporations contains any septic tanks in which process wastewater or anyMaterials of Environmental Concern have been Released.

(c)     NoAPI Corporation has ever sent or transported, or arranged to send or transport, anyMaterials of Environmental Concern to a site that, pursuant to any applicableEnvironmental Law: (i) has been placed on the “National Priorities List” of hazardous waste sites or any similar state list; (ii) is otherwise designated or identified as a potential site for remediation, cleanup, closure or other environmental remedial activity; or (iii) is subject to aLegal Requirement to take “removal” or “remedial” action as detailed in any applicableEnvironmental Law or to make payment for the cost of cleaning up any site.

(d)     Except with respect toContracts relating toAPI Leased Real Property, none of theAPI Corporations has entered into anyCompany Contract that may require any of them to guarantee, reimburse, defend, hold harmless or indemnify any other party with respect to liabilities arising out ofEnvironmental Laws, or the activities of theAPI Corporations or any otherPerson relating toMaterials of Environmental Concern.

2.20     Insurance. Each material insurance policy and self-insurance program and arrangement relating to the business, assets and operations of the API Corporations is in full force and effect. Since January 1, 2012, none of the API Corporations has received any notice or other communication regarding any actual or possible: (a) cancellation or invalidation of any material insurance policy; (b) refusal of any coverage or rejection of any material claim under any insurance policy; or (c) material adjustment in the amount of the premiums payable with respect to any insurance policy. There is no pending workers’ compensation or other claim under or based upon any insurance policy of any of the API Corporations involving an amount in excess of $100,000 in any individual case or $500,000 in the aggregate.

2.21     Transactions withAffiliates. Except as set forth in the Company SEC Documents filed prior to the date of this Agreement, during the period commencing on the date of the Company’s last proxy statement filed with the SEC through the date of this Agreement, no event has occurred that would be required to be reported by the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.

26

2.22Legal Proceedings;Orders.

(a)     Except as set forth in Part 2.22(a) of the Company Disclosure Schedule, there is not as of the date hereof, and there has not been since January 1, 2012, any pending and servedLegal Proceeding, or (to the knowledge of theCompany) any pending but not servedLegal Proceeding and during such period noPerson has threatened to commence any materialLegal Proceeding: (i) that involves any of theAPI Corporations, any business of any of theAPI Corporations, any of the assets owned, leased or used by any of theAPI Corporations or, to the knowledge of theCompany, anyCompany Associate (in their capacity as such); or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, theMerger or any of the otherContemplated Transactions. To the knowledge of theCompany, no event has occurred, and no claim, dispute or other condition or circumstance exists, thatwould reasonably be expected to give rise to or serve as a reasonable basis for the commencement of anyLegal Proceeding of the type described in clause “(i)” or clause “(ii)” of the first sentence of thisSection 2.22(a).

(b)     There is noOrder to which any of theAPI Corporations, or any of the material assets owned or used by any of theAPI Corporations, is subject. To the knowledge of theCompany, no officer or other key employee of any of theAPI Corporations is subject to anyOrder that prohibits such officer or other employee from engaging in or continuing any conduct, activity or practice relating to the business of any of theAPI Corporations.

2.23     Inapplicability ofSection203 of theDGCLand other Anti-takeover Statutes. Assuming the representations set forth in the last sentence of Section 3.23 are true, the Company Board has taken, and during the Pre-Closing Period the Company Board will take, all actions necessary to ensure that the restrictions applicable to business combinations contained in Section 203 of the DGCL are not, and will not be, applicable to the execution, delivery or performance of this Agreement, the Company Stockholder Voting Agreements, or to the consummation of the Merger or any of the other Contemplated Transactions. The Company Board (at a meeting duly called and held) has, to the extent necessary, adopted a resolution having the effect of causing the Company not to be subject to any state takeover law or similar Legal Requirement that might otherwise apply to the Merger or any of the other Contemplated Transactions. No state takeover statute or similar Legal Requirement (other than Section 203 of the DGCL) applies or purports to apply to the Merger, this Agreement, the Company Stockholder Voting Agreements or any of the Contemplated Transactions. None of the Company or any of its respective “affiliates” or “associates” (as defined in Section 203 of the DGCL) is (as of immediately prior to the execution of this Agreement), or has been (during the three years preceding the execution of this Agreement), an “interested stockholder” (as defined in Section 203 of the DGCL) with respect to Parent.

2.24     Vote Required. Assuming the representations set forth in the last sentence of Section 3.23 are true, the affirmative vote of the holders of a majority of the voting power of the shares of Company Common Stock outstanding on the record date for the Company Stockholders’ Meeting (the “Required Company Stockholder Vote”) is the only vote of the holders of any class or series of the Company’s capital stock necessary to adopt this Agreement or consummate the transactions contemplated hereby.

2.25     Solvency.Each API Corporation is solvent and consummation of the transactions contemplated by this Agreement will not render any of the API Corporations insolvent, in each case, for all purposes under federal bankruptcy and applicable state fraudulent transfer and fraudulent conveyance laws.

27

2.26Opinion of Financial Advisor. The Company Board has received the opinion of B. Riley & Co., LLC (the “Company’s Financial Advisor”), financial advisor to the Company, dated January 29, 2015, to the effect that, as of such date and based upon the factors and assumptions set forth therein, the Exchange Ratio is fair, from a financial point of view, to the holders of the Company Common Stock. The Company will promptly furnish an accurate and complete copy of said opinion to Parent for informational purposes only.

2.27     Financial Advisor; Transaction Expenses. Except for the Company’s Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Merger or any of the other Contemplated Transactions based upon arrangements made by or on behalf of any of the API Corporations. The Company has furnished to Parent accurate and complete copies of all agreements under which any such fees, commissions or other amounts have been paid or may become payable and all indemnification and other agreements related to the engagement of the Company’s Financial Advisor. Part 2.27 of the Company Disclosure Schedule contains a good faith estimate of the fees and expenses of the Company’s Financial Advisor.

2.28     Disclosure. None of the information to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Form S-4 Registration Statement will, at the time the Form S-4 Registration Statement is filed with the SEC or at the time it, or any amendment or supplement thereto, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus will, at the time the Joint Proxy Statement/Prospectus is mailed to the stockholders of the Company or the stockholders of Parent or at the time of the Company Stockholders’ Meeting or the Parent Stockholders’ Meeting (or any adjournment or postponement thereof), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Joint Proxy Statement/Prospectus will, at the time the Joint Proxy Statement/Prospectus is mailed to the stockholders of the Company or the stockholders of Parent or at the time of the Company Stockholders’ Meeting or the Parent Stockholders’ Meeting (or any adjournment or postponement thereof), comply as to form in all material respects with the provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated by the SEC thereunder, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of the Parent for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus.

2.29     Acknowledgement by theCompany.The Company is not relying and has not relied on any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied, except for the representations and warranties in Section 3 or contained in the Parent Stockholder Voting Agreements. The representations and warranties by Parent and Merger Sub contained in Section 3 constitute the sole and exclusive representations and warranties of Parent, the other Luna Corporations and their respective Representatives in connection with the Contemplated Transactions and the Company understands, acknowledges and agrees that all other representations and warranties of any kind or nature whether express, implied or statutory are specifically disclaimed by Parent.The Company acknowledges that neither Parent nor Merger Sub has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding Parent or Merger Sub furnished or made available to the Company and its Representatives, except as expressly set forth in Section 3 (which includes all schedules corresponding thereto), and neither Parent nor Merger Sub nor any other Person shall be subject to any liability to the Company or its Representatives or any other Person resulting from Parent’s making available such information to the Company and its Representatives or as to the Company’s use of such information. The Company expressly waives any such claims relating to the matters described in the preceding sentence.

28

Section 3.REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent andMerger Sub represent and warrant to theCompany as follows (it being understood that each representation and warranty contained in thisSection 3 is subject to:(a) the exceptions and disclosures set forth in the part or subpart of theParent Disclosure Schedule corresponding to the particularSection or subsection in thisSection 3 in which such representation and warranty appears; and(b) any exception or disclosure set forth in any other part or subpart of theParent Disclosure Schedule to the extent it is reasonably obvious that such exception or disclosure would qualify such representation and warranty; and(c) any information set forth in theParent SEC Documents filed on the SEC’s EDGAR database and publicly availablefor at least 10 business days prior to the date of thisAgreement, other than information set forth therein under the headings “Risk Factors” or “Forward-Looking Statements” and any other information set forth therein that is predictive or forward-looking in nature):

3.1     Subsidiaries; Due Organization; Etc.

(a)     Part 3.1(a) of theParent Disclosure Schedule identifies each Subsidiary of theParent and indicates its jurisdiction of organization. Neither theParent nor any ofParent’s Subsidiaries owns any capital stock of, or any equity interest of any nature in, any otherEntity, other than theParent’s Subsidiaries. NoLuna Corporations has agreed or is obligated to make, or is bound by anyContract under which it may become obligated to make, any future investment in or capital contribution to any otherEntity.

(b)     Each of theLuna Corporations is a corporation or other business organization duly organized, validly existing and in good standing (to the extent that the laws of the jurisdiction of its formation recognize the concept of good standing) under the laws of the jurisdiction of its incorporation and has all necessary organizational power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under allContracts by which it is bound.

(c)     Each of theLuna Corporations is qualified to do business as a foreign corporation, and is in good standing, under the laws of all jurisdictions where the nature of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or in good standing, individually or in the aggregate, would not have aParent Material Adverse Effect.

3.2     Certificate of Incorporation and Bylaws. The Parent has delivered or Made Available to the Company accurate and complete copies of the certificate of incorporation, bylaws, memorandum of association and articles of association or equivalent governing documents of each of the Luna Corporations, including all amendments thereto.

3.3     Authority; Binding Nature ofAgreement. Assuming the representations set forth in the last sentence of Section 2.23 are true: Parent and Merger Sub have the corporate right, power and authority to enter into and perform their respective obligations under this Agreement and, subject to obtaining the Required Parent Stockholder Vote and the Required Merger Sub Stockholder Vote, respectively, consummate the transactions contemplated hereby. The Parent Board (at a meeting duly called and held) has unanimously: (a) determined that this Agreement and the Merger are advisable and fair to, and in the best interests of, Parent and its stockholders; (b)  authorized and approved the execution, delivery and performance of this Agreement by Parent and the issuance of shares of Parent Common Stock pursuant to this Agreement; and (c) recommended the approval of the issuance of the Parent Common Stock pursuant to this Agreement for purposes of Nasdaq Listing Rule 5635 by the holders of Parent Common Stock and directed that the issuance of such shares be submitted for consideration by the Parent’s stockholders at the Parent Stockholders’ Meeting. Assuming the due authorization, execution and delivery of this Agreement by the Company, this Agreement constitutes the legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency, the relief of debtors and creditors’ rights generally; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

29

3.4Non-Contravention;Consents. Assuming compliance with the applicable provisions of theDGCL and the listing requirements of theNASDAQ Capital Market, except as set forth in Part 3.4 of the Parent Disclosure Schedule, neither(1) the execution, delivery or performance of thisAgreement, nor(2) the consummation of theMerger or any of the otherContemplated Transactions, will, directly or indirectly (with or without notice or lapse of time):

(a)     contravene, conflict with or result in a violation of: (i) any of the provisions of the certificate of incorporation, bylaws or other charter or organizational documents of any of theLuna Corporations; or (ii) any resolution adopted by the stockholders, the board of directors or any committee of the board of directors of any of theLuna Corporations;

(b)     contravene, conflict with or result in a violation of, anyLegal Requirement or anyOrder to which any of theLuna Corporations, or any of the assets owned or used by any of theLuna Corporations, is subject;

(c)     contravene, conflict with or result in a violation of any of the terms or requirements of, or give anyGovernmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, anyGovernmental Authorization that is held by any of theLuna Corporations or that otherwise relates to the business of any of theLuna Corporations or to any of the assets owned or used by any of theLuna Corporations;

(d)     contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any Parent Material Contract, or give anyPerson the right to: (i) declare a default or exercise any remedy under any suchParent Material Contract; (ii) accelerate the maturity or performance of any such Parent Material Contract; or (iii) cancel, terminate or modify any right, benefit, obligation or other term of such Parent Material Contract; or

(e)     result in the imposition or creation of anyEncumbrance upon or with respect to any asset owned or used by any of theLuna Corporations (except for minor liens that will not, in any case or in the aggregate, materially detract from the value of the assetssubject thereto or materially impair the operations of any of the Luna Corporations).

Except as may be required by theSecurities Act, theExchange Act, theDGCL and the listing requirements of the NASDAQ Capital Market, none of theLuna Corporations is or will be required to make any filing with or give any notice to, or to obtain anyConsent from, anyGovernmental Body in connection with:(x) the execution, delivery or performance of thisAgreement; or(y) the consummation of theMerger or any of the otherContemplated Transactions, except where the failure to make any such filing or give any such notice or to obtain any suchConsent would not, individually or in the aggregate, be material to theLuna Corporations.

30

3.5Capitalization, Etc.

(a)     The authorized capital stock of theParent consists of:  (i) 100,000,000 shares ofParent Common Stock,$0.001 par value per share, of which15,049,808 shares are issued and are outstanding; and (ii) 5,000,000 shares ofParent Preferred Stock,$0.001 par value per share, 1,321,514 of which have been designated as Series A Convertible Preferred Stock,$0.001 par value per share, 1,321,514 of which shares are issued and are outstanding.  All of the outstanding shares ofParent Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable.  None of theLuna Corporations (other than theParent) holds any shares ofParent Common Stock or any rights to acquire shares ofParent Common Stock.

(b)     Except as set forth in Part 3.5(b) of the Parent Disclosure Schedule: (i) none of the outstanding shares ofParent Common Stock is entitled or subject to any preemptive right, right of repurchase or forfeiture, right of participation, right of maintenance or any similar right; (ii) none of the outstanding shares ofParent Common Stock is subject to any right of first refusal in favor of theParent; and (iii) there is noParent Contract relating to the voting or registration of, or restricting anyPerson from purchasing, selling, pledging or otherwise disposing of (or from granting any option or similar right with respect to), any shares ofParent Common Stock. None of theLuna Corporations is under any obligation, or is bound by anyContract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares ofParent Common Stock or other securities, except for theParent’s right to repurchase or reacquirerestricted shares of Parent Common Stock held by an employee of theParent upon termination of such employee’s employment or upon any other forfeiture of a vesting condition.

(c)     As of the date of this Agreement: (i) 4,286,357 shares of Parent Common Stock are subject to issuance pursuant to Parent Options; and (ii) 13,681,118 shares of Parent Common Stock are reserved for future issuance pursuant to equity awards not yet granted under the Parent Option Plans.

(d)     TheParent has delivered orMade Available toCompany a complete and accurate list that sets forth with respect to eachParent Equity Award outstanding as of the date of thisAgreement the following information: (i) the particular plan (if any) pursuant to which suchParent Equity Award was granted; (ii) the name of the holder of suchParent Equity Award; (iii) the type ofParent Equity  Award; (iv) the number of shares ofParent Common Stock subject to suchParent Equity Award; (v)the per share exercise price (if any) of suchParent Equity Award; (vi) the applicable vesting schedule, and the extent to which suchParent Equity Award is vested and exercisable, if applicable; (vii) the date on which suchParent Equity Award was granted; (viii) the date on which suchParent Equity Award expires (if applicable); and (ix) if suchParent Equity Award is aParent Option, whether suchParent Option is an “incentive stock option” (as defined in theCode) or a non-qualified stock option. TheParent has delivered orMade Available to theCompany accurate and complete copies of all equity plans pursuant to which any outstandingParent Equity Awards were granted by theParent, and the forms of all agreements evidencing suchParent Equity Awards. Theexercise price of eachParent Option is not less than the fair market value of a share ofParent Common Stock as determined on the date of grant of suchParent Option. All grants ofParent Equity Awards were recorded on theParent’s financial statements (including, any related notes thereto) contained in theParent SEC Documents in accordance withGAAP, and no such grants involved any “back dating” or similar practices with respect to the effective date of grant (whether intentional or otherwise). There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights or similar equity-based awards with respect to any of theLuna Corporations.

31

(e)     Except as set forth inSections 3.5(a), 3.5(c) and 3.5(d), or as permitted from and after the date of thisAgreement pursuant toSection 4.3, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of thecapital stock or other securities of any of the Luna Corporations; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of thecapital stock or other securities of any of the Luna Corporations or that has the right to vote on any matter on which the stockholders ofParent have the right to vote; (iii)Contract under which any of theLuna Corporations is or may become obligated to sell or otherwise issue any shares of itscapital stock or any other securities; or (iv) condition or circumstance thatwould reasonably be expected to give rise to or provide a basis for the assertion of a claim by anyPerson to the effect that suchPerson is entitled to acquire or receive any shares ofcapital stock or other securities of any of the Luna Corporations.

(f)     All outstanding shares ofParent Common Stock, and all options and otherParent Equity Awards and other securities of theLuna Corporations, have been issued and granted in compliance in all material respects with: (i) all applicable securities laws and other applicableLegal Requirements; and (ii) all requirements set forth in applicableContracts.

(g)     All of the outstanding shares of capital stock of each of theParent’s Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, and are owned beneficially and of record by theParent, free and clear of anyEncumbrances, other than restrictions under applicable securities laws.

3.6SECFilings; Financial Statements.

(a)     TheParent has delivered orMade Available (or made available on theSEC website) to theCompany accurate and complete copies of all registration statements, proxy statements,Parent Certifications and other statements, reports,schedules, forms and other documents filed by theParent with theSEC,including all amendments thereto, sinceJanuary 1, 2014 (collectively, the “Parent SEC Documents”). All statements, reports,schedules, forms and other documents required to have been filed by theParent or to the best of the knowledge ofParent, its officers with theSEC since January 1, 2014 have been so filed on a timely basis. None of theParent’s Subsidiaries is required tofile any documents with theSEC. As of the time it was filed with theSEC (or, if amended or superseded by a filing prior to the date of thisAgreement, then on the date of such filing): (i) each of theParent SEC Documents complied as to form in all material respects with the applicable requirements of theSecurities Act or theExchange Act (as the case may be); and (ii) none of theParent SEC Documents containedany untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the certifications and statements relating to theParent SEC Documents required by: (A) Rule 13a-14 or Rule 15d-14 under theExchange Act; (B) 18 U.S.C. §1350 (Section 906 of theSarbanes-Oxley Act); or (C) any other rule or regulation promulgated by theSEC or applicable to theParent SEC Documents (collectively, the “Parent Certifications”) is accurate and complete, and complies as to form in all material respects with all applicableLegal Requirements. As used in the introduction to thisSection 3 and in thisSection 3.6, the term “file” and variations thereof shall be broadly construed toinclude any manner in which a document or information is filed, furnished, submitted, supplied or otherwise made available to theSEC or any member of its staff.

(b)     TheParent maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under theExchange Act. Such disclosure controls and procedures are designed to ensure that all material information concerning theLuna Corporations required to be disclosed by theParent in the reports that it is required tofile, submit or furnish under theExchange Act is recorded, processed, summarized and reported within the time periods specified in theSEC’s rules and forms. TheParent is in compliance in all material respects with the applicable listing requirements of the NASDAQ Capital Market, and has not since January 1, 2014 received any notice asserting any non-compliance with the listing requirements of the NASDAQ Capital Market.

32

(c)     The financial statements (including any related notes) contained or incorporated by reference in theParent SEC Documents: (i) complied as to form in all material respects with the published rules and regulations of theSEC applicable thereto; (ii) were prepared in accordance withGAAP applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements or, in the case of unaudited financial statements, as permitted by Form 10-Q, Form 8-K or any successor form under theExchange Act, and except that the unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments, none of which will be material); and (iii) fairly present, in all material respects, the consolidated financial position of theParent and its consolidated Subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of theParent and its consolidated Subsidiaries for the periods covered thereby. No financial statements of anyPerson other than theLuna Corporations are required byGAAP to be included in the consolidated financial statements of theParent. There are no comments from theSEC or its staff pending with respect to any statements, reports,schedules, forms or other documents filed byParent with theSEC that remain outstanding and unresolved.

(d)     TheParent’s auditor has at all times since the date of enactment of theSarbanes-Oxley Act been: (i) a registered public accounting firm (as defined inSection 2(a)(12) of theSarbanes-Oxley Act); (ii) “independent” with respect to theParent within the meaning of Regulation S-X under theExchange Act; and (iii) to the knowledge of theParent, in compliance with subsections (g) through (l) ofSection 10A of theExchange Act and the rules and regulations promulgated by theSEC and the Public Company Accounting Oversight Board thereunder. All non-audit services performed by theParent’s auditors for theLuna Corporations that were required to be approved in accordance withSection 202 of theSarbanes-Oxley Act were so approved.

(e)     TheParent maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under theExchange Act) which is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withGAAP, and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of theLuna Corporations; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity withGAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of theParent; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of theLuna Corporations that could have a material effect on theParent’s consolidated financial statements. TheParent’s management has completed an assessment of the effectiveness of theParent’s system of internal controls over financial reporting in compliance with the requirements ofSection 404 of theSarbanes-Oxley Act for the fiscal year ended December 31, 2013, and, except as set forth in theParent SEC Documents filed prior to the date of thisAgreement, such assessment concluded that such controls were effective. To the knowledge of theParent, except as set forth in theParent SEC Documents filed prior to the date of thisAgreement, since December 31, 2013, neither theParent nor any of its Subsidiaries has identified or been made aware of: (A) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by theLuna Corporations; (B) any illegal act or fraud, whether or not material, that involves theParent’s management or other employees; or (C) any claim or allegation regarding any of the foregoing.

33

(f)     Part 3.6(f) of theParent Disclosure Schedule lists, and theParent has delivered orMade Available to theCompany accurate and complete copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K under theExchange Act) currently in effect or effected by any of theLuna Corporations since January 1, 2010. None of theLuna Corporations has any obligation or other commitment to become a party to any such “off-balance sheet arrangements” in the future.

3.7Absence of Changes. Exceptas set forth in Part 3.7 of the Parent Disclosure Schedule, since December 31, 2013 through the date of thisAgreement:

(a)     there has not been anyParent Material Adverse Effect, and no event has occurred or circumstance has arisen that, in combination with any other events or circumstances,would reasonably be expected to have or result in a Parent Material Adverse Effect;

(b)     there has not been any material loss, damage or destruction to, or any material interruption in the use of, any of the material assets of any of theLuna Corporations (whether or not covered by insurance);

(c)     none of theLuna Corporations has: (i) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of capital stock; or (ii) repurchased, redeemed or otherwise reacquired any shares ofcapital stock or other securities of the Luna Corporations (other than repurchases ofParent Restricted Stock in connection with termination of employment of the previous holder of suchParent Restricted Stock that were madein the ordinary course of business and consistent with past practices, or upon the cashless or net exercise of outstandingParent Options);

(d)     none of theLuna Corporations has sold, issued or granted, or authorized the issuance of: (i)any capital stock or other security (except forParent Common Stock issued upon the valid exercise of outstandingParent Options); (ii) any option, warrant or right to acquireany capital stock or any other security (except forParent Options identified in Part 3.5(d) of theParent Disclosure Schedule); or (iii) any instrument convertible into or exchangeable forany capital stock or other security;

(e)     theParent has not amended or waived any of its rights under, or permitted the acceleration of vesting under: (i) any provision of any of theParent Option Plans; (ii) any provision of anyContract evidencing any outstandingParent Option; (iii) any restricted stock unitagreement; or (iv) any otherContract evidencing or relating to any equity award (whether payable in cash or stock);

(f)     (i) there has been no amendment to the certificate of incorporation or bylaws of theParent, (ii) none of theLuna Corporations has effected or been a party to anymerger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction and (iii) none of theLuna Corporations has acquired or disposed of any business or a material amount of assets;

(g)     theLuna Corporations have not made any capital expenditures that in the aggregate exceed $1,000,000;

34

(h)     none of theLuna Corporations has written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other indebtedness in excess of $100,000;

(i)     none of theLuna Corporations has: (i) lent money to anyPerson (other than routine travel advances made to employees in the ordinary course of business); or (ii) incurred or guaranteed any indebtedness for borrowed money;

(j)     none of theLuna Corporations has: (i) adopted, established or entered into anyParent Employee Plan orParent Employee Agreement; (ii) caused or permitted anyParent Employee Plan orParent Employee Agreement to be amended in any material respect; or (iii) increased the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to any of its directors, officers or other employees by in excess of $50,000 in any individual case;

(k)     none of theLuna Corporations has changed any of its methods of accounting or accounting practices in any material respect except as required by concurrent changes inGAAP orSEC rules and regulations;

(l)     none of theLuna Corporations has made any materialTax election made any material amendments toTax Returns previously filed, or settled or compromised any materialTax liability or refund;

(m)     none of theLuna Corporations has commenced or settled anyLegal Proceeding;

(n)     none of theLuna Corporations has amended, terminated or granted any waiver under theParent Rights Agreement or any “standstill” or similaragreement; and

(o)     none of theLuna Corporations has agreed or committed to take any of the actions referred to in clauses “(c)” through “(n)” above.

3.8Title to Assets. The Luna Corporations own, and have good and valid title to, all assets (excluding, for purposes of this Section 3.8, Intellectual Property and Intellectual Property Rights) purported to be owned by them, including: (a) all of said assets reflected on the Parent Audited Balance Sheet (except for inventory sold or otherwise disposed of in the ordinary course of business since the date of the Parent Audited Balance Sheet); and (b) all other of said assets reflected in the books and records of the Luna Corporations as being owned by the Luna Corporations. All of said assets are owned by the Luna Corporations free and clear of any Encumbrances, except for: (i) any lien for current Taxes not yet due and payable; (ii) minor liens that have arisen in the ordinary course of business and that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of any of the Luna Corporations; and (iii) liens described in Part 3.8 of the Parent Disclosure Schedule. The Luna Corporations are the lessees of, and hold valid leasehold interests in, all assets purported to have been leased by them, including: (A) all assets reflected as leased on the Parent Audited Balance Sheet; and (B) all other assets reflected in the books and records of the Luna Corporations as being leased to the Luna Corporations, and the Luna Corporations enjoy undisturbed possession of such leased assets.

35

3.9Loans; Customers; Suppliers.

(a)     Part 3.9(a) of theParent Disclosure Schedule contains an accurate and complete list as of the date of thisAgreement of all outstanding loans and advances made by any of theLuna Corporations to anyCompany Associate, other than routine travel advances made to directors or officers or other employees in the ordinary course of business.

(b)     Part 3.9(b) of theParent Disclosure Schedule accurately identifiesLuna Corporations’ top 5 customers forParent’s Lightwave Division in the fiscal year ended on December 31, 2013 based on the revenues received byLuna Corporations in that year (excluding, for these purposes, the U.S. Government). TheParent has not received any notice or other communication, and has not been sent any other written communication, indicating that any of its customers or otherPerson identified or required to be identified in Part 3.9(b) of theParent Disclosure Schedule may cease dealing with or materially reduce its orders from any of theLuna Corporations.

(c)     Part 3.9(c) of theParent Disclosure Schedule accurately identifiesLuna Corporations’ key suppliers of materials or components forParent’s Lightwave Division (“Parent Key Suppliers”). For this purpose, aParent Key Supplier would be one that, if it ceased supplying theParent, the cessation would cause a material disruption to the operations of such business unit. TheParent has not received any notice or other communication, and has not been sent any other written communication, indicating that anyParent Key Supplier may cease dealing with any of theLuna Corporations or materially change the business terms of the supply relationship.

3.10     Real Property; Leasehold.

(a)     Except as set forth in Part 3.10(a) of the Parent Disclosure Schedule, noLuna Corporations owns any real property. ALuna Corporation owns fee simple title to all of the real properties set forth on Part 3.10(a) of theParent Disclosure Schedule (the “Parent Owned Real Property”), in each case free and clear of allEncumbrances except for (i) minorEncumbrances that will not, in any case or in the aggregate, materially detract from the value of the real propertysubject thereto or materially impair the operations of any of the Luna Corporations, (ii) allEncumbrances disclosed on existing title policies or surveysMade Available to theCompany prior to the date of thisAgreement, and (iii) real estateTaxes and special assessments with respect to suchParent Owned Real Property that are not yet due and payable. NoPerson other than aLuna Corporation has any ownership interest in anyParent Owned Real Property. None of theLuna Corporations has received written notice to the effect that there are any condemnation proceedings that are pending or, to the knowledge ofParent, threatened with respect to any material portion of anyParent Owned Real Property. NoLuna Corporations has received written notice of (A) any structural defects or any material violation ofLegal Requirements relating to anyParent Owned Real Property or (B) any physical damage to anyParent Owned Real Property that is not covered by insurance and that would materially detract from the value of theParent Owned Real Property subject thereto or materially impair the operations of any of the Luna Corporations.

(b)     Part 3.10(b) of theParent Disclosure Schedule sets forth an accurate and complete list of each lease pursuant to which any of theLuna Corporations leases real property from any otherPerson (“Luna Real Estate Leases”). (All real property leased to theLuna Corporations pursuant to the real property leases identified or required to be identified in Part 3.10(b) of theParent Disclosure Schedule,including all buildings, structures, fixtures and other improvements leased to theLuna Corporations, is referred to as the “Luna Leased Real Property”) To the knowledge of theParent, there is no existing plan or study by anyGovernmental Body or by any otherPerson that challenges or otherwise adversely affects the continuation of the use or operation of anyLuna Leased Real Property. Part 3.10(b) of theParent Disclosure Schedule contains an accurate and complete list of all active subleases, occupancy agreements and otherParent Contracts granting to anyPerson (other than anyLuna Corporations) a right of use or occupancy of any of theLuna Leased Real Property. Except as set forth in the leases or subleases identified in Part 3.10(b) of theParent Disclosure Schedule, there is noPerson in possession of anyLuna Leased Real Property other than aLuna Corporation. Since January 1, 2010, none of theLuna Corporations has received any written notice (or, to the knowledge of theParent, any other communication, whether written or otherwise) of a default, alleged failure to perform, or any offset or counterclaim with respect to any occupancyagreement with respect to anyLuna Leased Real Property which has not been fully remedied and withdrawn.

36

3.11Intellectual Property.

(a)     Part 3.11(a) of theParent Disclosure Schedule accurately identifies the following (and all of the following have beenMade Available toCompany):

(i)     in Part 3.11(a)(i) of theParent Disclosure Schedule anyRegistered IP in which any of theLuna Corporations has or purports to have an ownership interest of any nature (whether solely or jointly with anotherPerson) (the “Luna Registered IP”),including (A) the jurisdiction in which suchLuna Registered IP has been registered or filed and the applicable registration or serial number; and (B) any otherPerson that has an ownership interest in such item ofLuna Registered IP and the nature of such ownership interest; and

(ii)    in Part 3.11(a)(ii) of theParent Disclosure Schedule: (A) anyContract pursuant to whichRegistered IP is in-licensed to any of theLuna Corporations; (B) eachContract pursuant to which any otherIntellectual Property Rights or Intellectual Property is in-licensed to any of theLuna Corporations (other than commercially available third party software); (C) anyContract pursuant to whichRegistered IP is out-licensed from any of theLuna Corporations (other than the license of software included inParent’s commercial products); and (D) anyContract pursuant to which any otherIntellectual Property Rights or Intellectual Property are out-licensed from any of theLuna Corporations; provided that in each case (I) specifying whether these licenses are exclusive or nonexclusive (for purposes of thisAgreement, a covenant not to sue or not to assert infringement claims shall be deemed to be equivalent to a nonexclusive license),(II) whether these licenses are assignable, (III) any option to license shall be listed specifying as such, (IV) notwithstanding the foregoing, any standard non-exclusive in-licenses or out-licenses or unexercised options to in-license pursuant to government contracts or subcontracts need not be included and (V) notwithstanding the foregoing, language in standard customer terms and conditions for the purchase of goods purporting to give the customer any non-exclusive license from the supplier need not be included.

(b)     TheParent has delivered orMade Available toCompany an accurate and complete copy of each standard form of the following documents andContracts used by anyLuna Corporation at any time since January 1, 2012: (i) terms and conditions with respect to the distribution, sale, or provisioning of anyParent Product; (ii)  employeeagreement or similarContract containing any assignment or license ofIntellectual Property orIntellectual Property Rights or any confidentiality provision; or (iii) consulting or independent contractoragreement or similarContract containing any assignment or license ofIntellectual Property orIntellectual Property Rights or any confidentiality provision.

(c)     TheLuna Corporations own all right, title and interest to and in theParent IP (other thanIntellectual Property Rights orIntellectual Property licensed to theParent, as identified in Part 3.11(a)(ii) of theParent Disclosure Schedule or pursuant to commercially available third party software and material transfer agreements entered into in the ordinary course of business) free and clear of anyEncumbrances (other than non-exclusive licenses granted by anyLuna Corporation in connection with the sale or license ofParent Products or conduct of work under government contracts or subcontracts in the ordinary course of business). Without limiting the generality of the foregoing, noParent Associate, to the knowledge of theParent, has any claim, right (whether or not currently exercisable) or interest to or in anyParent IP and eachParent Associate who is or was involved in the creation or development of anyParent IP has signed a valid, enforceableagreement containing an assignment ofIntellectual Property Rights to theLuna Corporations and confidentiality provisions protecting theParent IP.

37

(d)     Neither the execution, delivery or performance of thisAgreement nor the consummation of any of theContemplated Transactions will, orwould reasonably be expected to, with or without notice or the lapse of time, result in or give any otherPerson the right or option to cause, create, impose or declare: (i) a loss of, orEncumbrance on, anyParent IP; or (ii) the grant, assignment or transfer to any otherPerson of any license or other right or interest under, to or in any of theParent IP.

(e)     TheParent has not concluded that anyPerson has infringed, misappropriated or otherwise violated, or that anyPerson is infringing, misappropriating or otherwise violating, anyParent IP in any material respect. Part 3.11(e) of theParent Disclosure Schedule: (i) accurately identifies (and theParent has provided toCompany an accurate and complete copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to any of theLuna Corporations or anyRepresentative of any of theLuna Corporations between January 1, 2011, and the date of thisAgreement regarding any alleged or suspected infringement or misappropriation of anyParent IP; and (ii) provides a brief description of the current status of the matter referred to in such letter, communication or correspondence.

(f)     TheParent has not concluded that any of theLuna Corporations or theParent Products has infringed (directly, contributorily, by inducement or otherwise), misappropriated or otherwise violated anyIntellectual Property Right of any otherPerson in any material respect. Part 3.11(f) of theParent Disclosure Schedule accurately identifies (and theParent has provided toCompany an accurate and complete copy of) each letter or other written or electronic communication or correspondence that has been sent or otherwise delivered by or to any of theLuna Corporations or, to the knowledge of theParent, anyRepresentative of any of theLuna Corporations, between January 1, 2011 and the date of thisAgreement regarding any alleged or suspected infringement or misappropriation of anyIntellectual Property Right of any otherPerson by any of theLuna Corporations.

(g)     No infringement, misappropriation or similar claim orLegal Proceeding involving infringement or misappropriation of anyIntellectual Property Right of any otherPerson is or, since January 1, 2011, has been pending and served or, to the knowledge of theParent, pending and not served or threatened against anyLuna Corporation or against any otherPerson who is, or has asserted orwould reasonably be expected to assert that it is, entitled to be indemnified, defended, held harmless or reimbursed by anyLuna Corporation with respect to such claim orLegal Proceeding (including any claim orLegal Proceeding that has been settled, dismissed or otherwise concluded).

(h)     Except as set forth in Part 3.11(h) of the Parent Disclosure Schedule, since January 1, 2011,none of the Luna Corporations has received any notice or other communication relating to any actual or alleged infringement, misappropriation or violation of anyIntellectual Property Right of anotherPerson by any of theParent Products.

38

(i)     Except as set forth in Part 3.11(i) of the Parent Disclosure Schedule, none of theLuna Corporations has transferred title to, or granted any exclusive license with respect to, any materialParent IP.

3.12Contracts.

(a)     Part 3.12(a) of theParent Disclosure Schedule identifies eachParent Contract that is executory as of the date of thisAgreement and that constitutes aParent Material Contract, except those that are filed by the Company as an exhibit pursuant to Item 601(b)(10) of Regulation S-K under the Exchange Act. For purposes of thisAgreement, “Parent Material Contract” shall mean:

(i)     anyContract which is in effect and which has been filed (or is required to be filed) by theParent as an exhibit pursuant to Item 601(b)(10) of Regulation S-K under theExchange Act, or thatParent is required to disclose under Item 404 of Regulation S-K under theExchange Act;

(ii)    anyContract: (A) constituting aParent Employee Agreement; (B) pursuant to which any of theLuna Corporations is or may become obligated to make any severance, termination or similar payment to anyParent Associate or any spouse, heir orRepresentative of anyParent Associate except for severance, termination or similar payments required by applicableLegal Requirements that does not exceed $50,000 per employee; (C) pursuant to which any of theLuna Corporations is or may become obligated to make any bonus or similar payment (other than payments constituting base salary, incentive bonuses or commissions paid in the ordinary course of business) in excess of $50,000 to anyParent Associate; or (D) pursuant to which any of theLuna Corporations is or may become obligated to grant or accelerate the vesting of, or otherwise modify, any stock option, restricted stock, stock appreciation right or other equity interest in any of theLuna Corporations (other than pursuant to a standard form of stock option agreement);

(iii)   anyContract identified or required to be identified in Part 3.11 of theParent Disclosure Schedule;

(iv)    anyContract with any distributor and anyContract with any other reseller or sales representative, in each case that provides exclusivity rights to any third party;

(v)     anyContract that is with a supplier of products, product candidates,raw materials or any intermediate form of any drug product, or any services, which supplier is the only source or only supplier of such product, product candidate,raw material, intermediate form of drug product or service in the market place that is in excess of $100,000 per year;

(vi)    anyContract imposing any restriction on the right or ability of anyLuna Corporations: (A) to compete with any otherPerson; (B) to acquire any product or other asset or any services from any otherPerson; (C) to develop, sell, supply, distribute, offer, support or service any product or any technology or other asset to or for any otherPerson; (D) to perform services for any otherPerson; or (E) to transact business with any otherPerson, in each case which restriction would orwould reasonably be expected to materially and adversely affect: (x) the conduct of the business of theLuna Corporations as currently conducted or as currently is proposed to be conducted; or (y) the design, development, manufacturing, reproduction, marketing, licensing, sale, offer for sale, importation, distribution, performance, display, creation of derivative works with respect to and/or use of anyParent Product;

39

(vii)   anyContract relating to any currency hedging;

(viii)  anyContract requiring that any of theLuna Corporations give any notice or provide any information to anyPerson prior to responding to or prior to accepting anyAcquisition Proposal or similar proposal, or prior to entering into any discussions,agreement, arrangement or understanding relating to anyAcquisition Transaction;

(ix)    Luna Real Estate Leases;

(x)     anyContract that: (A) involves the payment or delivery of cash or other consideration in an amount orhaving a value in excess of $1,000,000 in the fiscal year ending December 31, 2014 or the following fiscal years; (B) requires by its terms the payment or delivery of cash or other consideration in an amount orhaving a value in excess of $1,000,000 in the fiscal year ending December 31, 2014 or the following fiscal years; (C) involves the performance of serviceshaving a value in excess of $1,000,000 in the fiscal year ending December 31, 2014; (D) requires by its terms the performance of serviceshaving a value in excess of $1,000,000 in the fiscal year ending December 31, 2014 or the following fiscal years; (E) is with a Luna Key Supplier who supplies more than $100,000 worth of product per year; (F) in which theParent or anyLuna Corporations has agreed to purchase a minimum quantity of goods relating to anyParent Product or has agreed to purchase goods relating to anyParent Product exclusively from a certain party; (G) is (i) material to theLuna Corporations and (ii) relates to the supply or manufacture of anyParent Product; or (H) relates to the lease by aLuna Corporation of material tangible personal property with an annual payment of $100,000 or greater; and

(xi)    anyContract, the termination of whichwould reasonably be expected to have a Parent Material Adverse Effect;

(xii)   eachContract relating to indebtedness for borrowed money or invested money; and

(xiii)  eachContract relating to the creation of anyEncumbrance with respect to any asset of any of theLuna Corporations.

TheParent has delivered orMade Available to theCompany an accurate and complete copy of eachParent Contract that constitutes a Parent Material Contract.

(b)     EachParent Contract that constitutes a Parent Material Contract is validand in full force and effect, and is enforceable in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors;and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

(c)     Except as set forth in Part 3.12(c) of the Parent Disclosure Schedule: (i) none of theLuna Corporations has violated or breached in any material respect, or committed any default in any material respect under, any Parent Material Contract; (ii) to the knowledge of theParent, no otherPerson has violated or breached in any material respect, or committed any default in any material respect under, any Parent Material Contract; (iii) to the knowledge of theParent, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time)would reasonably be expected to: (A) result in a violation or breach in any material respect of any of the provisions of any Parent Material Contract; (B) give anyPerson the right to declare a default in any material respect under any Parent Material Contract; (C) give anyPerson the right to receive or require a rebate, chargeback, penalty or change in delivery schedule under any Parent Material Contract; (D) give anyPerson the right to accelerate the maturity or performance of any Parent Material Contract; or (E) give anyPerson the right to cancel, terminate or modify any Parent Material Contract; and (iv) since January 1, 2012,none of the Luna Corporations has received any notice or other communication regarding any actual or possible violation or breach of, or default under, any Parent Material Contract.

40

(d)     Government Contracts; Security Clearances.A true and correct list of each Government Contract to which the Parent is a party and each outstanding Government Bid, if the actual or potential award amount is $500,000 or greater, is set forth in Part 3.12(d) of the Parent Disclosure Schedule (a “ParentListed Government Contract”).  Except as set forth in Part 3.12(d) of the Parent Disclosure Schedule:

(i)     No Parent Listed Government Contract is based on the Parent having 8(a) status, small business status, small disadvantaged business status, service-disabled veteran-owned small business status, protégé status, or other preferential status afforded by statute or regulation.

(ii)    The Parent has not made a mandatory disclosure under FAR 52.203-13(b)(3)(i), FAR Part 9, or any other requirement of law, or any voluntary disclosure, to any Governmental Body with respect to any alleged unlawful conduct, misstatement, or omission arising under or relating to any Parent Listed Government Contract, and there are no facts that would require mandatory disclosure under FAR 52.203-13(b)(3)(i), FAR Part 9, or any other statute or regulation.

(iii)   The Parent has complied in all material respects with the terms and conditions of each Parent Listed Government Contract to which it is a party.  The Parent has complied in all material respects with all Laws applicable and pertaining to each Parent Listed Government Contract and each scheduled Government Bid (and in any certificate, statement, list, schedule or other documents submitted or furnished in connection with the foregoing).  All representations, warranties and certifications made by the Parent with respect to any Parent Listed Government Contract were current, accurate, and complete as of their effective date and the Parent has complied in all material respects with all such representations, warranties and certifications.  No termination for convenience, termination for default, cure notice or show cause notice is currently in effect, has been issued or, to the Parent’s Knowledge, is threatened or expected with respect to any Parent Listed Government Contract.

(iv)    No cost incurred by the Parent pertaining to any Government Contract is: (1) currently being questioned or challenged by the U.S. Government, any Governmental Body, or any other Person; or (2) has been disallowed by any Governmental Body, or has been, or now is, the subject of an investigation. No amount of money due to the Parent under any Government Contract or Government Bid has been withheld or set off, nor has any claim been made to withhold or set off money.  Neither any Governmental Body nor any prime contractor, subcontractor or other Person has notified the Parent in writing, or to the Parent’s Knowledge, orally that the Parent has breached or violated any Law, certification, representation, warranty, covenant, clause, provision or requirement in any material respect pertaining to any Government Contract or Government Bid.

(v)     There are (1) no outstanding claims or requests for equitable adjustment against the Parent by the U.S. Government, any other Governmental Body or by any prime contractor, higher or lower tier subcontractor, vendor or other third party arising under or relating to any Government Contract, and (2) no outstanding material disputes between the Parent, on the one hand, and the U.S. Government or any other Governmental Body, on the other hand, under the Contract Disputes Act (41 U.S.C. §§ 7101-7109) or any other statute or between the Parent, on the one hand, and any prime contractor, higher or lower tier subcontractor, vendor or other third party, on the other hand, arising under or relating to any such Government Contract or Government Bid.  To the Knowledge of the Parent, the Parent has no interest in any pending or potential claim against the U.S. Government, any Governmental Body or any prime contractor, higher or lower tier subcontractor or vendor arising under or relating to any Government Contract or Government Bid.

41

(vi)    Neither the Parent nor any of its respective directors, officers, employees, consultants, or agents (1) is, has been in the past six (6) years, or, to the Knowledge of the Parent, is threatened with being, debarred, suspended, or excluded from participation in, or the award of, Contracts or doing business with the U.S. Government or any Governmental Body, (2)  is (or was, during the past six (6) years) the subject of a finding of non-compliance, non-responsibility, or ineligibility for government contracting (excluding for this purpose ineligibility to bid on certain contracts due to generally applicable bidding requirements) for any reason or is listed on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs, (3)  has committed in the past six (6) years (or taken any action to conceal) any violation of any applicable Law relating to procurement in respect of any Government Contract or Government Bid, or (4) is currently proposed for, or has been subject to, suspension, debarment or exclusion proceedings.  No payment, contribution, gift, or discount has been offered, made, or given by the Parent or by any Person on behalf of the Parent in the past six (6) years in connection with any Government Contract or Government Bid, in violation of such Government Contract or Government Bid or applicable Law.

(vii)   The cost accounting system and procurement systems of the Parent with respect to the Government Contracts and Government Bids are in material compliance with applicable Laws.  There has not been, and there is no basis for, a finding of fraud or any claim of any material Liability as a result of defective pricing, mischarging, or improper payments on the part of the Parent.  The Parent has neither undergone nor received any communication that it will be subject to any audit, and there is no basis for any audit, whether arising under or relating to any Government Contract or otherwise, other than routine audits conducted by the U.S. Government or the Parent in the Ordinary Course of Business. 

(viii)  Part 3.12(d)(viii) of the Parent Disclosure Schedule sets forth a true and complete list of all facility security clearances held by the Parent and all personnel security clearances held by the Parent or any officer, director, or employee of the Parent (listed by category).

(1)     Such clearances are all of the facility and personnel security clearances necessary and sufficient to allow the conduct of the Parent’s business.

(2)     The Parent is in compliance with all national and agency-specific security obligations, including, without limitation, those specified in the National Industrial Security Program Operating Manual, DOD 5220.22-M (February 2006) (as amended).

(3)     Other than routine audits by the Defense Security Service or other Cognizant Security Agency, there has been no audit relating to the Parent’s compliance with the requirements of the National Industrial Security Program that resulted in material adverse findings against Parent.

(4)     There is no proposed or threatened termination of any such facility or personnel security clearances.

3.13Liabilities. None of the Luna Corporations has any accrued, contingent or other liabilities of the type required to be disclosed, accrued or reserved in the liabilities column of a balance sheet prepared in accordance with GAAP, except for: (a) liabilities identified as such, or specifically reserved against, in the Parent Audited Balance Sheet; (b) liabilities that have been incurred by the Luna Corporations since the date of the Parent Audited Balance Sheet in the ordinary course of business and consistent with past practices; (c) liabilities for performance of obligations of the Luna Corporations pursuant to the express terms of Parent Contracts; (d) liabilities under this Agreement or incurred in connection with the Contemplated Transactions; and (e) liabilities that are not, individually or in the aggregate, material to the Luna Corporations, or that are described in Part 3.13 of the Parent Disclosure Schedule.

42

3.14Compliance with Legal Requirements; Regulatory Matters.

(a)     Each of theLuna Corporations is, and has during the past two years been, in compliance in all material respects with all applicableLegal Requirements,including Environmental Laws and Legal Requirements relating to employment, privacy law matters, exportation of goods and services, securities law matters andTaxes, and all applicableHealth Care Laws, which affect the business, properties, assets and activities of theLuna Corporations. During the past five years,none of the Luna Corporations has received any notice or other communication from anyGovernmental Body or otherPerson regarding any actual or possible violation in any material respect of, or failure to comply in any material respect with, anyLegal Requirement.

(b)     As of the date hereof, no claims, actions, proceedings or investigations thatwould reasonably be expected to result in such a material debarment or exclusion are pending or, to the knowledge of theParent, threatened against any of theLuna Corporations or their officers, consultants, employees or agents.

(c)     TheLuna Corporations are not a party to any corporate integrity agreements, deferred prosecution agreements, monitoring agreements, consent decrees, settlement orders, or similar agreements with or imposed by anyGovernmental Body.

3.15     Certain Business Practices. Neither the Parent nor any of its directors, employees or officers, and to the Parent’s knowledge, no agents, consultants or distributors engaged by the Parent (a) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) has used or is using any corporate funds for any direct or indirect unlawful payments to any official or employee of a foreign or domestic Governmental Body, (c) has violated or is violating any provision of any Anti-Bribery Law, (d) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties, (e) has made any bribe, unlawful rebate, unlawful payoff, influence payment, kickback or other unlawful payment of any nature in furtherance of an offer, payment, promise to pay, authorization, or ratification of the payment, directly or indirectly, of any gift, money or anything of value to any official or employee of a foreign or domestic Governmental Body to secure any improper advantage (within the meaning of such term under any applicable Anti-Bribery Law) or to obtain or retain business, or (f) has otherwise taken any action that has caused, or would reasonably be expected to cause the Parent to be in violation of any applicable Anti-Bribery Law. The Parent has established and maintains a compliance program, internal controls and procedures appropriate for compliance with the Anti-Bribery Laws.

3.16     Governmental Authorizations.

(a)     TheLuna Corporations hold all materialGovernmental Authorizations necessary to enable theLuna Corporations to conduct their respective businesses in the manner in which such businesses are currently being conducted,including allGovernmental Authorizations required underEnvironmental Laws. All suchGovernmental Authorizations are validand in full force and effect. EachLuna Corporation is, and at all times since January 1, 2012 has been, in compliance in all material respects with the terms and requirements of suchGovernmental Authorizations. Since January 1, 2012,none of the Luna Corporations has received any notice or other communication from anyGovernmental Body regarding: (i) any actual or possible violation of or failure to comply with any term or requirement of any materialGovernmental Authorization; or (ii) any actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of any materialGovernmental Authorization.

43

(b)     Part 3.16(b) of theParent Disclosure Schedule describes the terms of each material active grant, incentive or subsidy provided or made available to or for the benefit of any of theLuna Corporations by any U.S. federal, state or localGovernmental Body or any foreignGovernmental Body. Each of theLuna Corporations is in full compliance with all of the material terms and requirements of each grant, incentive and subsidy identified or required to be identified in Part 3.16(b) of theParent Disclosure Schedule. Neither the execution, delivery or performance of thisAgreement, nor the consummation of theMerger or any of the otherContemplated Transactions, does, will or could reasonably be expected to (with or without notice or lapse of time) give anyPerson the right to revoke, withdraw, suspend, cancel, terminate or modify any grant, incentive or subsidy identified or required to be identified in Part 3.16(b) of theParent Disclosure Schedule.

3.17TaxMatters.

(a)     Each of theTax Returns required to be filed by or on behalf of the respectiveLuna Corporations with anyGovernmental Body with respect to any taxable period ending on or before theClosing Date (the “Luna Corporations Returns”): (i) has been or will be filed on or before the applicable due date (including any extensions of such due date); and (ii) has been, or will be when filed, prepared in all material respects in compliance with all applicableLegal Requirements. All amounts shown on theLuna Corporations Returns to be due on or before theClosing Date have been or will be paid on or before theClosing Date, except with respect to matters contested in good faith in appropriate proceedings and for which adequate reserves have been established in accordance withGAAP.

(b)     TheParent Audited Balance Sheet fully accrues all actual and contingent liabilities for materialTaxes with respect to all periods through the date of theParent Audited Balance Sheet. Except as set forth in Part 3.17(b) of theParent Disclosure Schedule, noLuna Corporation has incurred any material liability forTaxes since the date of theCompany Audited Balance Sheet other than in the ordinary course of business.

(c)     To the knowledge ofParent, noLuna Corporations have received notice of an audit and noLuna Corporations Return since January 1, 2012 has been subject to an audit with respect toTaxes by anyGovernmental Body. No extension or waiver of the limitation period applicable to any of theLuna Corporations Returns has been granted (by theParent or any otherPerson), and no such extension or waiver has been requested from anyLuna Corporations.

(d)     No claim orLegal Proceeding is pending or, to the knowledge of theParent, has been threatened against or with respect to anyLuna Corporations in respect of any materialTax. There are no unsatisfied liabilities for materialTaxes with respect to any notice of deficiency or similar document received by anyLuna Corporations with respect to any materialTax (other than liabilities forTaxes asserted under any such notice of deficiency or similar document which are being contested in good faith by theLuna Corporations and with respect to which adequate reserves for payment have been established on theParent Audited Balance Sheet). There are no liens for materialTaxes upon any of the assets of any of theLuna Corporations except liens for currentTaxes not yet due and payable. None of theLuna Corporations has been, and none of theLuna Corporations will be, required toinclude any adjustment in taxable income for U.S. federal incomeTax purposes for anyTax period (or portion thereof) pursuant toSection 481 or 263A of theCode as a result of transactions or events occurring, or accounting methods employed, prior to theClosing.

44

(e)     No written claim has ever been made by anyGovernmental Body in a jurisdiction where aLuna Corporation does notfile aTax Return that it is or may be subject to taxation by that jurisdiction which has resulted orcould reasonably be expected to result in an obligation to payTaxes.

(f)     There are noContracts relating to the allocating, sharing or indemnification ofTaxes to which anyLuna Corporations is a party, other than (i)Contracts containing customary gross-up, allocation, sharing or indemnification provisions in credit agreements, derivatives, leases, and similar agreements entered into in the ordinary course of business or (ii) commercially reasonableContracts for the allocation or payment of personal propertyTaxes, sales or useTaxes or value addedTaxes with respect to personal property leased, used, owned or sold in the ordinary course of business.

(g)     NoLuna Corporations has constituted either a “distributing corporation” or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of theCode.

(h)     NoLuna Corporations is or has been a United States real property holding corporation within the meaning ofSection 897(c)(2) of theCode during the applicable period specified inSection 897(c)(1)(A)(ii)of theCode.

(i)     NoLuna Corporations has been a member of an affiliated group of corporations within the meaning ofSection 1504 of theCode or within the meaning of any similar Legal Requirement to which a Luna Corporation may be subject, other than the affiliated group of which theParent is the commonparent. NoLuna Corporations has any liability forTaxes of a predecessor or transferor that became a liability of the successor or transferee by operation of law or by contract.

(j)     TheParent has disclosed on its federal incomeTax Returns all positions that could give rise to a material understatement penalty within the meaning ofSection 6662 of theCode or any similarLegal Requirement.

(k)     NoLuna Corporations has participated in, or is currently participating in, a “listed transaction” within the meaning of Treasury RegulationSection 1.6011-4(b)(1).

(l)     TheLuna Corporations have withheld and paid allTaxes required to have been withheld and paid in connection with amounts paid or owning to any employee, independent contractor, creditor, stockholder or otherPerson.

(m)    NoLuna Corporation has waived any statute of limitations in respect ofTaxes or agreed to any extension of time with respect to aTax assessment or deficiency, which waiver or extension is still in effect.

(n)     NoLuna Corporation has taken any action or knows of any fact thatwould reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning ofSection 368(a) of theCode.

45

3.18Employee and Labor Matters; Benefit Plans.

(a)     Except as set forth in Part 3.18(a) of the Parent Disclosure Schedule or as required by applicableLegal Requirements, the employment of each of theLuna Corporations’ employees is terminable by the applicableLuna Corporations at will.

(b)     Except as set forth in Part 3.18(b) of the Parent Disclosure Schedule, none of theLuna Corporations is a party to, or has a duty to bargain for, any collective bargainingagreement or otherContract with a labor organization or works council representing any of its employees and there are no labor organizations or works councils representing, purporting to represent or, to the knowledge of theParent, seeking to represent any employees of any of theLuna Corporations. There has not been any strike, slowdown, work stoppage, lockout, job action, picketing, labor dispute, question concerning representation, union organizing activity, or any threat thereof, or any similar activity or dispute, affecting any of theLuna Corporations or any of their employees. There is not now pending, and, to the knowledge ofParent, noPerson has threatened to commence, any such strike, slowdown, work stoppage, lockout, job action, picketing, labor dispute, question regarding representation or union organizing activity or any similar activity or dispute. There is no claim or grievance pending or, to the knowledge of theParent, threatened against anyLuna Corporations relating to any employmentContract, wages and hours, leave of absence, plantclosing notification, employment statute or regulation, privacy right, labor dispute, workers’ compensation policy or long-term disability policy, safety, retaliation, immigration or discrimination matters involving anyParent Associate,including charges of unfair labor practices or harassment complaints.

(c)     Parent has delivered orMade Available to theCompany an accurate and complete list, by country and as of the date hereof, of eachParent Employee Plan and eachParent Employee Agreement. None of theLuna Corporations intends, and none of theLuna Corporations has committed, to establish or enter into any newParent Employee Plan orParent Employee Agreement, or to modify anyParent Employee Plan orParent Employee Agreement (except to conform any suchParent Employee Plan orParent Employee Agreement to the requirements of any applicableLegal Requirements, in each case as previously disclosed tothe Company in writing or as required by thisAgreement).There has been no amendment to, announcement by any Luna Corporation relating to, or change in employee participation or coverage under, any Parent Employee Plan that would materially increase the annual expense of maintaining such plan above the level of the expense incurred for the most recently completed fiscal year with respect to any director, officer, employee, independent contractor or consultant, as applicable.

(d)     TheParent has delivered orMade Available to theCompany accurate and complete copies of: (i) all documents setting forth the terms of eachParent Employee Plan and eachParent Employee Agreement,including all amendments thereto; (ii) the two most recent annual reports (Form Series 5500 and allschedules and financial statements attached thereto), if any, required under applicableLegal Requirements in connection with eachParent Employee Plan; (iii) if theParent Employee Plan is subject to the minimum funding standards of Section 302 ofERISA, the most recent annual and periodic accounting ofParent Employee Plan assets, if any; (iv) the most recent summary plan description together with the summaries of material modifications thereto, if any, required underERISA or any similarLegal Requirement with respect to eachParent Employee Plan; and (v) all material correspondence in its possession regarding anyParent Employee Plan regarding any audit, investigation or proceeding regarding suchParent Employee Plan or any fiduciary thereof.

46

(e)     Each of theLuna Corporations andParent Affiliates has performed in all material respects all obligations required to be performed by it under eachParent Employee Plan and Parent Employee Agreement, and eachParent Employee Plan andParent Employee Agreement has been established and maintained in all material respects in accordance with its terms and applicableLegal Requirements. AnyParent Employee Plan intended to be qualified underSection 401(a) of theCode has obtained a favorable determination letter (or opinion letter, if applicable) as to its qualified status under theCode. AllParent Pension Plans required to have been approved by any foreignGovernmental Body have been so approved, no such approval has been revoked (or, to the knowledge of theParent, has revocation been threatened) and no event has occurred since the date of the most recent approval or application therefor relating to any suchParent Pension Plan thatwould reasonably be expected to materially affect any such approval relating thereto or materially increase the costs relating thereto. EachParent Employee Plan intended to be tax qualified under applicableLegal Requirements is so tax qualified, and no event has occurred and no circumstance or condition exists thatwould reasonably be expected to result in the disqualification of any suchParent Employee Plan. No “prohibited transaction,” within the meaning ofSection 4975 of theCode orSections 406 and 407 ofERISA, and not otherwise exempt under Section 408 ofERISA, has occurred with respect to anyParent Employee Plan. EachParent Employee Plan (other than anyParent Employee Plan to be terminated prior to theEffective Time in accordance with thisAgreement) can be amended, terminated or otherwise discontinued after theClosing in accordance with its terms, without liability toParent, any of theLuna Corporations or anyParent Affiliate (other than any liability for ordinary administrationexpenses). There are no audits or inquiries pending or, to the knowledge of theParent, threatened by theIRS, theDOL or any otherGovernmental Body with respect to anyParent Employee Plan or any fiduciary thereof. None of theLuna Corporations, and noParent Affiliate, has ever incurred: (i) any material penalty orTax with respect to anyParent Employee Plan under Section 502(i) ofERISA orSections 4975 through 4980 of theCode; or (ii) any material penalty orTax under applicableLegal Requirements. Each of theLuna Corporations andParent Affiliates has made all contributions and other payments required by and due under the terms of eachParent Employee Plan and eachParent Employee Agreement.

(f)     None of theLuna Corporations, and noParent Affiliate, has ever maintained, established, sponsored, participated in or contributed to any: (i)Parent Pension Plan subject to Title IV of ERISA; (ii) “multiemployer plan” within the meaning ofSection (3)(37) ofERISA; or (iii) plan described inSection 413 of theCode. NoParent Employee Plan is or has been funded by, associated with or related to a “voluntary employees’ beneficiary association” within the meaning ofSection 501(c)(9) of theCode. None of theLuna Corporations, and noParent Affiliate, has ever maintained, established, sponsored, participated in or contributed to anyParent Pension Plan in which stock of any of theLuna Corporations or anyParent Affiliate is or was held as a plan asset. The fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide in full for the accrued benefit obligations, with respect to all current and former participants in such Foreign Plan according to the reasonable actuarial assumptions and valuations most recently used to determine employer contributions to and obligations under such Foreign Plan, and noContemplated Transaction will cause any such assets or insurance obligations to be less than such benefit obligations. There are no material liabilities of theLuna Corporations with respect to anyParent Employee Plan that are not properly accrued and reflected in the financial statements of theParent in accordance withGAAP. Nothing has occurred that could result in a material increase in the benefits under or the expense of maintaining any Parent Employee Plan from the level of benefits or expense incurred for the most recently completed fiscal year.

(g)     None of theLuna Corporations, and noParent Affiliate, maintains, sponsors or contributes to anyParent Employee Plan that is an employee welfare benefit plan (as such term is defined in Section 3(1) ofERISA) and that is, in whole or in part, self-funded or self-insured. NoParent Employee Plan provides (except at no cost to theLuna Corporations or anyParent Affiliate), or reflects or represents any liability of any of theLuna Corporations or anyParent Affiliate to provide, post-termination or retiree life insurance, post-termination or retiree health benefits or other post-termination or retiree employee welfare benefits to anyPerson for any reason, except as may be required byCOBRA or other applicableLegal Requirements. Other than commitments made that involve no future costs to any of theLuna Corporations or anyParent Affiliate, none of theLuna Corporations nor anyParent Affiliate has ever represented, promised or contracted (whether in oral or written form) to anyParent Associate (either individually or toParent Associates as a group) or any otherPerson that suchParent Associate(s) or otherPerson would be provided with post-termination or retiree life insurance, post-termination or retiree health benefit or other post-termination or retiree employee welfare benefits, except to the extent required by applicableLegal Requirements.

47

(h)     Except as set forth in Part 3.18(h) of the Parent Disclosure Schedule, and except as expressly required or provided by thisAgreement, neither the execution of thisAgreement nor the consummation of theContemplated Transactions will orwould reasonably be expected to (either alone or upon the occurrence of termination of employment) constitute an event under anyParent Employee Plan,Parent Employee Agreement, trust or loan that will or may result (either alone or in connection with any other circumstance or event) in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to anyParent Associate.

(i)     Except as set forth in Part 3.18(i) of the Parent Disclosure Schedule, each of theLuna Corporations andParent Affiliates: (i) is, and at all times has been, in compliance in all material respects with anyOrder or arbitration award of any court, arbitrator or anyGovernmental Body respecting employment, employment practices, terms and conditions of employment, wages, hours or other labor related matters; (ii) has withheld and reported all material amounts required by applicableLegal Requirements or byContract to be withheld and reported with respect to wages, salaries and other payments toParent Associates; (iii) is not, to the knowledge of theParent, liable for any material arrears of wages or any materialTaxes or any material interest or penalty for failure to comply with theLegal Requirements applicable of the foregoing; and (iv) is not liable for any material payment to any trust or other fund governed by or maintained by or on behalf of anyGovernmental Body with respect to unemployment compensation benefits, social security, social charges or other benefits or obligations forParent Associates (other than routine payments to be madein the normal course of business and consistent with past practices).

(j)     There is noagreement, plan, arrangement or otherContract covering anyParent Associate, and no payments have been made or will be made in connection with theMerger to anyParent Associate,that, considered individually or considered collectively with any other suchContracts or payments, will, orwould reasonably be expected to, be characterized as a “parachute payment” within the meaning ofSection 280G(b)(2) of theCode or give rise directly or indirectly to the payment of any amount that would not be deductible pursuant toSection 162(m) of theCode (or any comparable provision under state or foreignTax laws). NoLuna Corporation is a party to or has any obligation under anyContract to compensate anyPerson for excise taxes payable pursuant toSection 4999 of theCode or for additionalTaxes payable pursuant toSection 409A of theCode.

(k)     Since January 1, 2009, none of theLuna Corporations has effectuated a “plant closing,” partial “plantclosing,” “relocation”, “mass layoff” or “termination” (as defined in theWARN Act or any similarLegal Requirement) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of any of theLuna Corporations.

(l)     EachParent Employee Plan andParent Employee Agreement that is a “nonqualified deferred compensation plan” (as defined underCode Section 409A) has been operated in compliance in all material respects withCode Section 409A and has complied in all material respects with applicable document requirements of 409A. No stock right or other equity option or appreciation right granted under any benefit plan has an exercise price that is less than the fair market value of the underlying stock or equity units (as the case may be) as of the date of such option or right was granted, or has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option or right. Neither the terms nor the performance of anyParent Employee Agreement orParent Employee Plan would reasonably be expected to result in gross income inclusion after theEffective Time pursuant to Section 409A(a)(1)(A) of the Code.

48

3.19Environmental Matters.

(a)     None of the Luna Corporations has received any notice or other communication, whether from aGovernmental Body, citizens group,Parent Associate or otherwise, that alleges that any of theLuna Corporations is not or might not be in compliance with anyEnvironmental Law, and, to the knowledge of theParent, there are no circumstances that may prevent or interfere with the compliance by any of theLuna Corporations with anyEnvironmental Law in the future.

(b)     To the knowledge of theParent: (i) allLuna Leased Real Property and any other property that is or was leased to or owned, controlled or used by any of theLuna Corporations, and all surface water, groundwater and soil associated with or adjacent to such property, is free of anyMaterials of Environmental Concern or material environmental contamination of any nature; (ii) none of theLuna Leased Real Property or any other property that is or was leased to or owned, controlled or used by any of theLuna Corporations contains any underground storage tanks, asbestos, equipment using PCBs or underground injection wells; and (iii) none of theLuna Leased Real Property or any other property that is or was leased to or owned, controlled or used by any of theLuna Corporations contains any septic tanks in which process wastewater or anyMaterials of Environmental Concern have been Released.

(c)     NoLuna Corporations has ever sent or transported, or arranged to send or transport, anyMaterials of Environmental Concern to a site that, pursuant to any applicableEnvironmental Law: (i) has been placed on the “National Priorities List” of hazardous waste sites or any similar state list; (ii) is otherwise designated or identified as a potential site for remediation, cleanup, closure or other environmental remedial activity; or (iii) is subject to aLegal Requirement to take “removal” or “remedial” action as detailed in any applicableEnvironmental Law or to make payment for the cost of cleaning up any site.

(d)     Except with respect toContracts relating toLuna Leased Real Property, none of theLuna Corporations has entered into anyParent Contract that may require any of them to guarantee, reimburse, defend, hold harmless or indemnify any other party with respect to liabilities arising out ofEnvironmental Laws, or the activities of theLuna Corporations or any otherPerson relating toMaterials of Environmental Concern.

3.20     Insurance. Each material insurance policy and self-insurance program and arrangement relating to the business, assets and operations of the Luna Corporations is in full force and effect. Since January 1, 2012, none of the Luna Corporations has received any notice or other communication regarding any actual or possible: (a) cancellation or invalidation of any material insurance policy; (b) refusal of any coverage or rejection of any material claim under any insurance policy; or (c) material adjustment in the amount of the premiums payable with respect to any insurance policy. There is no pending workers’ compensation or other claim under or based upon any insurance policy of any of the Luna Corporations involving an amount in excess of $100,000 in any individual case or $500,000 in the aggregate.

49

3.21Transactions withAffiliates. Except as set forth in the Parent SEC Documents filed prior to the date of this Agreement, during the period commencing on the date of the Parent’s last proxy statement filed with the SEC through the date of this Agreement, no event has occurred that would be required to be reported by the Parent pursuant to Item 404 of Regulation S-K promulgated by the SEC.

3.22     Legal Proceedings;Orders.

(a)     Except as set forth in Part 3.22(a) of the Parent Disclosure Schedule, there is not as of the date hereof, and there has not been since January 1, 2012, any pending and servedLegal Proceeding, or (to the knowledge of theParent) any pending but not servedLegal Proceeding and during such period noPerson has threatened to commence any materialLegal Proceeding: (i) that involves any of theLuna Corporations, any business of any of theLuna Corporations, any of the assets owned, leased or used by any of theLuna Corporations or, to the knowledge of theParent, anyParent Associate (in their capacity as such); or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, theMerger or any of the otherContemplated Transactions. To the knowledge of theParent, no event has occurred, and no claim, dispute or other condition or circumstance exists, thatwould reasonably be expected to give rise to or serve as a reasonable basis for the commencement of anyLegal Proceeding of the type described in clause “(i)” or clause “(ii)” of the first sentence of thisSection 3.22(a).

(b)     There is noOrder to which any of theLuna Corporations, or any of the material assets owned or used by any of theLuna Corporations, is subject. To the knowledge of theParent, no officer or other key employee of any of theLuna Corporations is subject to anyOrder that prohibits such officer or other employee from engaging in or continuing any conduct, activity or practice relating to the business of any of theLuna Corporations.

3.23     Inapplicability ofSection203 of theDGCLand other Anti-takeover Statutes. The Parent Board has taken, and during the Pre-Closing Period the Parent Board will take, all actions necessary to ensure that the restrictions applicable to business combinations contained in Section 203 of the DGCL are not, and will not be, applicable to the execution, delivery or performance of this Agreement, the Parent Stockholder Voting Agreements, or to the consummation of the Merger or any of the other Contemplated Transactions. The Parent Board (at a meeting duly called and held) has, to the extent necessary, adopted a resolution having the effect of causing the Parent not to be subject to any state takeover law or similar Legal Requirement that might otherwise apply to the Merger or any of the other Contemplated Transactions. No state takeover statute or similar Legal Requirement (other than Section 203 of the DGCL) applies or purports to apply to the Merger, this Agreement, the Parent Stockholder Voting Agreements or any of the Contemplated Transactions. None of the Parent, Merger Sub or any of their respective “affiliates” or “associates” (as defined in Section 203 of the DGCL) is (as of immediately prior to the execution of this Agreement), or has been (during the three years preceding the execution of this Agreement), an “interested stockholder” (as defined in Section 203 of the DGCL) with respect to the Company.

3.24     Vote Required.Assuming the representations set forth in the last sentence of Section 2.23 are true, the only vote of Parent’s stockholders required to consummate the transactions contemplated hereby is the affirmative vote of the holders of a majority of the shares of Parent Common Stock present in person or by proxy at the Parent Stockholders’ Meeting in favor of the approval of the issuance of the Parent Common Stock pursuant to this Agreement for the purpose of approving such issuance as required under Nasdaq Listing Rule 5635 (the “Required Parent Stockholder Vote”). The affirmative vote of the holders of a majority of the voting power of the shares of common stock of Merger Sub (the “Required Merger Sub Stockholder Vote”) is the only vote of the holders of any class or series of Merger Sub’s capital stock necessary to adopt this Agreement or consummate the transactions contemplated hereby. Parent is the sole stockholder of record of Merger Sub. Parent shall, in its capacity as sole stockholder of Merger Sub, adopt this Agreement and approve the Merger by written consent as soon as practicable following execution of this Agreement, and shall promptly provide a copy of such executed written consent to the Company.

50

3.25Solvency.Each Luna Corporation is solvent and consummation of the transactions contemplated by this Agreement will not render any of the Luna Corporations insolvent, in each case, for all purposes under federal bankruptcy and applicable state fraudulent transfer and fraudulent conveyance laws.

3.26     Opinion of Financial Advisor. The Parent Board has received the written opinion of Mooreland Partners LLC (the “Parent’s Financial Advisor”), financial advisor to the Parent, dated January 30, 2015, to the effect that the Exchange Ratio is fair, from a financial point of view, to the Parent. The Parent has furnished an accurate and complete copy of said written opinion to the Company.

3.27     Financial Advisor; Transaction Expenses. Except for the Parent’s Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Merger or any of the other Contemplated Transactions based upon arrangements made by or on behalf of any of the Luna Corporations. The Parent has furnished to the Company accurate and complete copies of all agreements under which any such fees, commissions or other amounts have been paid or may become payable and all indemnification and other agreements related to the engagement of the Parent’s Financial Advisor. Part 3.27 of the Parent Disclosure Schedule contains a good faith estimate of the fees and expenses of the Parent’s Financial Advisor.

3.28     Disclosure. None of the information to be supplied by or on behalf of Parent for inclusion or incorporation by reference in the Form S-4 Registration Statement will, at the time the Form S-4 Registration Statement is filed with the SEC or at the time it, or any amendment or supplement thereto, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of Parent for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus will, at the time the Joint Proxy Statement/Prospectus is mailed to the stockholders of the Company or the stockholders of Parent or at the time of the Company Stockholders’ Meeting or the Parent Stockholders’ Meeting (or any adjournment or postponement thereof), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Form S-4 Registration Statement and the Joint Proxy Statement/Prospectus included therein will, at the time the Form S-4 Registration Statement is filed, at the time the Joint Proxy Statement/Prospectus is mailed to the stockholders of the Company or the stockholders of Parent, at the time of the Company Stockholders’ Meeting or the Parent Stockholders’ Meeting (or any adjournment or postponement thereof) and at the Effective Time, comply as to form in all material respects with the provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated by the SEC thereunder, except that no representation or warranty is made by Parent with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of the Company for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus.

3.29     Valid Issuance. The Parent Common Stock to be issued in the Merger (including the Parent Common Stock to be issued upon the exercise of assumed and converted Company Options) has been duly authorized and will, when issued in accordance with the provisions of this Agreement, be validly issued, fully paid and nonassessable and will not be subject to any restriction on resale under the Securities Act, other than restrictions imposed by Rules 144 and 145 under the Securities Act.

51

3.30 Acknowledgement byParent. Neither Parent nor Merger Sub is relying and neither Parent nor Merger Sub has relied on any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied, except for the representations and warranties in Section 2 or contained in the Company Stockholder Voting Agreements. The representations and warranties by the Company contained in Section 2 constitute the sole and exclusive representations and warranties of the Company, the other API Corporations and their respective Representatives in connection with the Contemplated Transactions and each of Parent and Merger Sub understands, acknowledges and agrees that all other representations and warranties of any kind or nature whether express, implied or statutory are specifically disclaimed by the Company. Each of Parent and Merger acknowledges that the Company has not made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Company furnished or made available to either Parent or Merger Sub or their respective Representatives, except as expressly set forth in Section 2 (which includes all schedules corresponding thereto), and neither the Company nor any other Person shall be subject to any liability to the Parent, Merger Sub or their respective Representatives or any other Person resulting from the Company’s making available such information to the Parent or Merger Sub or their respective Representatives or as to the Parent or Merger Sub’s use of such information. Each of Parent and Merger Sub expressly waives any such claims relating to the matters described in the preceding sentence.

3.31     Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Contemplated Transactions and has not engaged in any business activities or conducted any operations other than in connection with the Contemplated Transactions.

Section 4.CERTAIN COVENANTS OF THE PARTIES REGARDING OPERATIONS DURING THE PRE-CLOSING PERIOD

4.1     Access and Investigation. During the period commencing on the date of this Agreement and ending as of the earlier of the termination of this Agreement or the Effective Time (the “Pre-Closing Period”), subject to applicable Legal Requirements and the terms of any confidentiality restrictions under Contracts of a party as of the date hereof, upon reasonable notice the Company and Parent shall each, and shall cause each of their respective Subsidiaries to: (a) provide the Representatives of the other party with reasonable access during normal business hours to its Representatives and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to such Entity or any of its Subsidiaries, in each case as reasonably requested by Parent or the Company, as the case may be; and (b) provide the Representatives of the other party with such copies of the existing books, records, Tax Returns, work papers and other documents and information relating to such Entity and its Subsidiaries as reasonably requested by Parent or the Company, as the case may be. During the Pre-Closing Period, the Company and Parent shall, and shall cause their respective Representatives to, cause their senior officers to meet, upon reasonable notice and during normal business hours, with their respective chief financial officers and other officers responsible for the Company’s and Parent’s financial statements and the internal controls, respectively, to discuss such matters as the Company or Parent may deem necessary or appropriate in order to enable Parent to comply following the Closing with the Sarbanes-Oxley Act and the rules and regulations relating thereto. Subject to Section 5.7 and without limiting the generality of any of the foregoing, during the Pre-Closing Period, the Company and Parent shall promptly provide the other with copies of any notice, report or other document filed with or sent to any Governmental Body on behalf of any of the API Corporations or the Luna Corporations, respectively, in connection with the Merger or any of the other Contemplated Transactions a reasonable time in advance of the filing or sending of such document in order to permit a review thereof. Nothing herein shall require the Company or the Parent to disclose any information if such disclosure would jeopardize any attorney-client privilege or contravene any applicable Legal Requirement or binding agreement entered into prior to the date of this Agreement or any non-disclosure or confidentiality agreement entered in the ordinary course of business after the date of this Agreement; provided that the parties shall cooperate to disclose such information to the extent possible without jeopardizing such privilege or contravening such Legal Requirements or such agreements. All information exchanged pursuant to this Section 4.1 shall be subject to the Confidentiality Agreement.

52

4.2Operation of the Business of theAPI Corporations.

(a)     During thePre-Closing Period, except as set forth in Part 4.2(a) of theCompany Disclosure Schedule, as otherwise contemplated by thisAgreement, as required by Legal Requirements or ifParent shall otherwise consent in writing (which consent shall notbe unreasonably withheld or delayed): (i) theCompany shall ensure that each of theAPI Corporations conducts its business and operationsin the ordinary course and consistent with past practices; (ii)the Company shall use commercially reasonable efforts to attempt to ensure that each of theAPI Corporations preserves intact the material components of its current business organization, keeps available the services of its current officers and directors, and maintains its relations and goodwill with all material suppliers, material customers, material licensors andGovernmental Bodies; and (iii) theCompany shall promptly notifyParent of any claim asserted orLegal Proceeding commenced, or, to theCompany’s knowledge, either: (A) with respect to aGovernmental Body, threatened; or (B) with respect to any otherPerson, threatened in writing, against, relating to, involving or otherwise affecting any of theAPI Corporations that relates to any of theContemplated Transactions.

(b)     Except as set forth in Part 4.2(b) of the Company Disclosure Schedule, during thePre-Closing Period, theCompany shall not (except as otherwise contemplated by thisAgreement, as required byLegal Requirements or with the prior written consent ofParent, which consent shall notbe unreasonably withheld or delayed), and theCompany shall ensure that each of the otherAPI Corporations does not (except as otherwise contemplated by thisAgreement, as required byLegal Requirements or with the prior written consent ofParent, which consent shall notbe unreasonably withheld or delayed):

(i)     declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of capital stock, or repurchase, redeem or otherwise reacquire any shares ofcapital stock or other securities, other than: (A) dividends or distributions between or among any of theAPI Corporations to the extent consistent with past practices; or (B) pursuant to theCompany’s right to purchaseshares of Company Restricted Stock held by an employee of theCompany upon termination of such employee’s employment or upon the cashless or net exercise of outstandingCompany Options or to satisfy withholding obligations upon vesting or exercise of equity awards;

(ii)    sell, issue, grant or authorize the sale, issuance or grant of: (A) any capital stock or other security; (B) any option, call, warrant or right to acquire any capital stock or other security; or (C) any instrument convertible into or exchangeable for any capital stock or other security (except that: (1) the Company may issue shares of Company Common Stock upon the valid exercise of Company Options or Company Warrants outstanding as of the date of this Agreement; and (2) Company may, in the ordinary course of business and consistent with past practices grant Company Equity Awards to employees (except that, with respect to named executive officers (as defined in Item 402 of Regulation S-K under the Securities Act), such grants may not exceed those made in either of the prior two years) of an API Corporation under the Company Option Plans; provided that such Company Equity Awards may not exceed amounts consistent with past practices with respect to the position being filled);

53

(iii)   amend or waive any of its rights under, or accelerate the vesting under, any provision of any of theCompany Option Plans, any provision of anyagreement evidencing any outstanding stock option, restricted stock grant, or any restricted stock unit purchaseagreement, or otherwise modify any of the terms of any outstanding option, restricted stockagreement, restricted stock unit, warrant or other security or any relatedContract;

(iv)    amend, terminate or grant any waiver under anystandstill agreements (except as permitted inSection 4.4(e));

(v)     amend or permit the adoption of any amendment to its certificate of incorporation or bylaws or other charter or organizational documents;

(vi)    (A) exceptin the ordinary course of business and consistent with past practices, acquire any equity interest or other interest in any otherEntity; (B) exceptin the ordinary course of business and consistent with past practices, form any Subsidiary; or (C) effect or become a party to anymerger, consolidation, share exchange, business combination, amalgamation, recapitalization, reclassification of shares, stock split, reverse stock split, division or subdivision of shares, consolidation of shares or similar transaction;

(vii)   make any capital expenditure (except that theAPI Corporations may make any capital expenditure that: (A) is provided for in theCompany’s capital expense budget delivered orMade Available toParent prior to the date of thisAgreement; or (B) when added to all other capital expenditures made on behalf of all of theAPI Corporations since the date of thisAgreement but not provided for in theCompany’s capital expense budget delivered orMade Available toParent prior to the date of thisAgreement, does not exceed $200,000 in the aggregate);

(viii)  other thanin the ordinary course of business and consistent with past practices: (A) enter into or become bound by, or permit any of the assets owned or used by it to become bound by, anyContract that would be a Company Material Contract or any otherContract that is material to theAPI Corporations (taken as a whole), it being agreed that entering into or amending any real estate lease shall be deemed to be a Company Material Contract not entered into in the ordinary course of business; or (B) amend, terminate, or waive any material right or remedy under, any Company Material Contract or any otherContract that is material to theAPI Corporations (taken as a whole), other than termination thereof upon the expiration of any suchContract in accordance with its terms or upon a material breach thereof by the counterparty thereto;

(ix)    acquire, lease or license any right or other asset from any otherPerson or sell or otherwise dispose of, or lease or license, any right or other asset to any otherPerson (except in each case for: (A) assets acquired, leased, licensed or disposed of by theCompany in the ordinary course of business and consistent with past practices; (B) assets that are immaterial to the business of theAPI Corporations; or (C) sales of inventory in the ordinary course of business);

(x)     make any pledge of any of its material assets or permit any of its material assets to become subject to anyEncumbrances, except forEncumbrances that do not materially detract from the value of such assets or that donot materially impair the operations of any of the API Corporations;

(xi)    lend money to anyPerson (other than routine travel and business expense advances made to directors or employees in the ordinary course of business), or, exceptin the ordinary course of business and consistent with past practices, incur or guarantee any indebtedness;

54

(xii)   establish, adopt, enter into or amend anyCompany Employee Plan orCompany Employee Agreement, pay any bonus or make any profit-sharing or similar payment to, pay any severance, retention or change-of-control or similar benefits, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation (including equity-based compensation, whether payable in stock, cash or other property) or remuneration payable to, any of its directors or any of its officers or other employees (except that theCompany may: (A) amend theCompany Employee Plans to the extent required by applicableLegal Requirements; (B) make customary bonus payments and profit sharing payments consistent with past practices in accordance with bonus and profit sharing plans existing on the date of thisAgreement; (C) pay severance, retention or change-of-control or similar benefits pursuant to anyCompany Employee Plan orCompany Employee Agreement as set forth on Part 4.2(b)(xii) of theCompany Disclosure Schedule; (D)(1) enter into ordinary course compensation arrangements with any new employee hired in accordance with clause(xiii), consistent with past practices or (2) increase the amount of the wages, salary, commissions, fringe benefits or other compensation (including equity-based compensation, whether payable in stock, cash or other property) or remuneration payable in connection with the promotion of any employee in the ordinary course of business and in accordance with clause(xiii), consistent with past practices; and (E) make payments or increase any benefits as required by the terms of anyCompany Employee Plan orCompany Employee Agreement as in effect as of the date of thisAgreement or as set forth on Part 4.2(b)(xii) of theCompany Disclosure Schedule);

(xiii)  hire any employee (except (A) to fill any position set forth in Part 4.2(b) of theCompany Disclosure Schedule or (B) in order to fill a position at the level of director or below vacated after the date of thisAgreement) or promote any employee to the level of Vice President or above;

(xiv)   other thanin the ordinary course of business and consistent with past practices or as required by concurrent changes inGAAP orSEC rules and regulations, change any of its methods of accounting or accounting practices in any respect;

(xv)    make any materialTax election, make any material amendments toTax Returns previously filed, or settle or compromise any materialTax liability or refund;

(xvi)   commence anyLegal Proceeding, except with respect to: (A) routine mattersin the ordinary course of business and consistent with past practices; (B) in such cases where theCompany reasonably determines in good faith that the failure to commence suit would result in a material impairment of a valuable aspect of its business (provided that theCompany consults withParent and considers the views and comments ofParent with respect to suchLegal Proceedings prior to commencement thereof); or (C) in connection with a breach of thisAgreement or the other agreements listed in the definition of “Contemplated Transactions;”

(xvii)  except as permitted pursuant toSection 5.15, settle anyLegal Proceeding or other material claim, other than pursuant to a settlement: (A) that results solely in monetary obligation involving payment by theAPI Corporations of the amount specifically reserved in accordance withGAAP with respect to suchLegal Proceedings or claim on theCompany Audited Balance Sheet; or (B) that results solely in monetary obligation involving only the payment of monies by theAPI Corporations of not more than $200,000 in the aggregate;

(xviii) enter into anyContract covering anyCompany Employee, or make any payment to anyCompany Employee (other than pursuant to aCompany Employee Plan or aCompany Employee Agreement as in effect as of the date of thisAgreement),that, considered individually or considered collectively with any otherContracts or payments, will, orwould reasonably be expected to, be characterized as a “parachute payment” within the meaning ofSection 280G(b)(2) of theCode in connection with theContemplated Transactions or give rise directly or indirectly to the payment of any amount that would not be deductible pursuant toSection 162(m) of theCode (or any comparable provision under state or foreignTax laws);

55

(xix)   take any action thatwould reasonably be expected to cause theMerger to fail to qualify as a “reorganization” underSection 368(a) of theCode (whether or not otherwise permitted by the provisions of thisSection 4) or fail to take any action reasonably necessary to cause theMerger to so qualify; or

(xx)    agree or commit to take any of the actions described in clauses ”(i)” through “(xix)” of thisSection 4.2(b).

(c)     During thePre-Closing Period, theCompany shall promptly notifyParent in writing of any event, condition, fact or circumstance thatwould reasonably be expected to make the timely satisfaction of any of the conditions set forth inSection 6 impossible or unlikely or that has had orcould reasonably be expected to have or result in a Company Material Adverse Effect. Without limiting the generality of the foregoing, theCompany shall promptly adviseParent in writing of any materialLegal Proceeding or material claim threatened, commenced or asserted against or with respect to any of theAPI Corporations. No notification given toParent pursuant to thisSection 4.2(c) shall limit or otherwise affect any of the representations, warranties, covenants or obligations of theCompany contained in thisAgreement.

4.3Operation of the Business of theLuna Corporations.

(a)     During thePre-Closing Period, except as set forth in Part 4.3(a) of theParent Disclosure Schedule, as otherwise contemplated by thisAgreement, as required by Legal Requirements or if theCompany shall otherwise consent in writing (which consent shall notbe unreasonably withheld or delayed): (i)Parent shall ensure that each of theLuna Corporations conducts its business and operationsin the ordinary course and consistent with past practices; (ii) Parent shall use commercially reasonable efforts to attempt to ensure that each of theLuna Corporations preserves intact the material components of its current business organization, keeps available the services of its current officers and directors, and maintains its relations and goodwill with all material suppliers, material customers, material licensors, andGovernmental Bodies; and (iii)Parent shall promptly notifyCompany of any claim asserted orLegal Proceeding commenced, or, toParent’s knowledge either: (A) with respect to aGovernmental Body, threatened; or (B) with respect to any otherPerson, threatened in writing, against, relating to, involving or otherwise affecting any of theLuna Corporations that relates to any of theContemplated Transactions.

(b)     Except as set forth in Part 4.3(b) of the Parent Disclosure Schedule, during thePre-Closing Period,Parent shall not (except as otherwise contemplated by thisAgreement, as required byLegal Requirements or with the prior written consent ofCompany, which consent shall notbe unreasonably withheld or delayed), andParent shall ensure that each of the otherLuna Corporations does not (except as otherwise contemplated by thisAgreement, as required byLegal Requirements or with the prior written consent of theCompany, which consent shall notbe unreasonably withheld or delayed):

(i)     declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of capital stock, or repurchase, redeem or otherwise reacquire any shares ofcapital stock or other securities, other than: (A) dividends or distributions between or among any of theLuna Corporations to the extent consistent with past practices; or (B) pursuant toParent’s right to purchaseshares of Parent Restricted Stock held by an employee ofParent upon termination of such employee’s employment or upon the cashless or net exercise of outstandingParent Options or to satisfy withholding obligations upon vesting or exercise of equity awards;

56

(ii)    sell, issue, grant or authorize the sale, issuance or grant of: (A) any capital stock or other security; (B) any option, call, warrant or right to acquire any capital stock or other security; or (C) any instrument convertible into or exchangeable for any capital stock or other security (except that: (1) the Parent may issue shares of Parent Common Stock upon the valid exercise of Parent Options outstanding as of the date of this Agreement; and (2) Parent may, in the ordinary course of business and consistent with past practices grant Parent Equity Awards to employees and directors (except that, with respect to named executive officers (as defined in Item 402 of Regulation S-K under the Securities Act), such grants may not exceed those made in either of the prior two years) of a Luna Corporation under the Parent Option Plans; provided that such Parent Equity Awards may not exceed amounts consistent with past practices with respect to the position being filled);

(iii)   amend or waive any of its rights under, or accelerate the vesting under, any provision of any of theParent Option Plans, any provision of anyagreement evidencing any outstanding stock option or any restricted stock unit purchaseagreement, or otherwise modify any of the terms of any outstanding option, restricted stockagreement, restricted stock unit, warrant or other security or any relatedContract;

(iv)    amend, terminate or grant any waiver underParent Rights Agreement or anystandstill agreements (except as permitted bySection 4.4(e));

(v)     amend or permit the adoption of any amendment to its certificate of incorporation or bylaws or other charter or organizational documents;

(vi)    (A) exceptin the ordinary course of business and consistent with past practices, acquire any equity interest or other interest in any otherEntity; (B) exceptin the ordinary course of business and consistent with past practices, form any Subsidiary; or (C) effect or become a party to anymerger, consolidation, share exchange, business combination, amalgamation, recapitalization, reclassification of shares, stock split, reverse stock split, division or subdivision of shares, consolidation of shares or similar transaction;

(vii)   make any capital expenditure (except that theLuna Corporations may make any capital expenditure that: (A) is provided for inParent’s capital expense budget delivered orMade Available to theCompany prior to the date of thisAgreement; or (B) when added to all other capital expenditures made on behalf of all of theLuna Corporations since the date of thisAgreement but not provided for inParent’s capital expense budget delivered orMade Available to theCompany prior to the date of thisAgreement, does not exceed $200,000 in the aggregate);

(viii)  other thanin the ordinary course of business and consistent with past practices: (A) enter into or become bound by, or permit any of the assets owned or used by it to become bound by, anyContract that would be a Parent Material Contract or any otherContract that is material to theLuna Corporations (taken as a whole); or (B) amend, terminate, or waive any material right or remedy under, any Parent Material Contract or any otherContract that is material to theLuna Corporations (taken as a whole), other than termination thereof upon the expiration of any suchContract in accordance with its terms or upon a material breach thereof by the counterparty thereto;

57

(ix)    acquire, lease or license any right or other asset from any otherPerson or sell or otherwise dispose of, or lease or license, any right or other asset to any otherPerson (except in each case for: (A) assets acquired, leased, licensed or disposed of byParent in the ordinary course of business and consistent with past practices; (B) assets that are immaterial to the business of theLuna Corporations; or (C) sales of inventory in the ordinary course of business);

(x)     make any pledge of any of its material assets or permit any of its material assets to become subject to anyEncumbrances, except forEncumbrances that do not materially detract from the value of such assets or that donot materially impair the operations of any of the Luna Corporations;

(xi)    lend money to anyPerson (other than routine travel and business expense advances made to directors or employees in the ordinary course of business), or, exceptin the ordinary course of business and consistent with past practices, incur or guarantee any indebtedness;

(xii)   establish, adopt, enter into or amend anyParent Employee Plan orParent Employee Agreement, pay any bonus or make any profit-sharing or similar payment to, pay any severance, retention or change-of-control or similar benefits, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation (including equity-based compensation, whether payable in stock, cash or other property) or remuneration payable to, any of its directors or any of its officers or other employees (except that theParent may: (A) amend theParent Employee Plans to the extent required by applicableLegal Requirements; (B) make customary bonus payments and profit sharing payments consistent with past practices in accordance with bonus and profit sharing plans existing on the date of thisAgreement; (C) pay severance, retention or change-of-control or similar benefits pursuant to anyParent Employee Plan orParent Employee Agreement as set forth on Part 4.3(b)(xii) of theParent Disclosure Schedule; (D)(1) enter into ordinary course compensation arrangements with any new employee hired in accordance with clause(xiii), consistent with past practices or (2) increase the amount of the wages, salary, commissions, fringe benefits or other compensation (including equity-based compensation, whether payable in stock, cash or other property) or remuneration payable in connection with the promotion of any employee in the ordinary course of business and in accordance with clause(xiii), consistent with past practices; and (E) make payments or increase any benefits as required by the terms of anyParent Employee Plan orParent Employee Agreement as in effect as of the date of thisAgreement or as set forth on Part 4.3(b)(xii) of theParent Disclosure Schedule);

(xiii)  hire any employee (except (A) to fill any position set forth in Part 4.3(b) of theParent Disclosure Schedule or (B) in order to fill a position at the level of director or below vacated after the date of thisAgreement) or promote any employee to the level of Vice President or above;

(xiv)   other thanin the ordinary course of business and consistent with past practices or as required by concurrent changes inGAAP orSEC rules and regulations, change any of its methods of accounting or accounting practices in any respect;

(xv)    make any materialTax election, make any material amendments toTax Returns previously filed, or settle or compromise any materialTax liability or refund;

(xvi)   commence anyLegal Proceeding, except with respect to: (A) routine mattersin the ordinary course of business and consistent with past practices; (B) in such cases whereParent reasonably determines in good faith that the failure to commence suit would result in a material impairment of a valuable aspect of its business (provided thatParent consults with theCompany and considers the views and comments of theCompany with respect to suchLegal Proceedings prior to commencement thereof); or (C) in connection with a breach of thisAgreement or the other agreements listed in the definition of “Contemplated Transactions”;

58

(xvii)  except as permitted pursuant toSection 5.15, settle anyLegal Proceeding or other material claim, other than pursuant to a settlement: (A) that results solely in monetary obligation involving payment by theLuna Corporations of the amount specifically reserved in accordance withGAAP with respect to suchLegal Proceedings or claim on theParent Audited Balance Sheet; or (B) that results solely in monetary obligation involving only the payment of monies by theLuna Corporations of not more than $200,000 in the aggregate;

(xviii) enter into anyContract covering anyParent Employee, or make any payment to anyParent Employee (other than pursuant to aParent Employee Plan or aParent Employee Agreement as in effect as of the date of thisAgreement),that, considered individually or considered collectively with any suchContracts or payments, will, orwould reasonably be expected to, be characterized as a “parachute payment” within the meaning ofSection 280G(b)(2) of theCode in connection with theContemplated Transactions or give rise directly or indirectly to the payment of any amount that would not be deductible pursuant toSection 162(m) of theCode (or any comparable provision under state or foreignTax laws);

(xix)   take any action thatwould reasonably be expected to cause theMerger to fail to qualify as a “reorganization” underSection 368(a) of theCode (whether or not otherwise permitted by the provisions of thisSection 4) or fail to take any action reasonably necessary to cause theMerger to so qualify; or

(xx)    agree or commit to take any of the actions described in clauses “(i)” through “(xix)” of thisSection 4.3(b).

(c)     During thePre-Closing Period,Parent shall promptly notify theCompany in writing of any event, condition, fact or circumstance thatwould reasonably be expected to make the timely satisfaction of any of the conditions set forth inSection 7 impossible or unlikely or that has had orcould reasonably be expected to have or result in a Parent Material Adverse Effect. Without limiting the generality of the foregoing,Parent shall promptly advise theCompany in writing of any materialLegal Proceeding or material claim threatened, commenced or asserted against or with respect to any of theLuna Corporations. No notification given to theCompany pursuant to this Section4.3(c) shall limit or otherwise affect any of the representations, warranties, covenants or obligations ofParent contained in thisAgreement.

4.4No Solicitation.

(a)     During thePre-Closing Period, theCompany shall not, directly or indirectly, and theCompany shall not permit its Subsidiaries and the respectiveRepresentatives of the API Corporations to, directly or indirectly:

(i)     solicit, initiate, knowingly encourage or knowingly facilitate the making, submission or announcement of anyAcquisition Proposal with respect to an API Corporation or Acquisition Inquiry with respect to an API Corporation;

(ii)    knowingly furnish any information regarding any of theAPI Corporations to anyPerson in connection with or in response to anAcquisition Proposal with respect to an API Corporation or Acquisition Inquiry with respect to an API Corporation (provided that in the case of this clause and the preceding clause (i), the Company may notify any Person that has made an Acquisition Inquiry or an Acquisition Proposal of the existence of this Section 4.4);

59

(iii)   engage in discussions or negotiations with anyPerson relating to anyAcquisition Proposal with respect to an API Corporation or Acquisition Inquiry with respect to an API Corporation;

(iv)    approve, endorse or recommend anyAcquisition Proposal with respect to an API Corporation or Acquisition Inquiry with respect to an API Corporation; or

(v)     enter into any letter of intent or similar document or anyContract contemplating or otherwise relating to anyAcquisition Transaction orAcquisition Inquiry with respect to anAPI Corporation (except for a definitive agreement entered into or to be entered into concurrently with a termination of this Agreement pursuant to Section 8.1(i));

provided, however, that prior to the adoption of thisAgreement by theRequired Company Stockholder Vote, nothing in thisAgreement shall prohibit theCompany from furnishing information regarding theAPI Corporations to, or entering into discussions and negotiations with, anyPerson in response to anAcquisition Proposal that theCompany Board determines in good faithis reasonably likely to lead to a Company Superior Offer and that is submitted to theCompany by suchPerson (and not withdrawn) if: (A) suchAcquisition Proposal did not result from any material breach (including any deemed material breach pursuant to the last sentence of this paragraph) of any of the provisions set forth in thisSection 4.4; (B) theCompany Board concludes in good faith, after having consulted with its outside legal counsel, that failure to take such actionwould be inconsistent with the fiduciary duties of the Company Board to the Company’s stockholders under applicable law; (C) prior to furnishing any such information to, or entering into discussions or negotiations with, suchPerson, theCompany givesParent written notice of the identity of suchPerson and of theCompany’s intention to furnish information to, or enter into discussions with, suchPerson, and theCompany receives from suchPerson an executed confidentialityagreement containing provisions (including nondisclosure provisions, use restrictions and non-solicitation provisions) at least as favorable to theCompany as the provisions of theConfidentiality Agreement as in effect immediately prior to the execution of thisAgreement (provided, however, that no such confidentialityagreement needinclude “standstill” provisions,including that no suchagreement needinclude any provision prohibiting suchPerson from makingAcquisition Proposals to theCompany); and (D) contemporaneously with furnishing any such information to suchPerson, theCompany furnishes such information toParent (to the extent such information has not been previously furnished orMade Available by theCompany toParent).Parent and theCompany agree that any action inconsistent with the restrictions set forth in this Section4.4 by any API Corporation or by anyRepresentative of an API Corporation will be deemed to be a breach of this Section 4.4 by theCompany.

(b)     During thePre-Closing Period,Parent shall not, directly or indirectly, andParent shall cause its Subsidiaries and the respectiveRepresentatives of theLuna Corporations not to, directly or indirectly:

(i)     solicit, initiate, knowingly encourage or knowingly facilitate the making, submission or announcement of anyAcquisition Proposal with respect to a Luna Corporation or Acquisition Inquiry with respect to a Luna Corporation;

(ii)    knowingly furnish any information regarding any of theLuna Corporations to anyPerson in connection with or in response to anAcquisition Proposal with respect to a Luna Corporation or Acquisition Inquiry with respect to a Luna Corporation(provided that in the case of this clause and the preceding clause (i), the Parent may notify any Person that has made an Acquisition Inquiry or an Acquisition Proposal of the existence of this Section 4.4);

60

(iii)   engage in discussions or negotiations with anyPerson relating to anyAcquisition Proposal with respect to a Luna Corporation or Acquisition Inquiry with respect to a Luna Corporation;

(iv)    approve, endorse or recommend anyAcquisition Proposal with respect to a Luna Corporation or Acquisition Inquiry with respect to a Luna Corporation; or

(v)     enter into any letter of intent or similar document or anyContract contemplating or otherwise relating to anyAcquisition Transaction orAcquisition Inquiry with respect to aLuna Corporation (except for a definitive agreement entered into or to be entered into concurrently with a termination of this Agreement pursuant to Section 8.1(h));

provided, however, that prior to the approval of the issuance of shares ofParent Common Stock in theMerger by theRequired Parent Stockholder Vote, nothing in thisAgreement shall prohibitParent from furnishing information regarding theLuna Corporations to, or entering into discussions and negotiations with, anyPerson in response to anAcquisition Proposal that theParent Board determines in good faithis reasonably likely to lead to a Parent Superior Offer and that is submitted toParent by suchPerson (and not withdrawn) if: (A) suchAcquisition Proposal did not result from any material breach (including any deemed material breach pursuant to the last sentence of this paragraph) of any of the provisions set forth in thisSection 4.4(b); (B) theParent Board concludes in good faith, after having consulted with its outside legal counsel, that failure to take such actionwould be inconsistent with the fiduciary duties of the Parent Board to Parent’s stockholders under applicable law; (C) prior to furnishing any such information to, or entering into discussions or negotiations with, suchPerson,Parent gives theCompany written notice of the identity of suchPerson and ofParent’s intention to furnish information to, or enter into discussions with, suchPerson, andParent receives from suchPerson an executed confidentialityagreement containing provisions (including nondisclosure provisions, use restrictions and non-solicitation provisions) at least as favorable toParent as the provisions of theConfidentiality Agreement as in effect immediately prior to the execution of thisAgreement (provided, however, that no such confidentialityagreement needinclude “standstill” provisions,including that no suchagreement needinclude any provision prohibiting suchPerson from makingAcquisition Proposals toParent); and (D) contemporaneously with furnishing any such information to suchPerson,Parent furnishes such information to theCompany (to the extent such information has not been previously furnished orMade Available byParent to theCompany). TheCompany andParent agree that any action inconsistent with the restrictions set forth in this Section4.4 by anyLuna Corporation or by anyRepresentative of a Luna Corporation will be deemed to be a breach of thisSection 4.4 byParent.

(c)     Each ofParent and theCompany shall promptly (and in no event later than 48 hours after receipt of anyAcquisition Proposal with respect to an API Corporation or a Luna Corporation, as the case may be, orAcquisition Inquiry with respect to an API Corporation or a Luna Corporation, as the case may be) advise the other party to thisAgreement orally and in writing of any suchAcquisition Proposal orAcquisition Inquiry (including the identity of thePerson making or submitting suchAcquisition Proposal orAcquisition Inquiry and the terms thereof,including a copy of any writtenAcquisition Proposal orAcquisition Inquiry) that is made or submitted by anyPerson during thePre-Closing Period. Each party receiving anAcquisition Proposal orAcquisition Inquiry shall keep the other party reasonably informed with respect to: (i) the status of any suchAcquisition Proposal orAcquisition Inquiry,including any negotiations with respect thereto; and (ii) the status and terms of any material modification or proposed material modification thereto.

61

(d)     Each ofParent and theCompany shall, and shall cause their respective Subsidiaries andRepresentatives to, immediately cease and cause to be terminated any discussions conducted on or before the date of thisAgreement with anyPerson that relate to anyAcquisition Proposal orAcquisition Inquiry.

(e)     Each ofParent and theCompany agrees not to release or permit the release of anyPerson from, or to waive or permit the waiver (other than any wavier of any “don’t ask don’t waive” provisions of anystandstill agreements now in effect, if the Board of theParent or theCompany (as applicable) determines in good faith that the failure to effect such waiver is inconsistent with the fiduciary duties of such Board to the stockholders of such party) of any provision of, any confidentiality, non-solicitation, no hire, “standstill” or similarContract to which any such party or any of its Subsidiaries is a party or under which any such party or any of its Subsidiaries has any rights, and will use its reasonable efforts to cause each suchagreement to be enforced at the request of the other party to thisAgreement, except that each ofParent and theCompany may waive any “standstill” or similarContract to which any such party or any subsidiary is a party if the party’s board of directors concludes in good faith, after having consulted with outside counsel, that the failure to take such action would be inconsistent with the fiduciary duties of the party’s board of directors.

4.5Debt Restructuring.Each of Parent and Company agree to cooperate to refinance all or a part of the Company Debt on terms reasonably satisfactory to Parent and the Company.

Section 5.     ADDITIONAL COVENANTS OF THE PARTIES

5.1     Registration Statement; Joint Proxy Statement/Prospectus.

(a)     As promptly as practicable after the date of thisAgreement,Parent and theCompany shall cooperate to prepare andParent shall cause to be filed with theSEC theForm S-4 Registration Statement, in which theJoint Proxy Statement/Prospectus will be included as a prospectus. Each ofParent andthe Company shall use commercially reasonable efforts: (i) to cause theForm S-4 Registration Statement and theJoint Proxy Statement/Prospectus to comply with the applicable rules and regulations promulgated by theSEC; (ii) to promptly notify the other of, cooperate with each other with respect to, provide the other party (and its counsel) with a reasonable opportunity to review and comment on, and respond promptly to any comments of theSEC or its staff with respect to theForm S-4 Registration Statement and theJoint Proxy Statement/Prospectus; (iii) to provide the other party (and its counsel) with a reasonable opportunity to review and comment on theForm S-4 Registration Statement and theJoint Proxy Statement/Prospectus, and any amendment or supplement thereto, prior to filing of any such document with theSEC; (iv) to have theForm S-4 Registration Statement become effective under theSecurities Act as promptly as practicable after it is filed with theSEC; and (v) to keep theForm S-4 Registration Statement effective through theClosing in order to permit the consummation of theMerger. TheCompany shall cause to be filed with theSEC theJoint Proxy Statement/Prospectus, Parent shall use commercially reasonable efforts to cause theJoint Proxy Statement/Prospectus to be mailed toParent’s stockholders, andthe Company shall use commercially reasonable efforts to cause theJoint Proxy Statement/Prospectus to be mailed to theCompany’s stockholders, in each case as promptly as practicable after theForm S-4 Registration Statement is declared effective under theSecurities Act. Each ofParent and theCompany shall promptly furnish the other party all information concerning such party, its Subsidiaries and stockholders that may be required or reasonably requested in connection with any action contemplated by thisSection 5.1. If eitherParent or theCompany becomes aware of any information that should be disclosed in an amendment or supplement to theForm S-4 Registration Statement or theJoint Proxy Statement/Prospectus, then such party: (i) shall promptly inform the other party thereof; (ii) shall provide the other party (and its counsel) with a reasonable opportunity to review and comment on any amendment or supplement to theForm S-4 Registration Statement or theJoint Proxy Statement/Prospectus prior to it being filed with theSEC; (iii) shall provide the other party with a copy of such amendment or supplement promptly after it is filed with theSEC; and (iv) shall cooperate, if appropriate, in mailing such amendment or supplement to the stockholders of theCompany orParent.

62

(b)     Prior tothe Effective Time, Parent shall use commercially reasonable efforts to obtain all regulatory approvals needed to ensure that theParent Common Stock to be issued in theMerger will (to the extent required) be registered or qualified or exempt from registration or qualification under the securities law of every state of the United States in which any registered holder ofCompany Common Stock has an address of record on the record date for determining the stockholders entitled to notice of and to vote at theCompany Stockholders’ Meeting;provided, however, thatParent shall not be required: (i) to qualify to do business as a foreign corporation in any jurisdiction in which it is not now qualified; or (ii) tofile a general consent to service of process in any jurisdiction.

5.2Company Stockholders’ Meeting.

(a)     TheCompany: (i) shall take all action necessary under all applicableLegal Requirements to call, give notice of and hold a meeting of the holders ofCompany Common Stock to vote on a proposal to adopt thisAgreement and to vote, on an advisory basis, on a proposal to approvethe compensation that may be payable to the Company’s named executive officers in connection with the Merger (a “say-on-golden parachute compensation” vote) as required bySection 14A of the Exchange Act and the applicable SEC rules issued thereunder (the “Company Stockholders’ Meeting”); and (ii) shall submit such proposals to such holders at theCompany Stockholders’ Meeting and shall not submit any other proposals to such holders in connection with theCompany’s Stockholders’ Meeting without the prior written consent ofParent. TheCompany in consultation withParent shall set a record date for persons entitled to notice of, and to vote at, theCompany’s Stockholders’ Meeting and shall not change such record date without the prior written consent ofParent (such consent not tobe unreasonably withheld, conditioned or delayed). Subject to the rights to postpone or adjourn theCompany Stockholders’ Meeting set forth below, theCompany Stockholders’ Meeting shall be held (on a date selected by theCompany in consultation withParent) as promptly as practicable after theForm S-4 Registration Statement is declared effective under theSecurities Act. TheCompany shall ensure that all proxies solicited by theAPI Corporations and theirRepresentatives in connection with theCompany Stockholders’ Meeting are solicited in compliance with all applicableLegal Requirements. Notwithstanding anything to the contrary contained in thisAgreement, theCompany may after consultation withParent adjourn or postpone theCompany’s Stockholders’ Meeting only: (A) to the extent necessary to ensure that any supplement or amendment to theJoint Proxy Statement/Prospectus that is required by applicableLegal Requirement (or in connection with the settlement of any applicable litigation) is timely provided to, and may be reviewed by, theCompany’s stockholders (with the determination of whether such adjournment or postponement is necessary under applicableLegal Requirements or in connection with a settlement to be determined in good faith by theCompany Board); (B) if as of the time for which theCompany Stockholders’ Meeting is originally scheduled there are insufficient shares ofCompany Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at theCompany’s Stockholders’ Meeting; (C) if additional time is reasonably required to solicit proxies in favor of the adoption of thisAgreement; or (D) to a date not later than two business days after the expiration of any five-business-day (or two-business-day, as applicable) period contemplated by Section 5.2 (c)(i) or (ii).

(b)     Subject toSection 5.2(c): (i) theJoint Proxy Statement/Prospectus shallinclude a statement to the effect that theCompany Board has determined that thisAgreement and theMerger are advisable and fair to, and in the best interests of, theCompany and its stockholders, and recommends that theCompany’s stockholders vote to adopt thisAgreement at theCompany Stockholders’ Meeting (such determination and recommendation being referred to as the “Company Board Recommendation”); (ii) theCompany Board Recommendation shall not be directly or indirectly withdrawn or modified in a manner adverse toParent; (iii) neither theCompany Board nor any committee thereof shall: (A) fail toinclude theCompany Board Recommendation in theJoint Proxy Statement/Prospectus; (B) recommend, adopt or approve, or propose publicly to recommend, adopt or approve, anAcquisition Proposal with respect to theCompany; (C) fail to publicly reaffirm theCompany Board Recommendation within five business days afterParent requests in writing that such action be taken; or (D) resolve to take any action described in clauses “(ii)” or “(iii)” of this sentence (each of the foregoing actions described in clauses “(ii)” and “(iii)” being referred to as a “Company Change in Recommendation”).

63

(c)     Notwithstanding anything to the contrary contained inSection 5.2(b) or elsewhere in thisAgreement, at any time prior to the adoption of thisAgreement by theRequired Company Stockholder Vote, theCompany Board may effect, or cause theCompany to effect, as the case may be, aCompany Change in Recommendation:

(i)     if: (A) theCompany has not breached, in any material respect, its obligations underSection 4.4 in connection with the offer referred to in the following clause “(B);”(B) after the date of thisAgreement, an unsolicited, bona fide, writtenAcquisition Proposal is made to theCompany and is not withdrawn;(C) theCompany Board determines in its good faith judgment, after consulting with its outside financial advisor and outside legal counsel, that such offer constitutes aCompany Superior Offer;(D) no less thanfive business days prior to taking the action set forth in the foregoing clause (C) the Company provides Parent written noticeof the Company Board’s intent to take the actions set forth in the foregoing clause (C) and specifying the reasons therefor (including the terms and conditions of such Company Superior Offer, the identity of the Person making the Company Superior Offer and copies of all relevant documents (including proposed agreements) relating thereto that are the basis of the proposed action by the Company Board) (it being understood and agreed that any amendment to the terms of such Company Superior Offer shall require a new notice period of two business days for purposes of this clause (D), (E) and (F));(E) during such fivebusiness day period (or twobusiness day period, as applicable), if requested byParent, theCompany engages in good faith negotiations withParent to amend thisAgreement in such a manner that the offer that was determined to constitute aCompany Superior Offer no longer constitutes aCompany Superior Offer;(F) at the end of such fivebusiness day period (or twobusiness day period, as applicable), such offer has not been withdrawn and continues to constitute aCompany Superior Offer (taking into account any changes to the terms of thisAgreement proposed byParent as a result of the negotiations required by clause “(E)” or otherwise); and (G) theCompany Board determines in good faith, after having consulted with its outside legal counsel, that, in light of suchCompany Superior Offer, a failure to make a Company Change in Recommendation would be inconsistent with the fiduciary duties of the Company Board to the Company’s stockholders under applicable law; or

(ii)    if:(A) other than

(1)     in connection with a Company Change in Recommendation with respect to a Company Superior Offer to which the foregoing clause (i) applies; or

(2)     in connection with or as a result of the making of, or any development or circumstance relating to, an Acquisition Proposal with respect to an API Corporation or an Acquisition Inquiry with respect to an API Corporation;

64

a material development or change in circumstances occurs or arises after the date of this Agreement that was neither known to the Company Board nor reasonably foreseeable to the Company Board as of the date of this Agreement and the Company Board determines in good faith, after consultation with outside counsel, that the failure to make such Company Change in Recommendation would be inconsistent with the fiduciary duties of the Company Board to the Company’s stockholders; (B) at least five business days prior to any meeting of the Company Board at which the Company Board will consider taking the action contemplated by the foregoing clause (A) the Company provides Parent with a written notice specifying the date and time of such meeting and the reasons for holding such meeting and the reasons for the proposed Company Change in Recommendation; (C) during such five business day period, if requested by Parent, the Company engages in good faith negotiations with Parent to amend this Agreement in such a manner that obviates the need for the Company Board to effect, or cause the Company to effect, a Company Change in Recommendation; and (D) the Company Board determines in good faith, after having consulted with its outside legal counsel, that, notwithstanding any proposed amendments to this Agreement proposed by Parent, a failure to make a Company Change in Recommendation would be inconsistent with the fiduciary duties of the Company Board to the Company’s stockholders.

(d)     Nothing contained in this Agreement shall prohibit the Company or the Company Board from (i) disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or from issuing a “stop, look and listen” statement pending disclosure of its position thereunder or (ii) making any disclosure to its stockholders if the Company Board determines in good faith, after consultation with outside counsel, that the failure to make such disclosure would be inconsistent with the fiduciary duties of the Company Board to the Company’s stockholders; provided, however, that in no event shall the Company Board effect a Company Change in Recommendation except in accordance with Section 5.2(c).

5.3Parent Stockholders’ Meeting.

(a)     Parent: (i) shall take all action necessary under all applicableLegal Requirements to call, give notice of and hold a meeting of the holders ofParent Common Stock to vote on a proposal to approve the issuance of shares ofParent Common Stock in theMerger pursuant to Nasdaq Listing Rule 5635 (the “Parent Stockholders’ Meeting”); and (ii) shall submit such proposal to such holders at theParent Stockholders’ Meeting and shall not submit any other proposal to such holders in connection with theParent Stockholders’ Meeting without the prior written consent of theCompany.Parent in consultation with theCompany shall set a record date for persons entitled to notice of, and to vote at, theParent Stockholders’ Meeting and shall not change such record date without the prior written consent of theCompany (such consent not tobe unreasonably withheld, conditioned or delayed). Subject to the rights to postpone or adjourn theParent Stockholders’ Meeting set forth below, theParent Stockholders’ Meeting shall be held on the same date as theCompany Stockholders’ Meeting (unless otherwise agreed upon by theCompany andParent).Parent shall ensure that all proxies solicited by theLuna Corporations and theirRepresentatives in connection with theParent Stockholders’ Meeting are solicited in compliance with all applicableLegal Requirements. Notwithstanding anything to the contrary contained in thisAgreement,Parent may after consultation with theCompany adjourn or postpone theParent Stockholders’ Meeting only: (i) to the extent necessary to ensure that any supplement or amendment to theJoint Proxy Statement/Prospectus that is required by applicableLegal Requirement (or in connection with the settlement of any applicable litigation) is timely provided to, and may be reviewed by,Parent’s stockholders (with the determination of whether such adjournment or postponement is necessary under applicableLegal Requirements or in connection with a settlement to be determined in good faith by theParent Board); (ii) if as of the time for which theParent Stockholders’ Meeting is originally scheduled there are insufficient shares ofParent Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at theParent Stockholders’ Meeting; (iii) if additional time is reasonably required to solicit proxies in favor of the approval of the issuance of shares ofParent Common Stock in theMerger; or (iv) to a date not later than two business days after the expiration of any five-business-day (or two-business-day, as applicable) period contemplated by Section 5.3 (c)(i) or (ii).

65

(b)     Subject toSection 5.3(c): (i) theJoint Proxy Statement/Prospectus shallinclude a statement to the effect that theParent Board has determined that thisAgreement and theMerger are advisable and fair to, and in the best interests of,Parent and its stockholders, and recommends thatParent’s stockholders vote to approve the issuance of shares ofParent Common Stock in theMerger at theParent Stockholders’ Meeting (such determination and recommendation being referred to as the “Parent Board Recommendation”); (ii) theParent Board Recommendation shall not be directly or indirectly withdrawn or modified in a manner adverse to theCompany; (iii) neither theParent Board nor any committee thereof shall: (A) fail toinclude theParent Board Recommendation in theJoint Proxy Statement/Prospectus; (B) recommend, adopt or approve, or propose publicly to recommend, adopt or approve, anAcquisition Proposal with respect toParent; (C) fail to publicly reaffirm theParent Board Recommendation within five business days after theCompany requests in writing that such action be taken; or (D) resolve to take any action described in clauses “(ii)” or “(iii)” of this sentence (each of the foregoing actions described in clauses “(ii)” and “(iii)” being referred to as a “Parent Change in Recommendation”).

(c)     Notwithstanding anything to the contrary contained inSection 5.3(b) or elsewhere in thisAgreement, at any time prior to the approval of the issuance of shares ofParent Common Stock in theMerger by theRequired Parent Stockholder Vote, theParent Board may effect, or causeParent to effect, as the case may be, aParent Change in Recommendation:

(i)     if: (A)Parent has not breached, in any material respect, its obligations underSection 4.4 in connection with the offer referred to in the following clause “(B);”(B) after the date of thisAgreement, an unsolicited, bona fide, writtenAcquisition Proposal is made toParent and is not withdrawn;(C) theParent Board determines in its good faith judgment, after consulting with its outside financial advisor and outside legal counsel, that such offer constitutes aParent Superior Offer;(D) no less thanfive business days prior to taking the action set forth in the foregoing clause (C) the Parent provides the Company written noticeof the Parent Board’s intent to take the actions set forth in the foregoing clause (C) and specifying the reasons therefor (including the terms and conditions of such Parent Superior Offer, the identity of the Person making the Parent Superior Offer and copies of all relevant documents (including proposed agreements) relating thereto that are the basis of the proposed action by the Parent Board) (it being understood and agreed that any amendment to the terms of such Parent Superior Offer shall require a new notice period of two business days for purposes of this clause (D), (E) and (F));(E) during such fivebusiness day period (or twobusiness day period, as applicable), if requested by theCompany,Parent engages in good faith negotiations with theCompany to amend thisAgreement in such a manner that the offer that was determined to constitute aParent Superior Offer no longer constitutes aParent Superior Offer;(F) at the end of such fivebusiness day period (or twobusiness day period, as applicable), such offer has not been withdrawn and continues to constitute aParent Superior Offer (taking into account any changes to the terms of thisAgreement proposed by theCompany as a result of the negotiations required by clause “(E)” or otherwise); and (G) theParent Board determines in good faith, after having consulted with its outside legal counsel, that, in light of suchParent Superior Offer, a failure to make a Parent Change in Recommendation would be inconsistent with the fiduciary duties of the Parent Board to Parent’s stockholders under applicable law; or

(ii)    if:(A) other than

(1)     in connection with a Parent Change in Recommendation with respect to a Parent Superior Offer to which the foregoing clause (i) applies; or

66

(2)     in connection with or as a result of the making of, or any development or circumstance relating to, an Acquisition Proposal with respect to a Luna Corporation or an Acquisition Inquiry with respect to a Luna Corporation;

a material development or change in circumstances occurs or arises after the date of this Agreement that was neither known to the Parent Board nor reasonably foreseeable to the Parent Board as of the date of this Agreement and the Parent Board determines in good faith, after consultation with outside counsel, that the failure to make such Parent Change in Recommendation would be inconsistent with the fiduciary duties of the Parent Board to the Parent’s stockholders; (B) at least five business days prior to any meeting of the Parent Board at which the Parent Board will consider taking the action contemplated by the foregoing clause (A) the Parent provides the Company with a written notice specifying the date and time of such meeting and the reasons for holding such meeting and the reasons for the proposed Parent Change in Recommendation; (C) during such five business day period, if requested by the Company, Parent engages in good faith negotiations with the Company to amend this Agreement in such a manner that obviates the need for the Parent Board to effect, or cause Parent to effect, a Parent Change in Recommendation; and (D) the Parent Board determines in good faith, after having consulted with its outside legal counsel, that, notwithstanding any proposed amendments to this Agreement proposed by the Company, a failure to make a Parent Change in Recommendation would be inconsistent with the fiduciary duties of the Parent Board to the Parent’s stockholders.

(d)     Nothing contained in this Agreement shall prohibit Parent or the Parent Board from (i) disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or from issuing a “stop, look and listen” statement pending disclosure of its position thereunder or (ii) making any disclosure to its stockholders if the Parent Board determines in good faith, after consultation with outside counsel, that the failure to make such disclosure would be inconsistent with the fiduciary duties of the Parent Board to the Parent’s stockholders; provided, however, that in no event shall the Parent Board effect a Parent Change in Recommendation except in accordance with Section 5.3(c).

(e)     The Company and Parent shall each use their reasonable best efforts to cause the Company Stockholders’ Meeting and the Parent Stockholders’ Meeting to be held on the same date.

5.4Stock Options.

(a)     At theEffective Time, (x) eachCompany Option that is outstanding and unexercised immediately prior to theEffective Time, whether or not vested, shall be converted into and become an option to purchaseParent Common Stock, andParent shall assume suchCompany Option in accordance with the terms (as in effect as of the date of thisAgreement) of the applicableCompany Option Plan and the terms of the stock optionagreement by which suchCompany Option is evidenced; and (y) each share ofParent Common Stock into which a share ofCompany Restricted Stock was converted pursuant toSection 1.5 shall be a share ofParent Restricted Stock and shall remain subject to the same terms and conditions as were applicable under the award ofCompany Restricted Stock immediately prior to theEffective Time. All rights with respect toCompany Common Stock underCompany Options assumed byParent shall thereupon be converted into options with respect toParent Common Stock. Accordingly, from and after theEffective Time: (A) eachCompany Option assumed byParent may be exercised solely for shares ofParent Common Stock; (B) the number of shares ofParent Common Stock subject to eachCompany Option assumed byParent shall be determined by multiplyingthe number of shares ofCompany Common Stock that were subject to suchCompany Option immediately prior to theEffective Time by theExchange Ratio, and rounding the resulting number down to the nearest whole number of shares ofParent Common Stock; (C)the per share exercise price for theParent Common Stock issuable upon exercise of eachCompany Option assumed byParent shall be determined by dividingthe per share exercise price ofCompany Common Stock subject to suchCompany Option, as in effect immediately prior to theEffective Time, by theExchange Ratio, and rounding the resulting exercise price up to the nearest whole cent; and (D) any restriction on the exercise of anyCompany Option assumed byParent shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of suchCompany Option shall remain unchanged;provided, however, thatParent Board or a committee thereof shall succeed to the authority and responsibility of theCompany Board or any committee thereof with respect to eachCompany Option,Company Restricted Stock assumed byParent.

67

(b)     Parent shallfile with theSEC, as soon as practicable after theEffective Time but in no event later than 10 business daysafter the date on which the Merger becomes effective, a registration statement on Form S-8, if available for use byParent, relating to the shares ofParent Common Stock issuable with respect to theCompany Options,Company Restricted Stock assumed byParent in accordance withSection 5.4(a).

(c)     At theEffective Time,Parent shall assume all of theCompany Option Plans.Parent shall be entitled to grant stock awards under each suchCompany Option Plan, to the extent permissible under applicableLegal Requirements, using the share reserves of suchCompany Option Plan as of theEffective Time (including any shares returned to such share reserves as a result of the termination ofCompany Options that are assumed byParent pursuant toSection 5.4(a)), except that: (i) stock covered by such awards shall be shares ofParent Common Stock; (ii) all references in suchCompany Option Plan to a number of shares ofCompany Common Stock shall be deemed amended to refer instead to a number of shares ofParent Common Stock determined by multiplying the number of referenced shares ofCompany Common Stock by theExchange Ratio, and rounding the resulting number down to the nearest whole number of shares ofParent Common Stock; and (iii) theParent Board or a committee thereof shall succeed to the authority and responsibility of theCompany Board or any committee thereof with respect to the administration of suchCompany Option Plan.

(d)     Prior to theEffective Time,the Company shall use its commercially reasonable efforts to take all action that may be necessary (under theCompany Option Plans and otherwise) to effectuate the provisions of thisSection 5.4 and to ensure that, from and after theEffective Time, holders ofCompany Options have no rights with respect thereto other than those specifically provided in thisSection 5.4. To the extent that aCompany Option qualifies immediately prior to theEffective Time as an “incentive stock option” within the meaning ofSection 422 of theCode, the option exercise price, the number of shares ofParent Company Common Stock purchasable upon exercise thereof, and the terms and conditions of suchCompany shall be determined in order to comply withSection 424(a) of theCode.

5.5Employee Benefits.

(a)     From and after theEffective Time, theCompany shall, andParent shall cause theCompany to, continue eachCompany Employee Plan that is a welfare benefit plan (each a “Continuing Company Plan”) in accordance with its terms as in effect immediately before theEffective Time through December 31, 2015 (the “Transition Period”), provided that nothing in thisAgreement shall prohibit the amendment or termination of any suchCompany Employee Plans in accordance with their terms and applicable Law.Parent agrees that, subject to any applicable plan provisions, contractual requirements orLegal Requirements all employees of theAPI Corporations who continue employment withParent, the Surviving Corporation or any Subsidiary of the Surviving Corporation after theEffective Time (“Continuing Employees”) (i) with respect to welfare benefit plans, shall be eligible toparticipate in aContinuing Company Plan during theTransition Period to substantially the same extent as similarly situatedContinuing Employees and, following theTransition Period, in aParent Employee Plan that is a group health plan to substantially the same extent as similarly situated employees ofParent, and (ii) with respect toParent Employee Plans other than welfare benefit plans, to substantially the same extent as similarly situated employees ofParent.

68

(b)     If requested in writing byParent at least five (5) days prior to theClosing, theCompany shall take (or cause to be taken) all actions necessary or appropriate to terminate, effective no later than the dayprior to the date on which the Merger becomes effective, anyCompany Employee Plan that contains a cash or deferred arrangement intended to qualify underSection 401(k) of theCode (a “Company 401(k) Plan”). If theCompany is required to terminate anyCompany 401(k) Plan, then theCompany shall provide toParent prior to theClosing Date written evidence of the adoption by theCompany Board of resolutions authorizing the termination of suchCompany 401(k) Plan (the form and substance of which resolutions shall be subject to the prior review ofParent). TheCompany also shall take, prior to theEffective Time, such other actions in furtherance of terminating suchCompany 401(k) Plan asParent may reasonably request in writing.

(c)     With respect to each “employee benefit plan” as defined in Section 3(3) ofERISA and each vacation and severance plan (that is not an “employee benefit plan” as defined in Section 3(3) ofERISA) maintained byParent or any Subsidiary ofParent (collectively, the “Parent Benefit Plans”) in which anyContinuing Employee willparticipate after theEffective Time,Parent shall, or shall cause theSurviving Corporation to, recognize all service of theContinuing Employees with theCompany or a Subsidiary, as the case may be, for purposes of eligibility, vesting and participation, in any suchParent Benefit Plan to the extent such service was credited under the applicableCompany Benefit Plan. In addition, and subject to the concurrence of any third-party insurers (which Parent shall use commercially reasonable efforts to obtain),Parent shall or shall cause theSurviving Corporation to: (i) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to theContinuing Employees under anyParent Benefit Plan that is a welfare benefit plan in which suchContinuing Employees may be eligible toparticipate after theEffective Time, other than preexisting condition limitations, exclusions or waiting periods that are already in effect with respect to suchContinuing Employees and that have not been satisfied or waived as of theEffective Time under any welfare benefit plan maintained for theContinuing Employees immediately prior to theEffective Time; and (ii) provide eachContinuing Employee with credit for any co-payments and deductibles paid prior to theEffective Time in satisfying any applicable deductible or out-of-pocket requirements under anyParent Benefit Plan that is a welfare benefit plan in which suchContinuing Employees may be eligible toparticipate after theEffective Time.

(d)     To the extent any employee notification or consultation requirements are imposed by applicableLegal Requirements with respect to any of theContemplated Transactions, theCompany andParent shall cooperate with each other to ensure that such requirements are complied with prior to theEffective Time.

(e)     Prior to theEffective Time, (i) theCompany shall not, and shall ensure that its Subsidiaries and the respectiveRepresentatives of the API Corporations do not, make any commitment to any employees of theAPI Corporations regarding continuing post-Closing employment,including post-Closing employee benefits and compensation, without the prior written approval ofParent, which approval shall not be unreasonably withheld and (ii) theParent shall not, and shall ensure that its Subsidiaries and the respectiveRepresentatives of theLuna Corporations do not, make any commitment to any employees of theLuna Corporations regarding continuing post-Closing employment,including post-Closing employee benefits and compensation, without the prior written approval of theCompany, which approval shall not be unreasonably withheld.

69

(f)     Nothing in thisSection 5.5 or elsewhere in thisAgreement shall be construed to create a right in anyCompany Associate to employment withParent, the Surviving Corporation or any other Subsidiary ofParent. Except forCompany Indemnified Persons to the extent of their respective rights pursuant to Section5.6, noCompany Associate, and noContinuing Employee, shall be deemed to be a third party beneficiary of thisAgreement. Except forParent Indemnified Persons to the extent of their respective rights pursuant toSection 5.6(b), noParent Associate shall be deemed to be a third party beneficiary of thisAgreement.

(g)     Nothing contained herein shall be construed as requiring theAPI Corporations or theLuna Corporations to continue any specificCompany Employee Plan orParent Employee Plan. The provisions of thisSection 5.5 are for the sole benefit ofParent and theCompany and nothing in thisSection 5.5, expressed or implied, is intended or shall be construed to constitute an amendment of anyCompany Employee Plan orParent Employee Plan (or an undertaking to amend any such plan) or other compensation and benefits plan maintained for or provided toCompany Employees,including Continuing Employees, prior to, on or following theEffective Time.

5.6Indemnification of Officers and Directors.

(a)     Company Indemnified Person.

(i)     All rights to indemnification, advancement ofexpenses and exculpation from liabilities by theCompany or its Subsidiaries existing in favor of thosePersons who are current or former directors or officers of theCompany or its Subsidiaries at or prior to theEffective Time (the “CompanyIndemnified Persons”) for their acts and omissions as directors, officers, employees or agents of theCompany or its Subsidiaries occurring prior to theEffective Time, as provided in theCompany’s certificate of incorporation or bylaws (or by the comparable governing documents of theCompany’s Subsidiaries) (in each case, as in effect as of the date of thisAgreement) and as provided in any indemnification agreements between theCompany or one of its Subsidiaries and saidCompany Indemnified Persons (as in effect as of the date of thisAgreement), shall survive theMerger and be observed and performed by theSurviving Corporation and any applicable Subsidiaries to the fullest extent permitted by applicable law for a periodof six (6) years from the date on which the Merger becomes effective (provided that all such rights in respect of any action or claim pending or asserted within such period shall continue until the disposition or final resolution of such claim).Parent shall cause the certificate of incorporation and bylaws (or comparable organizational documents) of theSurviving Corporation and its Subsidiaries to contain provisions no less favorable with respect to indemnification, advancement ofexpenses and exculpation of current and former directors and officers of theCompany and its Subsidiaries than are presently set forth in the certificate of incorporation and bylaws (or comparable organizational documents) of theCompany and such Subsidiaries, and such provisions shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of anyPerson benefited by such provisions without such person’s prior written consent.Parent guarantees the full and timely performance of the obligations of theSurviving Corporation and its Subsidiaries under this Section5.6(a), and Parent shall be jointly and severally liable for such obligations.

(ii)    At or prior to theEffective Time, theCompany or the Surviving Corporation shall purchase a directors’ and officers’ liability insurance “tail policy” with a claims periodof six (6) years from theEffective Time, and on terms and conditions no less favorable to theCompany Indemnified Parties than those in effect under theCompany Existing D&O Policy (as defined below) in effect on the date hereof, for the benefit of theCompany Indemnified Persons with respect to their acts and omissions as directors, officers, employees and agents of theCompany or its Subsidiaries occurring prior to theEffective Time. The cost of such “tail policy” shall not exceed 300% of the current annual premium of theCompany Existing D&O Policy. If such “tail policy” is not obtained then from theEffective Time until the sixth anniversaryof the date on which the Merger becomes effective, theSurviving Corporation shall maintain in effect, for the benefit of theCompany Indemnified Persons with respect to their acts and omissions as directors, officers, employees or agents of theCompany or any of its Subsidiaries occurring at or prior to theEffective Time, the existing policies of directors’ and officers’ liability insurance maintained by theCompany as of the date of thisAgreement in the form delivered orMade Available by theCompany toParent prior to the date of thisAgreement (the “CompanyExisting D&O Policy”), to the extent that directors’ and officers’ liability insurance coverage is commercially available;provided, however, that the annual cost of such coverage shall not exceed $300,000 (the “CompanyMaximum Premium”). In the event any future annual premiums for theCompany Existing D&O Policy (or any substitute policies) exceed theCompany Maximum Premium, the Surviving Corporation shall be entitled to reduce the amount of coverage of theCompany Existing D&O Policy (or any substitute policies) to the amount of coverage that can be obtained for a premium equal to theCompany Maximum Premium.

70

(b)     Parent Indemnified Person.

(i)     All rights to indemnification, advancement ofexpenses and exculpation from liabilities by theParent or its Subsidiaries existing in favor of thosePersons who are current or former directors or officers of theParent or its Subsidiaries at or prior to theEffective Time (the “ParentIndemnified Persons”) for their acts and omissions as directors, officers, employees or agents of theParent or its Subsidiaries occurring prior to theEffective Time, as provided in theParent’s certificate of incorporation or bylaws (as in effect as of the date of thisAgreement) and as provided in any indemnification agreements between theParent and saidParent Indemnified Persons (as in effect as of the date of thisAgreement), shall survive theMerger and be observed by theParent and such Subsidiaries to the fullest extent permitted by applicable law for a periodof six (6) years from the date on which the Merger becomes effective.

(ii)    At or prior to theEffective Time, theParent shall purchase a directors’ and officers’ liability insurance “tail policy” with a claims periodof six (6) years from theEffective Time, and on terms and conditions no less favorable to theParent Indemnified Parties than those in effect under theParent Existing D&O Policy (as defined below) in effect on the date hereof, for the benefit of theParent Indemnified Persons with respect to their acts and omissions as directors, officers, employees and agents of theParent or any of its Subsidiaries occurring prior to theEffective Time.  TheParent shall not be required to pay more than 300% of the current annual premium of theParent Existing D&O Policy for such “tail policy.” If such “tail policy” is not obtained then from theEffective Time until the sixth anniversaryof the date on which the Merger becomes effective, theParent shall maintain in effect, for the benefit of theParent Indemnified Persons with respect to their acts and omissions as directors, officers, employees or agents of theParent or any of its Subsidiaries occurring at or prior to theEffective Time, the existing policies of directors’ and officers’ liability insurance maintained by theParent as of the date of thisAgreement in the form delivered orMade Available by theParent toCompany prior to the date of thisAgreement (the “ParentExisting D&O Policy”), to the extent that directors’ and officers’ liability insurance coverage is commercially available;provided, however, that: (i) theParent may substitute for theParent Existing D&O Policy a policy or policies of comparable coverage; and (ii) theParent shall not be required to pay annual premiums for theParent Existing D&O Policy (or for any substitute policies) in excess of $500,000 (the “Parent Maximum Premium”). In the event any future annual premiums for theParent Existing D&O Policy (or any substitute policies) exceed theParent Maximum Premium, theParent shall be entitled to reduce the amount of coverage of theParent Existing D&O Policy (or any substitute policies) to the amount of coverage that can be obtained for a premium equal to theParent Maximum Premium.

71

(c)     Parent shall pay (as incurred) allexpenses,including reasonable fees andexpenses of counsel, which anyCompany Indemnified Person orParent Indemnified Person may incur in enforcing the indemnification and other obligations provided for in thisSection 5.6.

(d)     ThisSection 5.6 is intended to be (i) for the benefit of, and shall be enforceable by, theCompany Indemnified Persons and theParent Indemnified Persons, their heirs and personal representatives and shall be binding on theParent, the Surviving Corporation and their successors and assigns, (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that anyCompany Indemnified Person orParent Indemnified Person may have by contract or otherwise,including indemnification agreements that theCompany orParent have entered into with any of their respective directors or officers and (iii) may not be amended, altered or repealed after theEffective Time without the prior written consent of the affectedCompany Indemnified Person orParent Indemnified Person (provided that such amendment, alteration or repeal prior to theEffective Time shall be governed bySection 9.1). In the event that theParent or the Surviving Corporation or any of their successors or assigns: (i) consolidates with or merges into any otherPerson and shall not be the continuing orsurviving corporation or entity in such consolidation ormerger; or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each case,Parent (or its successor, as applicable), shall make proper provision so that the successors and assigns of the Surviving Corporation or theParent (as the case may be) honor the indemnification and other obligations set forth in thisSection 5.6. ThisSection 5.6 shall survive consummation of theMerger.

5.7Regulatory Approvals and Related Matters.

(a)     Each party shalluse reasonable best efforts tofile, as soon as practicable after the date of thisAgreement, all notices, reports and other documents required to be filed by such party with anyGovernmental Body with respect to theMerger and the otherContemplated Transactions, and to submit promptly any additional information requested by any suchGovernmental Body. Each of theCompany andParent shall give the other party prompt notice of the commencement or known threat of commencement of any Legal Proceeding by or before anyGovernmental Body with respect to theMerger or any of the otherContemplated Transactions, keep the other party reasonably informed as to the status of any suchLegal Proceeding or threat, and in connection with any such Legal Proceeding, each of theCompany orParent will permit authorizedRepresentatives of the other party to be present at each meeting or conference relating to any suchLegal Proceeding and to have access to and be consulted in connection with any document, opinion or proposal made or submitted to anyGovernmental Body in connection with any such Proceeding.

(b)     Subject to Section5.7(c),Parent,Merger Sub andthe Company shall use reasonable best efforts to take, or cause to be taken, all actions necessary or advisable to satisfy each of the conditions set forth inSection 6 and 7, consummate theMerger and make effective the otherContemplated Transactions (provided that no party shall be required to waive any of the conditions set forth inSection 6 or 7, as applicable, to its obligations to consummate theMerger and the otherContemplated Transactions). Without limiting the generality of the foregoing, but subject toSection 5.7(c), each party to thisAgreement: (i) shall make all filings (if any) and give all notices (if any) required to be made and given by such party in connection with theMerger and the otherContemplated Transactions; (ii) shalluse reasonable best efforts to obtain eachConsent (if any) required to be obtained (pursuant to any applicableLegal Requirement orContract, or otherwise) by such party in connection with theMerger or any of the otherContemplated Transactions; and (iii) shalluse reasonable best efforts to lift any restraint, injunction or other legal bar to theMerger.

72

(c)     Notwithstanding anything to the contrary contained in this Section5.7, neitherParent,Merger Sub or theCompany shall have any obligation under thisAgreement to divest or agree to divest (or cause any of its Subsidiaries to divest or agree to divest) any of its respective material businesses, material product lines or material assets, or to take or agree to take (or cause any of its Subsidiaries to take or agree to take) any other material action or agree (or cause any of its Subsidiaries to agree) to any material limitation or material restriction on any of its respective material businesses, material product lines or material assets.

5.8Disclosure. Parent and the Company shall cooperate with each other before issuing any press release or otherwise making any public statement regarding this Agreement or the Contemplated Transactions. The Company shall cooperate with Parent and consider the views and comments of Parent before any of the API Corporations or any of their Representatives sends any emails or other documents to the Company Associates generally or otherwise communicates with the Company Associates generally, with respect to the Merger or any of the other Contemplated Transactions. The Parent shall cooperate with the Company and consider the views and comments of the Company before any of the Luna Corporations or any of their Representatives sends any emails or other documents to the Parent Associates generally or otherwise communicates with the Parent Associates generally, with respect to the Merger or any of the other Contemplated Transactions. Notwithstanding the foregoing: (i) a party may issue any such press release or make any such public announcement or statement as may be required by any Legal Requirement or the rules and regulations of the NASDAQ Capital Market and the New York Stock Exchange MKT, as applicable, if it first notifies and consults with the other party hereto prior to issuing any such press release or making any such public announcement or statement; (ii) the Company need not consult with Parent in connection with any press release, public statement or filing to be issued or made with respect to any Acquisition Proposal relating to any API Corporation or any Company Change in Recommendation; and (iii) Parent need not consult with the Company in connection with any press release, public statement or filing to be issued or made with respect to any Acquisition Proposal relating to Parent or any Parent Subsidiaries or any Parent Change in Recommendation.

5.9     TaxMatters.

(a)     Each ofParent,Merger Sub and Company shall report theMerger on theirTax Returns as a “reorganization” within the meaning ofSection 368(a) of theCode.

(b)     Prior to the filing of the Form S-4 Registration Statement, the Company and Parent shall execute and deliver to Cooley LLP and to Tarter Krinsky & Drogin LLP tax representation letters in substantially the form attached to this Agreement asExhibits D andE, respectively. Following the delivery of the tax representation letters pursuant to the preceding sentence of this Section 5.9(b): (i) Parent shall use commercially reasonable efforts to cause Cooley LLP to deliver to it a tax opinion satisfying the requirements of Item 601 of Regulation S-K under the Securities Act; and (ii) the Company shall use commercially reasonable efforts to cause Tarter Krinsky & Drogin LLP to deliver to it a tax opinion satisfying the requirements of Item 601 of Regulation S-K under the Securities Act. In rendering such opinions, each of such counsel shall be entitled to rely on the tax representation letters referred to in this Section 5.9(b). Parent and Company, respectively, shall use their best efforts not to take or cause to be taken any action that would cause to be untrue (or fail to take or cause not to be taken any action which inaction would cause to be untrue) any of the representations included in the certificates described in this Section 5.9(b).

5.10     Listing. Parent shall use best efforts to cause the shares of Parent Common Stock to be issued in the Merger,including theParent Common Stock to be issued upon(a) the exercise of assumed and convertedCompany Options, and(b) the vesting of assumed and convertedCompany Restricted Stock, to be approved for listing (subject to notice of issuance) on the NASDAQ Capital Market at or prior to the Effective Time.

73

5.11Resignation of Officers and Directors. The Company shall use commercially reasonable efforts to obtain and deliver to Parent at or prior to the Effective Time the resignation of each officer and director of each of the API Corporations other than those continuing in office in accordance with Section 5.12 as officers and directors of the Surviving Corporation. Parent shall use commercially reasonable efforts to obtain and deliver to the Company at or prior to the Effective Time the resignation of each officer and director of each of the Luna Corporations other than those continuing in office in accordance with Section 5.12.

5.12     Board of Directors of the Combined Company; Management of the Combined Company.

(a)     The parties and theParent Board shall take all actions necessary to ensure that effective at theEffective Time (and if necessary to enable Mr. Pastor to serve for a term expiring at the Parent’s 2018 Annual Meeting of Stockholders, to take all actions necessary following the Effective Time to ensure that), theParent Board shall be expanded to seven seats and shall consist of three directors to be designated by theParent Board prior to theEffective Time, who shallinclude Richard W. Roedel as Chairman and a Class I director, Michael W. Wise as a Class II director and John B. Williamson, III as a Class II director, and three directors to be designated by theCompany Board prior to theEffective Time, who shallinclude Donald Pastor as a Class III director (and the Parent board shall, if necessary to enable Mr. Pastor to serve for a term expiring at the 2018 Annual Meeting of Stockholders, nominate Mr. Pastor for election or re-election at Parent’s 2015 Annual Meeting of Stockholders), Gary Spiegel as a Class II director and Ed J. Coringrato Jr. as a Class I director, each such director to hold office from and after theEffective Time until the earliest of appointment of his or her respective successor, resignation or proper removal.The Chief Executive Officer of Parent shall serve as a Class III director of theParent Board following theClosing, until the earliest of appointment of his successor or his resignation or proper removal. In the event that any director designated pursuant to this Section5.12(a) by theParent Board or theCompany Board is unwilling or unable to serve at theEffective Time, theParent Board or theCompany Board, respectively, shall designate a replacement for such director prior to theEffective Time.     

(b)     The parties and theParent Board shall take all actions necessary to ensure that effective at theEffective Time, the Chief Executive Officer ofParent shall continue to serve in such position and the other officers ofParent shall consist of such persons as are mutually agreed between theCompany andParent, each to hold office from and after theEffective Time until the earliest of appointment of his or her respective successor, resignation or removal. In the event that any such officer is unwilling or unable to serve at theEffective Time, theCompany andParent shall mutually agree upon a replacement prior to theEffective Time.

(c)     Prior to the Effective Time, Parent shall provide evidence reasonably satisfactory to the Company of the taking of such actions by the Parent Board as may be necessary to ensure the matters contemplated by Sections 5.12(a) and (b).

5.13     Section 16Matters.Subject to the following sentence, prior to the Effective Time, Parent and the Company shall take all such steps as may be required (to the extent permitted under applicable Legal Requirements and no-action letters issued by the SEC) to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the Contemplated Transactions by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, and the acquisition of Parent Common Stock (including derivative securities with respect to Parent Common Stock) by each individual who is or will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Parent, to be exempt under Rule 16b-3 under the Exchange Act. At least 10 days prior to the Closing Date, the Company shall furnish the following information to Parent for each Person who, immediately after the Effective Time, will become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Parent (to the extent then known): (a) the number of shares of Company Common Stock held by such Person and expected to be exchanged for shares of Parent Common Stock pursuant to the Merger; (b) the number of Company Options and Company Restricted Stock, held by such Person and expected to be assumed by Parent and converted or exercisable into shares of Parent Common Stock in connection with the Merger; (c) the number of other derivative securities (if any) with respect to Company Common Stock held by such Person and expected to be converted into shares of Parent Common Stock or derivative securities with respect to Parent Common Stock in connection with the Merger; and (d) the EDGAR codes for each such Person.

74

5.14Obligations ofMerger Sub.Parent shall take all action necessary to causeMerger Sub and, after theEffective Time, the Surviving Corporation to perform their respective obligations under thisAgreement and to consummate theContemplated Transactions upon the terms and subject to the conditions set forth in thisAgreement

5.15     Securityholder Litigation.

(a)     TheCompany shall give theParent the right toparticipate in the defense or settlement of any securityholder litigation against theCompany and/or theCompany Board relating to theContemplated Transactions. In no event shall theCompany enter into or agree to any settlement with respect to such securityholder litigation without theParent’s prior written consent (which consent shall notbe unreasonably withheld, conditioned or delayed).

(b)     TheParent shall give theCompany the right toparticipate in the defense or settlement of any securityholder litigation against theParent and/or theParent Board relating to theContemplated Transactions. In no event shall theParent enter into or agree to any settlement with respect to such securityholder litigation without theCompany’s prior written consent (which consent shall notbe unreasonably withheld, conditioned or delayed).

(c)     For purposes of thisSection 5.15, “participate” means that the non-litigating party will be kept reasonably apprised of proposed strategy and other significant decisions with respect to any securityholder litigation by the litigating party (to the extent the attorney-client privilege between the litigating party and its counsel is not undermined or otherwise affected), and the non-litigating party may offer comments or suggestions with respect to the litigation but will not be afforded any decision making power or authority over the litigation, except for the right to consent to any settlement as set forth in thisSection 5.15.

Section 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB

(lx)     The obligations ofParent andMerger Sub to effect theMerger and otherwise consummate theContemplated Transactions are subject to the satisfaction, at or prior to theClosing, of each of the following conditions:

6.1     Accuracy of Representations. Each of the representations and warranties of the Company shall have been accurate in all respects as of the date of this Agreement and shall be accurate in all respects as of the Closing Date as if made on and as of the Closing Date (except for any such representations and warranties made as of a specific date, which shall have been accurate in all respects as of such date);provided, however,that: (i) for purposes of determining the accuracy of such representations and warranties as of the foregoing dates: (A) all materiality qualifications limiting the scope of such representations and warranties shall be disregarded; and (B) any update of or modification to the Company Disclosure Schedule made or purported to have been made on or after the date of this Agreement shall be disregarded; and (ii) any inaccuracies in such representations and warranties, other than inaccuracies in representations and warranties in Section 2.4(f), Section 2.12(c) with respect to Company Material Contracts listed in Section 2.12(a)(xii), will be disregarded if all such inaccuracies (considered collectively) do not constitute, and would not reasonably be expected to have or result in, a Company Material Adverse Effect.

75

6.2Performance of Covenants. The covenants and obligations in this Agreement that the Company is required to comply with or to perform at or prior to the Closing shall have been complied with and performed in all material respects.

6.3     Effectiveness of Registration Statement. The Form S-4 Registration Statement shall have become effective in accordance with the provisions of the Securities Act; no stop order shall have been issued by the SEC and shall remain in effect with respect to the Form S-4 Registration Statement; and no proceeding seeking such a stop order shall have been initiated by the SEC and remain pending or shall be threatened by the SEC.

6.4     Stockholder Approval.

(a)     ThisAgreement shall have been duly adopted by theRequired Company Stockholder Vote.

(b)     The issuance of shares ofParent Common Stock in theMerger shall have been duly approved by theRequired Parent Stockholder Vote.

6.5     Opinion and Certificate. Parent and Merger Sub shall have received the following opinion and certificate, each of which shall be in full force and effect:

(a)     a written opinion of Cooley LLP, in form and substance reasonably acceptable toParent andMerger Sub, dated as of theClosing Date to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, for U.S. federal income tax purposes theMerger will constitute a “reorganization” within the meaning ofSection 368(a) of theCode. In rendering such opinion, Cooley LLP may rely upon customary assumptions and representations reasonably satisfactory to it,including representations set forth in certificates of officers ofParent,Merger Sub and Company, in substantially the forms attached hereto asExhibits DandE; provided, however, that the condition set forth in thisSection 6.5(a) shall not be waivable byParent orMerger Sub after adoption of thisAgreement by the holders of shares ofCompany Common Stock, unless further stockholder approval is obtained with appropriate disclosure; and

(b)     a certificate executed by the Chief Executive Officer of theCompany confirming that the conditions set forth in 6.1, 6.2, 6.4(a), and 6.6 have been duly satisfied.

6.6     NoCompanyMaterial Adverse Effect. Since the date of this Agreement, there shall not have occurred any Company Material Adverse Effect that has not been cured, and no event shall have occurred or circumstance shall exist that, in combination with any other events or circumstances, would reasonably be expected to have or result in a Company Material Adverse Effect.

76

6.7Governmental Approvals. AnyGovernmental Authorization or otherConsent required to be obtained with respect to theMerger under anyLegal Requirement shall have been obtainedand shall remain in full force and effect (other than any suchGovernmental Authorization orConsent under otherLegal Requirements, the failure to obtain which would notreasonably be expected to have a Company Material Adverse Effect or aParent Material Adverse Effect).

6.8     Listing. The shares of Parent Common Stock to be issued in the Merger, including the Parent Common Stock to be issued upon (a) the exercise of assumed and converted Company Options, and (b) the vesting of assumed and converted Company Restricted Stock, shall have been approved for listing (subject to notice of issuance) on the NASDAQ Capital Market.

6.9     No Restraints. No temporary restraining order, preliminary or permanent injunction or other Order preventing the consummation of the Merger shall have been issued by any court of competent jurisdiction or other Governmental Body and remain in effect, and there shall not be any Legal Requirement enacted or deemed applicable to the Merger that makes consummation of the Merger illegal.

6.10     No Governmental Litigation. There shall not be pending any Legal Proceeding in which a Governmental Body with jurisdiction over the parties is a party: (a) challenging or seeking to restrain, prohibit, rescind or unwind the consummation of the Merger or any of the other Contemplated Transactions; (b) seeking to prohibit or limit in any material respect Parent’s ability to vote, transfer, receive dividends with respect to or otherwise exercise ownership rights with respect to the stock of the Surviving Corporation; (c) relating to the Merger or the other Contemplated Transactions and that would reasonably be expected to materially and adversely affect the right or ability of Parent to own any of the material assets or materially limit the operation of the business of any of the API Corporations; (d) seeking to compel any of the API Corporations, Parent or any Subsidiary of Parent to dispose of or hold separate any material assets or material business as a result of the Merger or any of the other Contemplated Transactions; or (e) relating to the Merger or the other Contemplated Transactions and seeking to impose (or that would reasonably be expected to result in the imposition of) any criminal sanctions or criminal liability on Parent or any of the API Corporations.

6.11     FIRPTA Matters. The Company shall have delivered to Parent a statement described in Section 1.1445-2(c)(3)(i) of the United States Treasury Regulations certifying the interests in the Company are not U.S. real property interests.

6.12     Payoff Letters and Release of Encumbrances.The Company shall have delivered to Parent (i) payoff letters in a form reasonably acceptable to Parent with respect to Company Debt (other than SVB Debt) for borrowed money as of immediately prior to the Closing, and (ii) evidence that all Encumbrances relating to Company Debt (other than SVB Debt) for borrowed money as of immediately prior to the Closing have been removed.

Section 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY

The obligation of theCompany to effect theMerger and otherwise consummate theContemplated Transactions is subject to the satisfaction, at or prior to theClosing, of each of the following conditions:

7.1     Accuracy of Representations. Each of the representations and warranties of Parent and Merger Sub shall have been accurate in all respects as of the date of this Agreement and shall be accurate in all respects as of the Closing Date as if made on and as of the Closing Date (except for any such representations and warranties made as of a specific date, which shall have been accurate in all respects as of such date);provided, however,that: (i) for purposes of determining the accuracy of such representations and warranties as of the foregoing dates: (A) all materiality qualifications limiting the scope of such representations and warranties shall be disregarded; and (B) any update of or modification to the Parent Disclosure Schedule made or purported to have been made on or after the date of this Agreement shall be disregarded; and (ii) any inaccuracies in such representations and warranties, other than inaccuracies in representations and warranties in Section 3.12(c) with respect to Parent Material Contracts listed in Section 3.12(a)(xii), will be disregarded if all such inaccuracies (considered collectively) do not constitute, and would not reasonably be expected to have or result in, a Parent Material Adverse Effect.

77

7.2 Performance of Covenants. The covenants and obligations in this Agreement that Parent and Merger Sub are required to comply with or to perform at or prior to the Closing shall have been complied with and performed in all material respects.

7.3     Effectiveness of Registration Statement. The Form S-4 Registration Statement shall have become effective in accordance with the provisions of the Securities Act; no stop order shall have been issued by the SEC and shall remain in effect with respect to the Form S-4 Registration Statement; and no proceeding seeking such a stop order shall have been initiated by the SEC and remain pending or shall be threatened by the SEC.

7.4     Stockholder Approval.

(a)     ThisAgreement shall have been duly adopted by theRequired Company Stockholder Vote.

(b)     The issuance of shares ofParent Common Stock in theMerger shall have been duly approved by theRequired Parent Stockholder Vote and thisAgreement shall have been duly adopted byParent as the sole stockholder ofMerger Sub.

7.5     Opinion and Certificate. The Company shall have received the following opinion and certificate, each of which shall be in full force and effect:

(a)     a written opinion ofTarter Krinsky & Drogin LLP, in form and substance reasonably acceptable to theCompany, dated as of theClosing Date to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, for U.S. federal income tax purposes theMerger will constitute a “reorganization” within the meaning ofSection 368(a) of theCode. In rendering such opinion,Tarter Krinsky & Drogin LLP may rely upon customary assumptions and representations reasonably satisfactory to it,including representations set forth in certificates of officers ofParent,Merger Sub and Company, in substantially the forms attached hereto asExhibits D andE; provided, however, that the condition set forth in thisSection 7.5(a) shall not be waivable by theCompany after adoption of thisAgreement by the holders of shares ofCompany Common Stock, unless further stockholder approval is obtained with appropriate disclosure; and

(b)     a certificate executed by the Chief Executive Officer ofParent confirming that the conditions set forth inSections 7.1, 7.2, 7.4(b) and 7.6 have been duly satisfied.

7.6     NoParentMaterial Adverse Effect. Since the date of this Agreement, there shall not have occurred any Parent Material Adverse Effect that has not been cured, and no event shall have occurred or circumstance shall exist that, in combination with any other events or circumstances, would reasonably be expected to have or result in a Parent Material Adverse Effect.

78

7.7 Governmental Approvals. AnyGovernmental Authorization or otherConsent required to be obtained with respect to theMerger under anyLegal Requirement shall have been obtainedand shall remain in full force and effect (other than any suchGovernmental Authorization orConsent under otherLegal Requirements, the failure to obtain which would notreasonably be expected to have a Company Material Adverse Effect or aParent Material Adverse Effect).

7.8     Listing. The shares of Parent Common Stock to be issued in the Merger, including the Parent Common Stock to be issued upon (a) the exercise of assumed and converted Company Options, and (b) the vesting of assumed and converted Company Restricted Stock, shall have been approved for listing (subject to notice of issuance) on the NASDAQ Capital Market.

7.9     No Restraints. No temporary restraining order, preliminary or permanent injunction or other Order preventing the consummation of the Merger shall have been issued by any court of competent jurisdiction or other Governmental Body and remain in effect, and there shall not be any Legal Requirement enacted or deemed applicable to the Merger that makes consummation of the Merger illegal.

7.10   No Governmental Litigation. There shall not be pending any Legal Proceeding in which a Governmental Body with jurisdiction over the parties is a party: (a) challenging or seeking to restrain, prohibit, rescind or unwind the consummation of the Merger or any of the other Contemplated Transactions; (b) seeking to prohibit or limit in any material respect Parent’s ability to vote, transfer, receive dividends with respect to or otherwise exercise ownership rights with respect to the stock of the Surviving Corporation; (c) that would reasonably be expected to materially and adversely affect the right or ability of Parent or any of the API Corporations to own any of the material assets or materially limit the operation of the business of any of the API Corporations; (d) seeking to compel any of the API Corporations, Parent or any Subsidiary of Parent to dispose of or hold separate any material assets or material business as a result of the Merger or any of the other Contemplated Transactions; or (e) relating to the Merger or the other Contemplated Transactions and seeking to impose (or that would reasonably be expected to result in the imposition of) any criminal sanctions or criminal liability on Parent or any of the API Corporations.

Section 8.TERMINATION

8.1     Termination. This Agreement may be terminated prior to the Effective Time (whether before or after adoption of this Agreement by the respective stockholders of the Company and Merger Sub and whether before or after approval of the issuance of shares of Parent Common Stock in the Merger by Parent’s stockholders):

(a)     by mutual written consent ofParent and theCompany;

(b)     by eitherParent or theCompany if theMerger shall not have been consummated byAugust 31, 2015 (the “End Date”);provided, however, that a party shall not be permitted to terminate thisAgreement pursuant to thisSection 8.1(b) if the failure to consummate theMerger by theEnd Date is attributable to a failure on the part of such party to perform any covenant or obligation in this Agreement required to be performed by such party at or prior to the Effective Time;

(c)     by eitherParent or theCompany if a court of competent jurisdiction or otherGovernmental Body shall have issued a final and nonappealableOrder, or shall have taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting theMerger;provided, however,that a party shall not be permitted to terminate this Agreement pursuant to this Section 8.1(c) if such Order or other action is attributable to a failure on the part of such party to perform any covenant or obligation in this Agreement required to be performed by such party at or prior to the Effective Time;

79

(d)     by eitherParent or theCompany if: (i) theCompany Stockholders’ Meeting (including any adjournments and postponements thereof) shall have been held and completed and theCompany’s stockholders shall have taken a final vote on a proposal to adopt thisAgreement; and (ii) thisAgreement shall not have been adopted at theCompany Stockholders’ Meeting (and shall not have been adopted at any adjournment or postponement thereof) by theRequired Company Stockholder Vote;provided, however, that a party shall not be permitted to terminate thisAgreement pursuant to thisSection 8.1(d) if the failure to have thisAgreement adopted by theRequired Company Stockholder Vote is attributable to a failure on the part of such party to perform any covenant or obligation in this Agreement required to be performed by such party at or prior to the Effective Time;

(e)     by eitherParent or theCompany if: (i) theParent Stockholders’ Meeting (including any adjournments and postponements thereof) shall have been held and completed andParent’s stockholders shall have taken a final vote on the issuance of shares ofParent Common Stock in theMerger; and (ii) the issuance of shares ofParent Common Stock in theMerger shall not have been approved at theParent Stockholders’ Meeting (and shall not have been approved at any adjournment or postponement thereof) by theRequired Parent Stockholder Vote;provided, however, that a party shall not be permitted to terminate thisAgreement pursuant to thisSection 8.1(e) if the failure to have the issuance ofParent Common Stock in theMerger approved by theRequired Parent Stockholder Vote is attributable to a failure on the part of such party to perform any covenant or obligation in this Agreement required to be performed by such party at or prior to the Effective Time;

(f)     byParent (at any time prior to the adoption of thisAgreement by theRequired Company Stockholder Vote) if aCompany Triggering Event shall have occurred;

(g)     by theCompany (at any time prior to the approval of the issuance of shares ofParent Common Stock in theMerger by theRequired Parent Stockholder Vote) if aParent Triggering Event shall have occurred;

(h)     byParent (at any time prior to the approval of the issuance of the shares ofParent Common Stock in theMerger by theRequired Parent Stockholder Vote) in order to accept aParent Superior Offer and enter into aParent Specified Agreement related to aParent Superior Offer if (i) suchParent Superior Offer shall not have resulted from a material breach ofSection 4.4, and (ii) theParent Board, after satisfying the requirements ofSection 5.3(c)(i), shall have authorized theParent to enter into a binding written definitiveagreement providing for the consummation of a transaction constituting aParent Superior Offer (the “Parent Specified Agreement”) andParent shall have simultaneously paid theParent Termination Fee in accordance withSection 8.3;

(i)     by theCompany (at any time prior to the adoption of thisAgreement by theRequired Company Stockholder Vote) in order to accept aCompany Superior Offer and enter into aCompany Specified Agreement related to aCompany Superior Offer if (i) suchCompany Superior Offer shall not have resulted from a material breach ofSection 4.4, and (ii) theCompany Board, after satisfying the requirements ofSection 5.2(c)(i), shall have authorized theCompany to enter into a binding written definitiveagreement providing for the consummation of a transaction constituting aCompany Superior Offer (the “Company Specified Agreement”) and theCompany shall have simultaneously paid theCompany Termination Fee in accordance withSection 8.3;

80

(j)     byParent if: (i) any of theCompany’s representations and warranties contained in thisAgreement shall be inaccurate as of the date of thisAgreement such that the condition set forth inSection 6.1 would not be satisfied, or shall have become inaccurateas of a date subsequent to the date of thisAgreement (as if made on such subsequent date) such that the condition set forth inSection 6.1 would not be satisfied; or (ii) any of theCompany’s covenants or obligations contained in thisAgreement shall have been breached such that the condition set forth inSection 6.2 would not be satisfied;provided, however, that, for purposes of clauses “(i)” and “(ii)” above, if an inaccuracy in any of theCompany’s representations and warranties (as of the date of thisAgreement or as of a date subsequent to the date of thisAgreement) or a breach of a covenant or obligation by theCompany is curable by theCompany by theEnd Date and theCompany is continuing to exercise its reasonable best efforts to cure such inaccuracy or breach, thenParent may not terminate thisAgreement under thisSection 8.1(j) on account of such inaccuracy or breach unless such inaccuracy or breach shall remain uncured for a period of 30 days commencing on the date thatParent gives theCompany notice of such inaccuracy or breach; or

(k)     by theCompany if: (i) any ofParent’s representations and warranties contained in thisAgreement shall be inaccurate as of the date of thisAgreement such that the condition set forth inSection 7.1 would not be satisfied, or shall have become inaccurate as of a date subsequent to the date of thisAgreement (as if made on such subsequent date) such that the condition set forth inSection 7.1 would not be satisfied; or (ii) any ofParent’s covenants or obligations contained in thisAgreement shall have been breached such that the condition set forth inSection 7.2 would not be satisfied;provided, however, that, for purposes of clauses “(i)” and “(ii)” above, if an inaccuracy in any ofParent’s representations and warranties (as of the date of thisAgreement or as of a date subsequent to the date of thisAgreement) or a breach of a covenant or obligation byParent is curable byParent by theEnd Date andParent is continuing to exercise its reasonable best efforts to cure such inaccuracy or breach, then theCompany may not terminate thisAgreement under thisSection 8.1(k) on account of such inaccuracy or breach unless such inaccuracy or breach shall remain uncured for a period of 30 days commencing on the date that theCompany givesParent notice of such inaccuracy or breach.

8.2Effect of Termination. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall be of no further force or effect;provided, however, that: (i) this Section 8.2, Section 8.3 and Section 9 shall survive the termination of this Agreement and shall remain in full force and effect; (ii) the Confidentiality Agreement shall survive the termination of this Agreement and shall remain in full force and effect in accordance with its terms; and (iii) the termination of this Agreement shall not relieve any party from any liability for any willful and material inaccuracy in or breach of any representation, warranty, covenant, obligation or other provision contained in this Agreement. For purposes of this Section 8.2 and Section 8.3 below, “willful and material inaccuracy in or breach” shall mean a material inaccuracy or material breach of any material representation, warranty or covenant or otheragreement set forth in thisAgreement that is a consequence of an act or failure to act byParent, orMerger Sub or theCompany, as applicable, with the actual knowledge ofParent,Merger Sub or theCompany, as applicable, that the taking of such act or failure to take such act would cause or constitute a breach or inaccuracy of thisAgreement.

8.3     Expenses;Termination Fees.

(a)     Except as set forth in thisSection 8.3, all fees andexpenses incurred in connection with thisAgreement and theContemplated Transactions shall be paid by the party incurring suchexpenses, whether or not theMerger is consummated;provided, however, thatParent and theCompany shall share equally all out-of-pocket fees andexpenses, other than accountants’ and attorneys’ fees, incurred in connection with the filing, printing and mailing of theForm S-4 Registration Statement and theJoint Proxy Statement/Prospectus and any amendments or supplements thereto.

81

(b)     If thisAgreement is terminated: (i) byParent pursuant toSection 8.1(f); or(ii) by theCompany pursuant to Section8.1(i), or (iii) by theCompany orParent pursuant to Section8.1(d) following aCompany Change in Recommendation, then theCompany shall pay toParent, in cash at the time specified in the following sentence, a nonrefundable fee in the amount of $750,000 (the “Company Termination Fee”). TheCompany Termination Fee shall be paid as follows: (x) in the case of clause “(i)” of the preceding sentence or in the case of termination byParent in the case of clause “(iii)” of the preceding sentence,within two business days after termination of thisAgreement; and (y) in all other instances, simultaneously with theCompany’s termination of theAgreement. In addition, if thisAgreement is terminated by either theCompany orParent pursuant to Section 8.1(d) in the absence of aCompany Change in Recommendation, then theCompany shall pay toParent, in cash at the time specified in the following sentence, a nonrefundable fee in the amount ofParent’s andMerger Sub’sExpenses, but not to exceed $250,000 (the “Company Reimbursement Fee”). TheCompany Reimbursement Fee shall be paid within three (3)Business Days after the later of the termination of thisAgreement and the delivery of documentation of suchExpenses. For purposes of this paragraph(b) and the next paragraph(c), the “Expenses” of a party means all reasonable out-of-pocket documented fees and expenses (including all fees andexpenses of counsel, accountants, consultants, financial advisors and investment bankers) incurred by such party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution, financing and performance of thisAgreement and all other matters related to the transactions contemplated by thisAgreement.

(c)     If thisAgreement is terminated: (i) by theCompany pursuant to Section8.1(g), (ii) byParent pursuant toSection 8.1(h); or (iii) byParent or theCompany pursuant to Section8.1(e) following aParent Change in Recommendation, thenParent shall pay to theCompany, in cash at the time specified in the following sentence, a nonrefundable fee in the amount of $750,000 (the “Parent Termination Fee” and, together with theCompany Termination Fee, as applicable, a “Termination Fee”). TheParent Termination Fee shall be paid as follows: (x) in the case of clause “(i)” of the preceding sentence or in the case of termination by theCompany in the case of clause “(iii)” of the preceding sentence,within two business days after termination of thisAgreement and (y) in all other instances, simultaneously with Parent’s termination of this Agreement. In addition, if thisAgreement is terminated by either theCompany orParent pursuant to Section 8.1(e) in the absence of aParent Change in Recommendation, thenParent shall pay toCompany, in cash at the time specified in the following sentence, a nonrefundable fee in the amount of theCompany’sExpenses, but not to exceed $250,000 (the “Parent Reimbursement Fee”). TheParent Reimbursement Fee shall be paid within three (3)Business Days after the later of the termination of thisAgreement and the delivery of documentation of suchExpenses.

(d)     Notwithstanding any other provision of thisAgreement to the contrary, the parties agree that, except as provided in the last sentence of thisSection 8.3(d), the payments contemplated by thisSections 8.3 represent the sole and exclusive remedy of the parties and that, except for the payments expressly set forth in thisSection 8.3 and as provided in the last sentence of thisSection 8.3(d), each of the parties and their respectiveaffiliates shall have no liability, shall not be entitled to bring or maintain any other claim, action or proceeding against the other, shall be precluded from any other remedy against the other, at law or in equity or otherwise, and shall not seek to obtain any recovery, judgment or damages of any kind against the other (or any partner, member, stockholder, director, officer, employee, Subsidiary,affiliate, agent or other representative of such party or parties) in connection with or arising out of the termination of thisAgreement, any breach of or by any party giving rise to such termination or the failure of theMerger and the other transactions contemplated by thisAgreement to be consummated. The parties agree that if (i) the termination of thisAgreement resulted from thewillful and material inaccuracy in or breach of any representation, warranty, covenant, obligation or other provision contained in thisAgreement, (ii) aTermination Fee is payable pursuant to the terms of thisAgreement at or following a termination hereof and (iii)Parent or theCompany, as applicable, has (A) notified the other party that it is not accepting any suchTermination Fee payable toParent or theCompany hereunder and is waiving any right thereto, which notification and waiver shall occur, if at all, (1) at the time of such termination of thisAgreement by such party, if such party is the party terminating thisAgreement, or (2)within five business days following such termination of thisAgreement, if the other party is the party terminating thisAgreement, and (B) refunded suchTermination Fee in full to the party paying suchTermination Fee within five business days following payment thereof, if suchTermination Fee has been paid hereunder prior to such notification, then payment of theTermination Fee shall not represent the sole and exclusive remedy of the parties hereunder.

82

(e)     If a party fails to pay when due any amount payable by such party under thisSection 8.3, then: (i) such party shall reimburse the other party for all costs andexpenses (including reasonable fees and disbursements of counsel) incurred in connection with the collection of such overdue amount and the enforcement by the other party of its rights under thisSection 8.3; and (ii) such party shall pay to the other party interest on such overdue amount (for the period commencing as of the date such overdue amount was originally required to be paid through the date such overdue amount is actually paid to the other party in full) at a rate per annum equal to the lower of: (i) 350 basis points over the “prime rate” (as announced by Bank of America, N.A. or any successor thereto) in effect on the date such overdue amount was originally required to be paid; or (ii) the maximum rate permitted by applicableLegal Requirements.

Section 9.MISCELLANEOUS PROVISIONS

9.1     Amendment. This Agreement may be amended with the approval of the respective boards of directors of the Company and Parent and Merger Sub at any time (whether before or after the adoption of this Agreement by the respective stockholders of the Company and Merger Sub and whether before or after approval of the issuance of Parent Common Stock in the Merger by Parent’s stockholders);provided, however, that: (a) after any such adoption of this Agreement by the Company’s or Merger Sub’s respective stockholders, no amendment shall be made which by applicable Legal Requirements requires further approval of such respective stockholders without the further approval of such stockholders; and (b) after any such approval of the issuance of shares of Parent Common Stock in the Merger by Parent’s stockholders, no amendment shall be made which by law or regulation of the NASDAQ Capital Market requires further approval of Parent’s stockholders without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

9.2     Waiver.

(a)     No failure on the part of any party to exercise anypower, right, privilege or remedy under thisAgreement, and no delay on the part of any party in exercising anypower, right, privilege or remedy under thisAgreement, shall operate as a waiver of suchpower, right, privilege or remedy; and no single or partial exercise of any suchpower, right, privilege or remedy shall preclude any other or further exercise thereof or of any otherpower, right, privilege or remedy.

(b)     No party shall be deemed to have waived any claim arising out of thisAgreement, or anypower, right, privilege or remedy under thisAgreement, unless the waiver of such claim,power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

83

9.3No Survival of Representations and Warranties. None of the representations and warranties contained in this Agreement or in any certificate delivered pursuant to this Agreement shall survive the Merger.

9.4     Entire Agreement; Counterparts; Exchanges by Facsimile. This Agreement and the other agreements referred to herein constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among or between any of the parties with respect to the subject matter hereof and thereof;provided, however, that the Confidentiality Agreement shall not be superseded and shall remain in full force and effect in accordance with its terms (it being understood that no provision in the Confidentiality Agreement shall limit any party’s rights or remedies in the case of actual fraud). This Agreement may be executed and delivered by electronic transmission (e.g., via email with a PDF attachment) and in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument.

9.5     Applicable Law; Jurisdiction; Specific Performance; Remedies. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. In any action between any of the parties arising out of or relating to this Agreement or any of the Contemplated Transactions: (a) each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware; and (b) each of the parties irrevocably waives the right to trial by jury. Each of the parties hereto further agrees that, to the fullest extent permitted by applicable law, service of any process, summons, notice or document by U.S. registered mail to such Person’s respective address set forth in Section 9.9 will be effective service of process for any claim, action, suit or other proceeding in the Court of Chancery of the State of Delaware with respect to any matters to which it has submitted to jurisdiction as set forth in this paragraph. The parties hereto hereby agree that a final judgment in any such claim, suit, action or other proceeding will be conclusive, subject to any appeal, and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of thisAgreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of thisAgreement and to enforce specifically the terms and provisions of thisAgreement without the requirement for the posting of any bond, this being in addition to any other remedy to which they are entitled at law or in equity. All rights and remedies existing under thisAgreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

9.6     Disclosure Schedules. The Company Disclosure Schedule shall be arranged in separate parts corresponding to the numbered and lettered sections contained in Section 2. The Parent Disclosure Schedule shall be arranged in separate parts corresponding to the numbered and lettered sections contained in Section 3. For purposes of this Agreement: (a) each statement or other item of information set forth in the Company Disclosure Schedule is intended only to qualify and limit the representations, warranties, covenants and agreements of the Company contained in this Agreement and shall not be deemed to expand in any way the scope or effect of any such representations, warranties, covenants and agreements; and (b) each statement or other item of information set forth in the Parent Disclosure Schedule is intended only to qualify and limit the representations, warranties, covenants and agreements of Parent and Merger Sub contained in this Agreement and shall not be deemed to expand in any way the scope or effect of any such representations, warranties, covenants and agreements. The Company Disclosure Schedule andParent Disclosure Schedule shall each be delivered as of the date hereof, and no amendments or modifications thereto shall be made. Any purported update or modification to theCompany Disclosure Schedule orParent Disclosure Schedule after the date hereof shall be disregarded.

84

9.7Attorneys’ Fees. In any action at law or suit in equity to enforce this Agreement or the rights of any of the parties hereunder, the prevailing party in such action or suit shall be entitled to receive a reasonable sum for its attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.

9.8     Assignability; No Third Party Rights. This Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit of, the parties hereto and their respective successors and assigns;provided, however, that neither this Agreement nor any party’s rights or obligations hereunder may be assigned or delegated by such party without the prior written consent of the other parties, and any attempted assignment or delegation of this Agreement or any of such rights or obligations by any party without the prior written consent of the other parties shall be void and of no effect. Except as specifically provided in Section 5.6 and, following the Effective Time, except for the right of holders of Company Common Stock to receive shares of Parent Common Stock and any cash in lieu of fractional shares of Parent Common Stock in accordance with Section 1, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

9.9     Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent by nationally recognized overnight air courier (such as Federal Express), two business days after mailing; (c) if sent by facsimile transmission or e-mail before 5:00 p.m. Eastern Time, when transmitted and receipt is confirmed; (d) if sent by facsimile transmission or e-mail after 5:00 p.m. Eastern Time and receipt is confirmed, on the following business day; and (e) if otherwise actually personally delivered, when delivered, provided that such notices, requests, demands and other communications are delivered to the physical address, e-mail address or facsimile number set forth below, or to such other address as any party shall provide by like notice to the other parties to this Agreement:

if toParent orMerger Sub:

Luna Innovations Incorporated

One Riverside Circle, Suite 400

Roanoke, VA 24016

Tel: (540) 769-8400

Attention:General Counsel

E-mail: kemperf@lunainc.com

Facsimile: (540) 581-0951

with a copy (which shall not constitute notice) to:

Cooley LLP

500 Boylston St.

Boston, MA 02136

Tel: (617) 937-2319

Attention:Alfred Browne

E-mails: abrowne@cooley.com

Facsimile: (617) 937-2400

85

if to theCompany:

Advanced Photonix, Inc.

2925 Boardwalk Drive

Ann Arbor, MI 48104

Tel:(734) 864-5600

Attention:Chairman

E-Mail:     donpastor53@gmail.com

Facsimile: (734) 998-3474

with a copy (which shall not constitute notice) to:

Tarter Krinsky & Drogin LLP

1350 Broadway

New York, NY 10018

Tel: (212) 216-1177               

Attention:Landey Strongin, Esq.

E-mails:lstrongin@tarterkrinsky.com

Facsimile: (212) 216-8001

9.10Cooperation. The Company and Parent agree to cooperate fully with Parent and the Company, respectively, and to execute and deliver such further documents, certificates, agreements and instruments and to take such other actions as may be reasonably requested by Parent or the Company to evidence or reflect the Contemplated Transactions and to carry out the intent and purposes of this Agreement.

9.11     Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.

9.12     Construction.

(a)     For purposes of thisAgreement, whenever the context requires: the singular number shallinclude the plural, and vice versa; the masculine gender shallinclude the feminine and neuter genders; the feminine gender shallinclude the masculine and neuter genders; and the neuter gender shallinclude masculine and feminine genders.

(b)     The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of thisAgreement.

86

(c)     As used in thisAgreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

(d)     Except as otherwise indicated, all references in thisAgreement to “Sections,” “Exhibits” and “Schedules” are intended to refer toSections of thisAgreement andExhibits orSchedules to thisAgreement.

(e)     The bold-faced headings contained in thisAgreement are for convenience of reference only, shall not be deemed to be a part of thisAgreement and shall not be referred to in connection with the construction or interpretation of thisAgreement.

(f)     Any payment to be made pursuant hereto shall be made in U.S. dollars and by wire transfer of immediately available funds.

[Remainder of page intentionally left blank]

87

IN WITNESS WHEREOF, the parties have caused thisAgreement to be executed as of the date first above written.

LUNA INNOVATIONS INCORPORATED
By:	/s/ Dale Messick
Name:	Dale Messick
Title:	CFO

APIMERGER SUB, INC.
By:	/s/ Dale Messick
	Dale Messick
	President

ADVANCED PHOTONIX, INC.
By:	/s/ Richard D. Kurtz
Name:	Richard D. Kurtz
Title:	President and CEO

[Signature Page - Agreement and Plan of Merger and Reorganization]

88

EXHIBIT A

CERTAIN DEFINITIONS

For purposes of theAgreement (including thisExhibit A):

Acquisition Inquiry. “Acquisition Inquiry” shall mean an inquiry, indication of interest or request for information (other than an inquiry, indication of interest or request for information made or submitted byParent to the Company or by theCompany to Parent) thatwould reasonably be expected to lead to anAcquisition Proposal.

Acquisition Proposal. “Acquisition Proposal” shall mean any offer or proposal (other than an offer or proposal made or submitted byParent to the Company or by theCompany to Parent) contemplating or otherwise relating to anyAcquisition Transaction.

Acquisition Transaction. “Acquisition Transaction” with respect to anEntity shall mean any transaction or series of transactions (other than theContemplated Transactions) involving, directly or indirectly:

(a)     any merger, exchange, consolidation, business combination, issuance of securities, acquisition of securities, reorganization, recapitalization, takeover offer, tender offer, exchange offer or other similar transaction:(i) in which suchEntity or any of its Subsidiaries is a party and which would result in a third party, or the stockholders of that third party, beneficially owning 15% or more of any class of equity or voting securities of suchEntity or any of its Subsidiaries, or theEntity resulting from such transaction or the parent of suchEntity;(ii) in which aPerson or “group” (as defined in theExchange Act and the rules promulgated thereunder) ofPersons directly or indirectly acquires beneficial or record ownership of securities representing more than 15% of the outstanding securities of any class of voting securities of suchEntity or any of its Subsidiaries; or(iii) in which suchEntity or any of its Subsidiaries issues securities representing more than 15% of the outstanding securities of any class of voting securities of suchEntity or any of its Subsidiaries;

(b)     any sale, lease, exchange, transfer, exclusive license, acquisition or disposition of any business or businesses or assets of suchEntity or its Subsidiaries that constitute or account for 15% or more of the consolidated net revenues, or consolidated net income for the 12 full months immediately prior to the receipt of the relatedAcquisition Proposal or 15% or more of the fair market value of the consolidated assets of suchEntity or any of its Subsidiaries; or

(c)     any liquidation or dissolution of suchEntity or any of its Subsidiaries.

Affiliate. An “affiliate” of anyPerson means any otherPerson, that, directly or indirectly through one or more intermediaries, controls or iscontrolled by, or isunder common control with, suchPerson, and, for the purposes of this definition only, “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or activities of aPerson whether through the ownership of securities, bycontract or agency or otherwise.

Agreement. “Agreement” shall mean theAgreement and Plan ofMerger and Reorganization to which thisExhibit A is attached, as it may be amended from time to time.

API Corporations.“API Corporations” shall mean:(a) theCompany; and(b) each ofCompany’s Subsidiaries.

89

Business Day.A “Business Day” or “business day” means any day other than(i) a Saturday or a Sunday or(ii) a day on which commercial banking institutions are authorized or required by applicableLegal Requirements to be closed in Boston, Massachusetts.

COBRA. “COBRA” shall mean theConsolidated Omnibus Budget Reconciliation Act of 1985, as amended.

Code.“Code” shall mean the United States Internal Revenue Code of 1986, as amended.

Company Affiliate. “Company Affiliate” shall mean anyPerson under common control with any of theAPI Corporations within the meaning ofSection 414(b),Section 414(c),Section 414(m) orSection 414(o) of theCode, and the regulations issued thereunder.

Company Associate. “Company Associate” shall mean any current or former officer or other employee, or any individual who is a current or former independent contractor, consultant or director, of or to any of theAPI Corporations or of or to anyCompany Affiliate.

Company Audited Balance Sheet. “Company Audited Balance Sheet” shall mean the audited consolidated balance sheet of theCompany and its consolidated Subsidiaries as of March 31, 2014 included in theCompany’s Annual Report onForm 10-K for the year ended March 31, 2014.

Company Board.“Company Board” shall mean theCompany’s board of directors.

Company Common Stock. “Company Common Stock” shall mean the Class A Common Stock,$0.001 par value per share, of theCompany.

Company Contract. “Company Contract” shall mean anyContract:(a) to which any of theAPI Corporations is a party;(b) by which any of theAPI Corporations or anyCompany IP or any other asset of any of theAPI Corporations is or may become bound or under which any of theAPI Corporations has, or may become subject to, any obligation; or(c) under which any of theAPI Corporations has or may acquire any right or interest.

Company Contract Manufacturing Agreement.“Company Contract Manufacturing Agreement” means any manufacturing or supplyagreement with a manufacturer or supplier of raw materials, bulk product, final packaged doses, or any intermediate form of any drug product to which theCompany or any API Corporation is a party.

Company Debt. “Company Debt” means all indebtedness of the API Corporations for money borrowed, purchase money indebtedness and/or guarantees in connection with the foregoing or of third party indebtedness, all capital lease obligations, all notes and other instruments required under GAAP to be reflected on the Company’s financial statements as indebtedness (whether current or long-term), and all other obligations of the API Corporations required under GAAP to be reflected on the Company’s financial statements as indebtedness (whether current or long-term) or any fees, accrued interest, prepayment penalties or premiums related to the foregoing.

Company Disclosure Schedule. “Company Disclosure Schedule” shall mean theCompany Disclosure Schedule that has been prepared by theCompany in accordance with the requirements ofSection 9.6 of theAgreement and that has been delivered by theCompany toParent on the date of theAgreement.

90

Company Employee. “Company Employee” shall mean any director or any officer or other employee of any of theAPI Corporations.

Company Employee Agreement.“Company Employee Agreement” shall mean each management, employment, severance, retention, transaction bonus, change in control, consulting, relocation, repatriation or expatriationagreement or otherContract between:(a) any of theAPI Corporations; and(b) anyCompany Employee, other than any suchContract that is terminable “at will” (or following a notice period imposed by applicable law) without any obligation on the part of anyAPI Corporation to make any severance, termination, change in control or similar payment or to provide any benefit.

Company Employee Plan.“Company Employee Plan” shall mean each plan, program, policy, practice orContract providing for compensation, severance, termination pay, deferred compensation, performance awards, stock or stock-related awards, fringe benefits, change in control payments, sick pay, paid time off, vacation pay, retirement benefits or other benefits or remuneration of any kind, whether or not in writing and whether or not funded,including each “employee benefit plan,” within the meaning ofSection 3(3) of ERISA (whether or notERISA is applicable to such plan):(a) that is or has been maintained or contributed to, or required to be maintained or contributed to, by any of theAPI Corporations for the benefit of anyCompany Employee; or(b) with respect to which any of theAPI Corporations has or may incur or become subject to any liability or obligation;provided, however,that aCompany Employee Agreement shall not be considered aCompany Employee Plan.

Company Equity Award. “Company Equity Award” shall mean any form of compensation (including deferred compensation) that is or may be paid or settled inCompany Common Stock.

Company IP.“Company IP” shall mean:(a) allIntellectual Property Rights in or to theCompany Products; and(b) all otherIntellectual Property Rights andIntellectual Property with respect to which any of theAPI Corporations has (or purports to have) an ownership interest or an exclusive license or similar exclusive right.

Company Material Adverse Effect. “Company Material Adverse Effect” shall mean any effect, change, claim, event or circumstance (collectively, “Effect”) that, considered together with all otherEffects, is orwould reasonably be expected to be or to become materially adverse to, or has orwould reasonably be expected to have or result in a material adverse effect on the assets, liabilities (whether matured or unmatured, absolute or contingent, or otherwise), business, financial condition or results of operations of theAPI Corporations taken as a whole;provided, however, that, in no event shall anyEffects resulting from any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has occurred, aCompany Material Adverse Effect:(i) conditions generally affecting the industries in which theAPI Corporations operate or the U.S. or global economy as a whole, to the extent that such conditions do not have a disproportionate impact on theAPI Corporations taken as a whole;(ii) general conditions in the financial markets, and any changes therein (including any changes arising out of acts of terrorism, war, weather conditions or other force majeure events), to the extent that such conditions do not have a disproportionate impact on theAPI Corporations, taken as a whole;(iii) changes in the trading price or trading volume ofCompany Common Stock (it being understood, however, that except as otherwise provided in clauses “(i),” “(ii),” “(iv),” “(v)” or “(vi)” of this sentence, any Effect giving rise to or contributing to such changes in the trading price or trading volume of Company Common Stock may give rise to a Company Material Adverse Effect and may be taken into account in determining whether a Company Material Adverse Effect has occurred);(iv) changes inGAAP (or any interpretations ofGAAP) or Legal Requirements applicable toCompany or any of its Subsidiaries;(v) the failure to meet public estimates or forecasts of revenues, earnings of other financial metrics, in and of itself, or the failure to meet internal projections, forecasts or budgets of revenues, earnings or other financial metrics, in and of itself (it being understood, however, that, except as otherwise provided in clauses “(i),” “(ii),” “(iii),” or “(iv)” of this sentence, anyEffect giving rise to or contributing to any such failure may give rise to aCompany Material Adverse Effect and may be taken into account in determining whether aCompany Material Adverse Effect has occurred);(vi) any shareholder lawsuit arising from or relating to thisAgreement or theContemplated Transactions and relating to a breachof the fiduciary duties of the Company Board to the Company’s stockholders under applicable law; or(vii) Effects resulting directly from the announcement or pendency of thisAgreement or theContemplated Transactions.

91

Company Option Plans.“Company Option Plans” shall mean: (a) the Company’s 1997 Employee Stock Option Plan, (b) the Company’s 2000 Stock Option Plan, and (c) the Company’s 2007 Equity Incentive Plan, each as amended.

Company Options.“Company Options” shall mean options to purchase shares ofCompany Common Stock from theCompany (whether granted by theCompany pursuant to theCompany Option Plans, assumed by theCompany or otherwise).

Company Pension Plan. “Company Pension Plan” shall mean each:(a) Company Employee Plan that is an “employee pension benefit plan,” within the meaning ofSection 3(2) of ERISA; or(b) other occupational pension plan,including any final salary or money purchase plan.

Company Preferred Stock. “Company Preferred Stock” shall mean the Preferred Stock,$0.001 par value per share, of theCompany.

Company Product. “Company Product” shall mean any products owned by, or licensed to, any API Corporation, or which any API Corporation is currently marketing, selling, distributing, developing, manufacturing, using or holding for use (whether or not in collaboration with anotherPerson).

Company Restricted Stock.“Company Restricted Stock” shall mean each share of restrictedCompany Common Stock issued by theCompany, which is subject to vesting conditions and rights to repurchase or reacquire by theCompany, whether granted by theCompany pursuant to aCompany Option Plan, assumed by theCompany in connection with any merger, acquisition or similar transaction or otherwise issued or granted and whether vested or unvested.

Company Superior Offer. “Company Superior Offer” shall mean an unsolicited bona fide written offer by a third party to purchase or otherwise acquire all or substantially all of the outstanding shares ofCompany Common Stock (whether through a tender offer, merger or otherwise) or all or substantially all of the assets of theCompany (on a consolidated basis), that is determined by theCompany Board, in its good faith judgment, after consulting with its outside financial advisor and outside legal counsel, and after taking into account the terms and conditions of the offer,including the likelihood and anticipated timing of consummation and all other financial, regulatory, legal and other aspects of such offer,including any financing condition, to be more favorable from a financial point of view to theCompany’s stockholders than theMerger.

Company Triggering Event. A “Company Triggering Event” shall be deemed to have occurred if:(a) theCompany Board shall have failed to recommend that theCompany’s stockholders vote to adopt theAgreement, or shall have directly or indirectly withdrawn or modified in a manner adverse toParent theCompany Board Recommendation;(b) theCompany shall have failed toinclude in theJoint Proxy Statement/Prospectus theCompany Board Recommendation and a statement to theeffect that theCompany Board has determined and believes that thisAgreement and theMerger are advisable and fair to, and in the best interests of, theCompany and its stockholders;(c) the Company shall have effected a Company Change in Recommendation or(d) theCompany shall have breached, or shall have been deemed to have breached pursuant to the last sentence ofSection 4.4(a), in any material respectSection 4.4 orSection 5.2 of theAgreement.

92

Confidentiality Agreement.“Confidentiality Agreement” shall mean that certainNondisclosure Agreement dated effective October 1, 2014, between theCompany andParent.

Consent. “Consent” shall mean any approval, consent, ratification, permission, waiver or authorization (including anyGovernmental Authorization).

Contemplated Transactions.“Contemplated Transactions” shall mean theMerger and the other transactions contemplated by theAgreement, theCompany Stockholder Voting Agreements and theParent Stockholder Voting Agreements.

Contract. “Contract” shall mean any written, oral or otheragreement, contract, subcontract, lease, understanding, arrangement, instrument, note, option, warranty, purchaseorder, license, sublicense, insurance policy, benefit plan or legally binding commitment or undertaking of any nature.

DGCL.“DGCL” shall mean the Delaware General Corporation Law.

DOL.“DOL” shall mean the United States Department of Labor.

Encumbrance. “Encumbrance” shall mean any lien, pledge, hypothecation, charge, mortgage, easement, encroachment, imperfection of title, title exception, title defect, right of possession, lease, tenancy license, security interest,encumbrance, claim, physical infringement or interference, option, right of first refusal, preemptive right, community property interest or restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset (excluding for this purpose any restrictions imposed by generally applicableLegal Requirements).

Environmental Law.“Environmental Law” means any federal, state, local or foreignLegal Requirement relating to pollution worker safety, exposure of any individual toMaterials of Environmental Concern or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata),including anyLegal Requirement relating to emissions, discharges, releases or threatened releases ofMaterials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling ofMaterials of Environmental Concern.

Entity. “Entity” shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization orentity.

ERISA. “ERISA” shall mean theEmployee Retirement Income Security Act of 1974, as amended.

FDA.     “FDA” shall mean the U.S. Food and Drug Administration or any successorGovernmental Body thereto.

FDA Act.“FDA Act” shall mean the U.S. Federal Food, Drug,and Cosmetic Act, as amended.

93

Form S-4 Registration Statement. “Form S-4 Registration Statement” shall mean the registration statement on Form S-4 to be filed with theSEC byParent in connection with the issuance ofParent Common Stock in theMerger, as said registration statement may be amended prior to the time it is declared effective by theSEC.

GAAP.“GAAP” shall mean generally accepted accounting principles in the United States.

Government Bid. “Government Bid” shall mean any quotation, bid, offer or proposal made by theCompany which, if accepted or awarded, would result in aGovernment Contract.

Government Contract. “Government Contract” shall mean aContract,including purchase orders, amendments, supplements or modifications, between theCompany and(1) the U.S. Government or any Governmental Body,(2) any prime contractor of the U.S. Government or anyGovernmental Body or(3) any subcontractor (at any tier) with respect to anyContract described in clauses (1) or (2) of this definition.

Governmental Authorization. “Governmental Authorization” shall mean any:(a) permit, license, certificate, franchise, permission, variance, clearance, registration, qualification or authorization issued, granted, given or otherwisemade available by or under the authority of anyGovernmental Body or pursuant to any Legal Requirement; or(b) right under anyContract with anyGovernmental Body.

Governmental Body. “Governmental Body” shall mean any:(a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature;(b) federal, state, local, municipal, foreign or other government;(c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body orEntity and any court or other tribunal); or(d) self-regulatory organization (including theNASDAQ Capital Market and theNew York Stock Exchange MKT).

Health Care Laws.“Health Care Laws” shall mean(a) theFDA Act and the regulations promulgated thereunder,(b) thePublic Health Service Act (42 U.S.C. §201 et seq.), and the regulations promulgated thereunder,(c) all federal and state fraud and abuse laws,including the Federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(b)), the civilFalse Claims Act (31 U.S.C. §3729 et seq.), the administrative False ClaimsLaw (42 U.S.C. §1320a-7b(a)), the Anti-Inducement Law (42 U.S.C. §1320a-7a(a)(5)), the exclusion laws (42 U.S.C. §1320a-7), and the regulations promulgated pursuant to such statutes,(d) theHealth Insurance Portability and Accountability Act of 1996 (42 U.S.C. §§1320d et seq.), as amended by theHealth Information, Technology for Economic and Clinical Health Act of 2009, the regulations promulgated thereunder and comparable state laws,(e) theControlled Substances Act (21 U.S.C. §801 et seq.),(f) Titles XVIII (42 U.S.C. §1395 et seq.) and XIX (42 U.S.C. §1396 et seq.) of theSocial Security Act and the regulations promulgated thereunder, and(g) all applicable laws, rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions administered by theFDA and otherGovernmental Bodies that regulate the design, development, testing, studying, manufacturing, processing, storing, importing or exporting, licensing, labeling or packaging, distributing or marketing of pharmaceutical products, or related to kickbacks, patient or program charges, recordkeeping, claims process, documentation requirements, medical necessity, referrals, the hiring of employees or acquisition of services or supplies from those who have been excluded from government health care programs, quality, safety, privacy, security, licensure, accreditation or any other aspect of providing health care services.

Intellectual Property.“Intellectual Property” shall mean United States, foreign and international patents, patent applications,including provisional applications and utility models, statutory invention registrations, invention disclosures, inventions, trademarks, service marks, trade names, domain names,URLs, trade dress, logos and other source identifiers,including registrations and applications for registration thereof, together with the goodwill symbolized by any of the foregoing, copyrights,including registrations and applications for registration thereof, software, formulae, trade secrets, know-how, methods, processes, protocols, specifications, techniques, and other forms of technology (whether or not embodied in any tangible form andincluding all tangible embodiments of the foregoing, such as laboratory notebooks, samples, studies and summaries).

94

Intellectual Property Rights. “Intellectual Property Rights” shall mean all rights of the following types, which may exist or be created under the laws of any jurisdiction in the world:(a) rights associated with works of authorship,including exclusive exploitation rights, copyrights, moral rights and mask works;(b) trademark, trade name and domain name rights and similar rights;(c) trade secret rights;(d) patent and industrial property rights;(e) other proprietary rights inIntellectual Property; and(f) rights in or relating to registrations, renewals, extensions, combinations, divisions and reissues of, and applications for, any of the rights referred to in clauses “(a)” through “(e)” above.

IRS.“IRS” shall mean the United States Internal Revenue Service.

Joint Proxy Statement/Prospectus. “Joint Proxy Statement/Prospectus” shall mean the joint proxy statement/prospectus to be sent to theCompany’s stockholders in connection with theCompany Stockholders’ Meeting and toParent’s stockholders in connection with theParent Stockholders’ Meeting.

Knowledge of Parent. “Knowledge of Parent” or a similar phrase shall mean the actual knowledge of My E. Chung, Dale E. Messick,Scott A. Graeff and Talfourd H. Kemper, Jr.

Knowledge of the Company. “Knowledge of the Company” or a similar phrase shall mean the actual knowledge of Richard Kurtz, Jeffrey Anderson, Jean-Pierre Maufras, Robin Risser and Steve Williamson.

Legal Proceeding. “Legal Proceeding” shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or otherGovernmental Body or any arbitrator or arbitration panel.

Legal Requirement. “Legal Requirement” shall mean any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance,code, edict, decree, rule, regulation,order, award, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put intoeffect by or under the authority of anyGovernmental Body (or under the authority of theNASDAQ Capital Market and theNew York Stock Exchange MKT).

Luna Corporations.“Luna Corporations” shall mean:(a) Parent; and(b) each ofParent’s Subsidiaries,including Merger Sub.

Made Available. Any statement in theAgreement to theeffect that any information, document or other material has been “Made Available” shall mean that:(a) with respect to information, document or other material to which theCompany has givenParent access:(i) such information, document or material wasmade available by theCompany for review byParent orParent’s Representativesfor at least 10 business days prior to the date of theAgreement in the virtual data room maintained by theCompany with theIntraLinks Data Site in connection with the transactions contemplated by theAgreement; and(ii) Parent andParent’sRepresentatives had access to such information, document or material throughout such period of time; and(b) with respect to information, document or other material to whichParent has given theCompany access:(i) such information, document or material wasmade available byParent for review by theCompany or theCompany’s Representativesfor at least 10 business days prior to the execution of theAgreement in the virtual data room maintained byParent withData Site from Merrill Corporation in connection with the transactions contemplated by theAgreement; and(ii) theCompany and theCompany’s Representatives had access to such information, document or material throughout such period of time or(c) that such information was filed by theCompany orParent, as applicable, with theSEC was, asof at least 10 business days prior to the date of thisAgreement, publicly available on the SEC’s EDGAR database. As used in this definition of “Made Available”, the term “file” and variations thereof shall be broadly construed toinclude any manner in which a document or information is filed, furnished, submitted, supplied or otherwisemade available to theSEC or any member of its staff.

95

Materials of Environmental Concern. “Materials of Environmental Concern”include chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products and any other substance that is now or hereafter regulated by anyEnvironmental Law or that is otherwise a danger to health, reproduction or the environment.

Order.“Order” shall mean any order, writ, injunction, judgment or decree of aGovernmental Body of competent jurisdiction.

Parent Affiliate. “Parent Affiliate” shall mean anyPerson under common control with any of theLuna Corporations within the meaning ofSection 414(b),Section 414(c),Section 414(m) orSection 414(o) of theCode, and the regulations issued thereunder.

Parent Associate. “Parent Associate” shall mean any current or former officer or other employee, or any individual who is a current or former independent contractor, consultant or director, of or to any of theLuna Corporations or of or to anyParent Affiliate.

Parent Audited Balance Sheet. “Parent Audited Balance Sheet” shall mean the audited consolidated balance sheet of theParent and its consolidated Subsidiaries as of December 31, 2013 included in theParent’s Annual Report on Form 10-K for the year ended December 31, 2013.

Parent Board.“Parent Board” shall mean theParent’s board of directors.

Parent Common Stock. “Parent Common Stock” shall mean the Common Stock,$0.001 par value per share, ofParent.

Parent Contract. “Parent Contract” shall mean anyContract:(a) to which any of theLuna Corporations is a party;(b) by which any of theLuna Corporations or anyParent IP or any other asset of any of theLuna Corporations is or may become bound or under which any of theLuna Corporations has, or may become subject to, any obligation; or(c) under which any of theLuna Corporations has or may acquire any right or interest.

Parent Contract Manufacturing Agreement.“Parent Contract Manufacturing Agreement” means any manufacturing or supplyagreement with a manufacturer or supplier of raw materials, bulk product, final packaged doses, or any intermediate form of any drug product to which theParent or anyLuna Corporations is a party.

Parent Disclosure Schedule. “Parent Disclosure Schedule” shall mean theParent Disclosure Schedule that has been prepared byParent in accordance with the requirements ofSection 9.6 of theAgreement and that has been delivered byParent to theCompany on the date of theAgreement.

96

Parent Employee.“Parent Employee” shall mean any director or any officer or any other employee of any of theLuna Corporations.

Parent Employee Agreement.“Parent Employee Agreement” shall meanany management, employment, severance, retention, transaction bonus, change in control, consulting, relocation, repatriation or expatriationagreement or otherContract between:(a) any of theLuna Corporations; and(b) anyParent Employee, other than any suchContract that is terminable “at will” (or following a notice period imposed by applicable law) without any obligation on the part of anyLuna Corporations to make any severance, termination, change in control or similar payment or to provide any benefit.

Parent Employee Plan. “Parent Employee Plan” shall mean any plan, program, policy, practice orContract providing for compensation, severance, termination pay, deferred compensation, performance awards, stock or stock-related awards, fringe benefits, change in control payments, sick pay, paid time off, vacation pay, retirement benefits or other benefits or remuneration of any kind, whether or not in writing and whether or not funded,including each “employee benefit plan,” within the meaning of Section 3(3) ofERISA (whether or notERISA is applicable to such plan):(a) that is maintained or contributed to, or required to be maintained or contributed to, by any of theLuna Corporations for the benefit of anyParent Employee; or(b) with respect to which any of theLuna Corporations has or may incur or become subject to any liability or obligation;provided, however,that aParent Employee Agreement shall not be considered aParent Employee Plan.

Parent Equity Award. “Parent Equity Award” shall mean any form of compensation (including deferred compensation) that is or may be paid or settled inParent Common Stock.

Parent IP.“Parent IP” shall mean:(a) allIntellectual Property Rights in or to theParent Products; and(b) all otherIntellectual Property Rights andIntellectual Property with respect to which any of theLuna Corporations has (or purports to have) an ownership interest or an exclusive license or similar exclusive right.

Parent Material Adverse Effect.“Parent Material Adverse Effect” shall mean anyEffect that, considered together with all otherEffects, is orwould reasonably be expected to be or to become materially adverse to, or has orwould reasonably be expected to have or result in a material adverse effect on the assets, liabilities (whether matured or unmatured, absolute or contingent, or otherwise), business, financial condition or results of operations ofParent and its Subsidiaries taken as a whole;provided, however, that, in no event shall anyEffects resulting from any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has occurred, aParent Material Adverse Effect:(i) conditions generally affecting the industries in which theLuna Corporations operate or the U.S. or global economy as a whole, to the extent that such conditions do not have a disproportionate impact onParent and its Subsidiaries taken as a whole;(ii) general conditions in the financial markets, and any changes therein (including any changes arising out of acts of terrorism, war, weather conditions or other force majeure events), to the extent that such conditions do not have a disproportionate impact onLuna Corporations taken as a whole;(iii) changes in the trading price or trading volume ofParent Common Stock (it being understood, however, that, except as otherwise provided in clauses “(i),” “(ii),” “(iv),” “(v)” or “(vi)” of this sentence, anyEffect giving rise to or contributing to such changes in the trading price or trading volume ofParent Common Stock may give rise to aParent Material Adverse Effect and may be taken into account in determining whether aParent Material Adverse Effect has occurred);(iv) changes inGAAP (or any interpretations ofGAAP) or Legal Requirements applicable toParent or any of its Subsidiaries;(v) the failure to meet public estimates or forecasts of revenues, earnings of other financial metrics, in and of itself, or the failure to meet internal projections, forecasts or budgets of revenues, earnings or other financial metrics, in and of itself (it being understood, however, that, except as otherwise provided in clauses “(i),” “(ii),” “(iii),” or “(iv)” of this sentence, anyEffect giving rise to or contributing to any such failure may give rise to aParent Material Adverse Effect and may be taken into account in determining whether aParent Material Adverse Effect has occurred);(vi) any shareholder lawsuit arising from or relating to thisAgreement or theContemplated Transactions and relating to a breachof the fiduciary duties of the Parent Board to the Parent’s stockholders under applicable law; or(vii) Effects resulting directly from the announcement or pendency of thisAgreement or theContemplated Transactions.

97

Parent Option Plans.“Parent Option Plans” shall mean:(a) Parent’s 2003 Stock Plan, and(b) Parent’s 2006 Equity Incentive Plan, each as amended.

Parent Options. “Parent Options” shall mean options to purchase shares ofParent Common Stock fromParent (whether granted byParent pursuant to theParent Option Plans, assumed byParent or otherwise).

Parent Pension Plan. “Parent Pension Plan” shall mean each:(a) Parent Employee Plan that is an “employee pension benefit plan,” within the meaning of Section 3(2) ofERISA; or(b) other occupational pension plan,including any final salary or money purchase plan.

Parent Preferred Stock. “Parent Preferred Stock” shall mean the Preferred Stock,$0.001 par value per share, ofParent.

Parent Product. “Parent Product” shall mean any products owned by, or licensed to, anyLuna Corporations, or which anyLuna Corporations is currently marketing, selling, distributing, developing, manufacturing, using or holding for use (whether or not in collaboration with anotherPerson).   

Parent Restricted Stock.“Parent Restricted Stock” shall mean each share of restrictedParent Common Stock issued by theParent, which is subject to vesting conditions and rights to repurchase or reacquire byParent, whether granted by theParent pursuant to aParent Option Plan, assumed by theParent in connection with any merger, acquisition or similar transaction or otherwise issued or granted and whether vested or unvested.

Parent Rights Agreement. “Parent Rights Agreement” shall mean theAmended and Restated Investor Rights Agreement dated as of January 13, 2010 by and amongParent,Carilion Clinic and certain other stockholders of theParent.

Parent Superior Offer. “Parent Superior Offer” shall mean an unsolicited bona fide written offer by a third party to purchase or otherwise acquire all or substantially all of the outstanding shares ofParent Common Stock (whether through a tender offer, merger or otherwise) or all or substantially all of the assets ofParent (on a consolidated basis), that is determined by theParent Board, in its good faith judgment, after consulting with its outside financial advisor and outside legal counsel, and after taking into account the terms and conditions of the offer,including the likelihood and anticipated timing of consummation and all other financial, regulatory, legal and other aspects of such offer,including any financing condition, to be more favorable from a financial point of view toParent’s stockholders than theMerger.

Parent Triggering Event. A “Parent Triggering Event” shall be deemed to have occurred if:(a) theParent Board shall have failed to recommend thatParent’s stockholders vote to approve the issuance of shares ofParent Common Stock in theMerger, or shall have directly or indirectly withdrawn or modified in a manner adverse to theCompany theParent Board Recommendation;(b) Parent shall have failed toinclude in theJoint Proxy Statement/Prospectus theParent Board Recommendation and a statement to theeffect that theParent Board has determined and believes that thisAgreement and theMerger are advisable and fair to, and in the best interests of, theParent and its stockholders;(c) theParent shall have effected a Parent Change in Recommendation; or(d) Parent shall have breached, or shall have been deemed to have breached pursuant to the last sentence ofSection 4.4(b), in any material respectSection 4.4 orSection 5.3 of theAgreement.

98

Person. “Person” shall mean any individual,Entity orGovernmental Body.

Registered IP. “Registered IP” shall mean allIntellectual Property Rights that are registered, filed or issued with, by or under the authority of anyGovernmental Body,including all patents, registered copyrights, registered mask works and registered trademarks and all applications for any of the foregoing.

Regulatory Authorizations. “Regulatory Authorizations” shall mean any approval, clearances, authorizations, registrations, exemptions, certifications and licenses granted by anyGovernmental Body which administersHealth Care Laws,including theFDA and other equivalent agencies.

Release. “Release” means any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping or other releasing into the environment, whether intentional or unintentional.

Representatives. “Representatives” shall mean with respect to anEntity, the directors, officers, other employees, agents, attorneys, accountants, investment bankers, other advisors andrepresentatives of suchEntity.

Sarbanes-Oxley Act. “Sarbanes-Oxley Act” shall mean theSarbanes-Oxley Act of 2002, as it may be amended from time to time.

SEC.“SEC” shall mean the United States Securities and Exchange Commission.

Securities Act. “Securities Act” shall mean theSecurities Act of 1933, as amended.

Subsidiary. AnEntity shall be deemed to be a “Subsidiary” of anotherPerson if suchPerson directly or indirectly owns, beneficially or of record:(a) an amount of voting securities of or other interests in suchEntity that is sufficient to enable suchPerson to elect at least a majority of the members of suchEntity’s board of directors or other governing body; or(b) at least 50% of the outstanding equity, voting or financial interests in suchEntity.

SVB Debt.“SVB Debt” meansCompany Debt pursuant to that certainLoan and Security Agreement by and among Silicon Valley Bank, Company and Picometrix, LLC, dated as of January 31, 2012, as amended to date.

Tax.“Tax” shall mean any federal, state, local, foreign or other tax (including any incometax, franchisetax, capital gainstax, gross receiptstax, value-addedtax, surtax, estimatedtax, unemploymenttax, premiumtax, national health insurancetax, excisetax, ad valoremtax, transfertax, stamptax, salestax, usetax, propertytax, businesstax, licensetax, alternative or add-on minimumtax, withholdingtax or payrolltax), and any charge, fine, penalty or interest related to atax, imposed, assessed or collected by or under the authority of anyGovernmental Body.

Tax Return. “Tax Return” shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information, and any amendment or supplement to any of the foregoing, filed with or submitted to, or required to be filed with or submitted to, anyGovernmental Body in connection with the determination, assessment, collection or payment of anyTax or in connection with the administration, implementation or enforcement of or compliance with anyLegal Requirement relating to anyTax.

99

Other Defined Terms. In addition, each of the following terms shall have the meaning given to such term in the applicableSection of theAgreement listed opposite such term:

Term	Section
Agreement	Preamble
API Corporation Returns	2.17(a)
API Leased Real Property	2.10(b)
API Registered IP	2.11(a)(i)
Anti-Bribery Laws	2.15
Book Entry Shares	1.5(e)
Closing Date	1.3
Closing	1.3

Company Preamble

Company 401(k) Plan	5.5(b)
Company Board Recommendation	5.2(b)
Company Certifications	2.6(a)
Company Change in Recommendation	5.2(b)
CompanyExisting D&O Policy	5.6(a)(ii)
Company Indemnified Persons	5.6(a)(i)
Company Material Contract	2.12(a)
CompanyMaximum Premium	5.6(a)(ii)
Company Owned Real Property	2.10(a)
Company Reimbursement Fee	8.3(b)
Company SEC Documents	2.6(a)
Company Specified Agreement	8.1(i)
Company Stock Certificate	1.6
Company Stockholder Voting Agreements	Recitals
Company Stockholders’ Meeting	5.2(a)
Company Termination Fee	8.3(b)
Company Warrants	1.5(d)
Company’s Financial Advisor	2.26
Continuing Employees	5.5(a)
Effective Time	1.3
End Date	8.1(b)
Exchange Act	2.12(a)(i)
Exchange Agent	1.7(a)
Exchange Fund	1.7(a)
Exchange Ratio	1.5(a)(iii)
Luna Corporations Returns	3.17(a)
Luna Leased Real Property	3.10(b)
Luna Registered IP	3.11(a)(i)
Merger Sub	Preamble
Merger	Recitals
Parent Benefit Plans	5.5(c)
Parent Board Recommendation	5.3(b)
Parent Certifications	3.6(a)

100

Parent Change in Recommendation	5.3(b)
ParentExisting D&O Policy	5.6(b)(ii)
Parent Indemnified Persons	5.6(b)(i)
Parent Intervening Event	5.3(c)(ii)
Parent Material Contract	3.12(a)
Parent Maximum Premium	5.6(b)(ii)
Parent Owned Real Property	3.10(a)
Parent SEC Documents	3.6(a)
Parent Reimbursement Fee	8.3(c)
Parent Specified Agreement	8.1(h)
Parent Stockholder Voting Agreements	Recitals
Parent Stockholders’ Meeting	5.3(a)
Parent Termination Fee	8.3(c)
Parent	Preamble
Parent’s Financial Advisor	3.26
Pre-Closing Period	4.1
Required Company Stockholder Vote	2.24
Required Merger Sub Stockholder Vote	3.24
Required Parent Stockholder Vote	3.24
Surviving Corporation	1.1
Termination Fee	8.3(c)
WARN Act	2.18(k)

 101

AGREEMENTAND PLAN OF MERGER AND REORGANIZATION

among:

LUNA INNOVATIONS INCORPORATED,

a Delaware corporation;

API MERGER SUB, INC.,

a Delaware corporation; and

ADVANCED PHOTONIX, INC.,

a Delaware corporation

___________________________

Dated as of January 30, 2015 

___________________________

TABLEOF CONTENTS

			PAGE
Section 1.		DESCRIPTION OF TRANSACTION	1
	1.1	Merger of Merger Sub into the Company	1
	1.2	Effects of the Merger	1
	1.3	Closing; Effective Time	1
	1.4	Certificate of Incorporation and Bylaws; Directors and Officers.	2
	1.5	Conversion of Shares.	2
	1.6	Closing of the Company’s Transfer Books	3
	1.7	Exchange of Certificates.	4
	1.8	Tax Consequences	5
	1.9	Further Action	5
Section 2.		REPRESENTATIONS AND WARRANTIES OF THE COMPANY	5
	2.1	Subsidiaries; Due Organization; Etc.	6
	2.2	Certificate of Incorporation and Bylaws	6
	2.3	Authority; Binding Nature of Agreement	6
	2.4	Non-Contravention; Consents	6
	2.5	Capitalization, Etc.	7
	2.6	SEC Filings; Financial Statements.	9
	2.7	Absence of Changes	11
	2.8	Title to Assets	12
	2.9	Loans; Customers; Suppliers.	12
	2.10	Real Property; Leasehold.	13
	2.11	Intellectual Property.	14
	2.12	Contracts.	15
	2.13	Liabilities	19
	2.14	Compliance with Legal Requirements; Regulatory Matters.	19
	2.15	Certain Business Practices	20
	2.16	Governmental Authorizations.	20
	2.17	Tax Matters.	20
	2.18	Employee and Labor Matters; Benefit Plans.	22
	2.19	Environmental Matters.	25
	2.20	Insurance	26
	2.21	Transactions with Affiliates	26
	2.22	Legal Proceedings; Orders.	26
	2.23	Inapplicability of Section 203 of the DGCL and other Anti-takeover Statutes	27
	2.24	Vote Required	27
	2.25	Solvency	27
	2.26	Opinion of Financial Advisor	27
	2.27	Financial Advisor	27
	2.28	Disclosure	27
	2.29	Acknowledgement by the Company	28
Section 3.		REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB	28
	3.1	Subsidiaries; Due Organization; Etc.	28
	3.2	Certificate of Incorporation and Bylaws	29
	3.3	Authority; Binding Nature of Agreement	29
	3.4	Non-Contravention; Consents	29

TABLE OF CONTENTS

CONTINUED 

			PAGE
	3.5	Capitalization, Etc.	30
	3.6	SEC Filings; Financial Statements.	32
	3.7	Absence of Changes	33
	3.8	Title to Assets	35
	3.9	Loans; Customers; Suppliers.	35
	3.10	Real Property; Leasehold.	35
	3.11	Intellectual Property.	36
	3.12	Contracts.	38
	3.13	Liabilities	42
	3.14	Compliance with Legal Requirements; Regulatory Matters.	42
	3.15	Certain Business Practices	42
	3.16	Governmental Authorizations.	43
	3.17	Tax Matters.	43
	3.18	Employee and Labor Matters; Benefit Plans.	45
	3.19	Environmental Matters.	48
	3.20	Insurance	49
	3.21	Transactions with Affiliates	49
	3.22	Legal Proceedings; Orders.	49
	3.23	Inapplicability of Section 203 of the DGCL and other Anti-takeover Statutes	49
	3.24	Vote Required	50
	3.25	Solvency	50
	3.26	Opinion of Financial Advisor	50
	3.27	Financial Advisor	50
	3.28	Disclosure	50
	3.29	Valid Issuance	51
	3.30	Acknowledgement by Parent	51
	3.31	Merger Sub	51
Section 4.		CERTAIN COVENANTS OF THE PARTIES REGARDING OPERATIONS DURING THE PRE-CLOSING PERIOD	51
	4.1	Access and Investigation	51
	4.2	Operation of the Business of the API Corporations.	52
	4.3	Operation of the Business of the Luna Corporations.	55
	4.4	No Solicitation.	59
	4.5	SVB Debt Restructuring	61
Section 5.		ADDITIONAL COVENANTS OF THE PARTIES	61
	5.1	Registration Statement; Joint Proxy Statement/Prospectus.	61
	5.2	Company Stockholders’ Meeting.	62
	5.3	Parent Stockholders’ Meeting.	64
	5.4	Stock Options.	66
	5.5	Employee Benefits.	68
	5.6	Indemnification of Officers and Directors	69
	5.7	Regulatory Approvals and Related Matters.	71
	5.8	Disclosure	72
	5.9	Tax Matters.	72
	5.10	Listing	73
	5.11	Resignation of Officers and Directors	73

 ii.

TABLE OF CONTENTS

CONTINUED 

			PAGE
	5.12	Board of Directors of the Combined Company; Management of the Combined Company.	73
	5.13	Section 16 Matters	74
	5.14	Obligations of Merger Sub	74
	5.15	Securityholder Litigation.	74
Section 6.		CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB	75
	6.1	Accuracy of Representations	75
	6.2	Performance of Covenants	75
	6.3	Effectiveness of Registration Statement	75
	6.4	Stockholder Approval.	75
	6.5	Opinion and Certificate	75
	6.6	No Company Material Adverse Effect	76
	6.7	Governmental Approvals.	76
	6.8	Listing	76
	6.9	No Restraints	76
	6.10	No Governmental Litigation	76
	6.11	FIRPTA Matters	76
	6.12	Payoff Letters	76
Section 7.		CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY	76
	7.1	Accuracy of Representations	77
	7.2	Performance of Covenants	77
	7.3	Effectiveness of Registration Statement	77
	7.4	Stockholder Approval.	77
	7.5	Opinion and Certificate	77
	7.6	No Parent Material Adverse Effect	78
	7.7	Governmental Approvals.	78
	7.8	Listing	78
	7.9	No Restraints	78
	7.10	No Governmental Litigation	78
Section 8.		TERMINATION	78
	8.1	Termination	78
	8.2	Effect of Termination	80
	8.3	Expenses; Termination Fees.	81
Section 9.		MISCELLANEOUS PROVISIONS	82
	9.1	Amendment	82
	9.2	Waiver.	82
	9.3	No Survival of Representations and Warranties	83
	9.4	Entire Agreement; Counterparts; Exchanges by Facsimile	83
	9.5	Applicable Law; Jurisdiction; Specific Performance; Remedies	83
	9.6	Disclosure Schedules	83
	9.7	Attorneys’ Fees	84
	9.8	Assignability; No Third Party Rights	84
	9.9	Notices	84
	9.10	Cooperation	85
	9.11	Severability	85
	9.12	Construction.	86

iii.