AGREEMENT AND PLAN OF MERGER BY AND AMONG BASIN WATER, INC., BW ACQUISITION MERGER SUB, INC., BASIN WATER MPT, INC., MOBILE PROCESS TECHNOLOGY, CO., THE STOCKHOLDERS LISTED ON SCHEDULE A HERETO, AND THE STOCKHOLDERS REPRESENTATIVE

EXECUTION COPY

EXHIBIT 10.24

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

BASIN WATER, INC.,

BW ACQUISITION MERGER SUB, INC.,

BASIN WATER – MPT, INC.,

MOBILE PROCESS TECHNOLOGY, CO.,

THE STOCKHOLDERS LISTED ON SCHEDULE A HERETO,

AND

THE STOCKHOLDERS’ REPRESENTATIVE

AUGUST 31, 2007

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) entered into this 31st day of August 2007 by and among Basin Water, Inc., a Delaware corporation (the “ Parent ”), BW Acquisition Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent (“ Merger Sub ”), Basin Water—MPT, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent (“ NewCo ,” and together with Merger Sub and Parent, the “ Parent Parties ”), the Stockholders listed on Schedule A hereto (together the “ Stockholders ”), Mobile Process Technology, Co., an Arkansas corporation (the “ Company ”), and the Stockholders’ Representative (as defined in Section 3.09 hereof). Parent, Merger Sub, NewCo, Stockholders, Stockholders’ Representative and the Company are referred to collectively herein as the “ Parties .”

RECITALS:

WHEREAS, the Parties desire to enter into a transaction pursuant to which, among other things, (i) Merger Sub will merge (“ Merger I ”) with and into the Company, with the Company as the surviving corporation (the “ Intermediate Surviving Corporation ”), (ii) pursuant to Merger I, the existing shares of capital stock (the “ Shares ”) of the Company will be cancelled, and, in exchange therefor, the holders of the Company’s capital stock (the “ Stockholders ”) will receive (subject to certain adjustments) in the aggregate $6,652,732 of cash and 462,746 shares of Basin Common Stock (as defined below), the capital stock of Merger Sub will be cancelled and, in exchange therefor, Parent will receive shares of common stock of the Intermediate Surviving Corporation and the Intermediate Surviving Corporation will become a direct wholly owned subsidiary of Parent, (iii) the Intermediate Surviving Corporation will merge (“ Merger II ” and, together with Merger I, the “ Mergers ”) with and into NewCo, with NewCo as the surviving corporation (the “ Surviving Entity ”), and (iv) pursuant to Merger II, the existing shares of capital stock of the Intermediate Surviving Corporation will be cancelled and, in exchange therefor, Parent will receive shares of common stock of the Surviving Entity;

WHEREAS, the respective Boards of Directors of the Company, Merger Sub, NewCo and Parent have approved this Agreement and the Mergers and the related transactions contemplated hereby, upon the terms and subject to the conditions of this Agreement;

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Company has received an irrevocable written consent (the “ Stockholders’ Consent ”) from the Stockholders substantially in the form of Exhibit A (a true, correct and complete copy of which has been delivered to Parent) who in the aggregate hold all of the voting power represented by all of the outstanding shares of the Company Common Stock (as defined below), pursuant to which such Stockholders have (i) adopted this Agreement, and (ii) approved the Mergers and other transactions contemplated hereby;

WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated hereby; and

WHEREAS, the Parties intend for Merger I, taken together with Merger II, to be treated for federal income tax purposes as a reorganization described in Section 368(a) of the Code and for this Agreement (as defined below) to be treated as a plan of reorganization, as described in the Treasury Regulations promulgated thereunder.

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NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises made in this Agreement, and in consideration of the representations and warranties contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby mutually acknowledged, the Parties, intending to become legally bound, agree as follows:

ARTICLE I

MERGER I

Section 1.01 Merger I . Upon the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the Arkansas Code (the “ Arkansas Code ”) and the DGCL, Merger Sub, at the Merger I Effective Time, shall be merged with and into the Company. As a result of Merger I, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Intermediate Surviving Corporation.

Section 1.02 Effective Time of Merger I . Prior to the Closing, the Company shall prepare and on the Closing Date, upon satisfaction of the terms and conditions set forth herein, the Parties shall cause Merger I to be consummated by filing with the Secretary of State of the State of Arkansas and the Secretary of State of the State of Delaware a certificate of merger (the “ Merger I Certificate of Merger ”) executed in accordance with the relevant provisions of the DGCL and the Arkansas Code, and shall make all other filings or recordings required under the DGCL and the Arkansas Code, as applicable, in respect of Merger I. Merger I shall become effective at such time as the Merger I Certificate of Merger is duly filed with such Secretary of State of the State of Delaware and the Secretary of State of the State of Arkansas or at such other time as Parent and the Company shall agree and specify in the Merger I Certificate of Merger (the time Merger I becomes effective being the “ Merger I Effective Time ”).

Section 1.03 Effect of Merger I . Merger I shall have the effects as provided in the applicable provisions of the DGCL and the Arkansas Code. Without limiting the generality of the foregoing, at the Merger I Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Intermediate Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Intermediate Surviving Corporation.

Section 1.04 Certificate of Incorporation; Bylaws . At the Merger I Effective Time, the Certificate of Incorporation and the Bylaws of the Company shall become the Certificate of Incorporation and the Bylaws of the Intermediate Surviving Corporation, each as in effect immediately prior to the Merger I Effective Time.

Section 1.05 Directors and Officers . The directors of Merger Sub immediately prior to the Merger I Effective Time shall be the initial directors of the Intermediate Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Intermediate Surviving Corporation. The officers of Merger Sub immediately prior to the Merger I Effective Time shall be the initial officers of the Intermediate Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Intermediate Surviving Corporation.

ARTICLE II

MERGER II

Section 2.01 Merger II . Immediately following the consummation of Merger I, upon the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DGCL, at the Merger II Effective Time, the Intermediate Surviving Corporation shall be merged with and into NewCo. As a result of Merger II, the separate corporate existence of the Intermediate Surviving Corporation shall cease and NewCo shall continue as the Surviving Entity.

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Section 2.02 Effective Time of Merger II . Prior to the Closing, the Company shall prepare a certificate of merger (the “ Merger II Certificate of Merger ”) executed in accordance with the relevant provisions of the DGCL in respect of Merger II. On the Closing Date and immediately following the consummation of Merger I, upon satisfaction of the terms and conditions set forth in this Agreement, the Parties shall cause Merger II to be consummated by filing the Merger II Certificate of Merger with the Secretary of State of the State of Delaware, and shall make all other filings or recordings required under the DGCL in respect of Merger II. Merger II shall become effective at such time as the Merger II Certificate of Merger is duly filed with such Secretary of State of the State of Delaware or at such other time as Parent and the Company shall agree and specify in the Merger II Certificate of Merger, but shall in any event be on the same date as Merger I (the time Merger II becomes effective being the “ Merger II Effective Time ”).

Section 2.03 Effect of Merger II . Merger II shall have the effects as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, at the Merger II Effective Time, all the property, rights, privileges, powers and franchises of the Intermediate Surviving Corporation and NewCo shall vest in the Surviving Entity, and all debts, liabilities and duties of the Intermediate Surviving Corporation and NewCo shall become the debts, liabilities and duties of the Surviving Entity.

Section 2.04 Certificate of Incorporation; Bylaws . At the Merger II Effective Time, the Certificate of Incorporation and the Bylaws of NewCo shall become the Certificate of Incorporation and the Bylaws of the Surviving Entity, each as in effect immediately prior to the Merger II Effective Time.

Section 2.05 Directors and Officers . The directors of NewCo immediately prior to the Merger II Effective Time shall be the initial directors of the Surviving Entity, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Entity. The officers of NewCo immediately prior to the Merger II Effective Time shall be the initial officers of the Surviving Entity, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Entity.

Section 2.06 Tax Treatment . The Parties intend that, for federal income tax purposes, Merger I, taken together with Merger II, shall be treated as a reorganization described in Section 368(a) of the Code. Notwithstanding the foregoing, none of the Parent Parties or the Company shall have any liability to the Stockholders for the tax consequences of the Merger I (separately or taken together with Merger II) failing to qualify as a reorganization described in Section 368(a) of the Code.

ARTICLE III

CLOSING; MERGER CONSIDERATION

Section 3.01 Closing . Subject to the satisfaction or waiver of each of the conditions set forth in ARTICLE IX and ARTICLE X of this Agreement, the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Latham & Watkins LLP, 12636 High Bluff Drive, Suite 400, San Diego, California at 10:00 a.m. Pacific time, on or around September 14, 2007, or such other location, date and time as may be agreed upon by the parties (such date and time being called the “ Closing Date ”). At the Closing:

(a) The Stockholders and the Company shall deliver or cause to be delivered to the Parent, or the Exchange Agent, as applicable, the following:

(i) The Certificates and other documents as required by Section 3.06 ;

(ii) The certificates required by Section 9.02 and Section 9.03 ;

(iii) The resignations (or other evidence of necessary corporate action) referred to in Section 9.06 ;

(iv) All of the books, data, documents, instruments and other records relating to the Company including without limitation the original incorporation documents, foreign qualifications, bylaws, minute books, and stock record books;

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(v) The Asset Purchase Agreement (as defined in Section 3.08 ), duly executed by the Company and the Craft Entity (as defined in Section 3.08 );

(vi) The Escrow Agreement, duly executed by Parent, the Company and the Stockholders’ Representative;

(vii) The Lease Agreement (as defined in Section 9.11 ), duly executed by the Company and the Craft Entity (as defined in Section 3.08 ); and

(viii) Any other documents or deliverables required to be delivered pursuant to ARTICLE IX .

(b) The Parent shall deliver or cause to be delivered to the Stockholders or Exchange Agent, as applicable, the following:

(i) Stock certificates in respect of the Basin Common Stock and the cash portion of the Merger Consideration in accordance with Section 3.02 (other than the Indemnity Escrowed Funds and the Working Capital Escrowed Funds, which shall be delivered to the Escrow Agent, and the Company Transaction Expenses);

(ii) The Escrow Agreement, duly executed by the Parent; and

(iii) Any other documents or deliverables required to be delivered pursuant to ARTICLE X .

Section 3.02 Merger Consideration . The aggregate consideration to be paid by Parent for the Company Common Stock in accordance with the allocation set forth on Schedule A (the “ Merger Consideration ”) is (i) 462,746 shares (the “ Basin Shares ”) of its Common Stock, par value $0.001 per share (“ Basin Common Stock ”) and (ii) $6,652,732 (the “ Cash Consideration ”) , subject to the Estimated Cash Consideration Adjustment and the Final Cash Consideration Adjustment; provided , that, (x) One Million Two Hundred Fifty Thousand Dollars ($1,250,000) of the Merger Consideration (such amount, allocated to the Stockholders in accordance with the percentages set forth on Schedule A , the “ Indemnity Escrowed Funds ”) shall be deposited with an agent, which shall be a bank or a trust company organized under the laws of the United States of America or any of the States, having a combined capital and surplus of not less than $100,000,000 selected by the Parent and the Stockholders’ Representative, and which shall initially be Computershare Trust Company, N.A. (the “ Escrow Agent ”), to be held in an account (the “ Indemnity Escrow Account ”) and will be released along with any other property in the Indemnity Escrow Account in accordance with the terms of the escrow agreement in the form attached hereto as Exhibit B (the “ Escrow Agreement “) and ARTICLE XI hereof, (y) Seven Hundred Fifty Thousand Dollars ($750,000) of the Merger Consideration (such amount, allocated to the Stockholders in accordance with the percentages set forth on Schedule A , the “ Working Capital Escrowed Funds ”) shall be deposited with the Escrow Agent, to be held in an account (the “ Working Capital Escrow Account ”) and will be released along with any other property in the Indemnity Escrow Account in accordance with the terms of the Escrow Agreement and Section 3.03 hereof, and (z) Three Hundred Ninety-Two Thousand Six Hundred Fifty Dollars ($392,650) of the Merger Consideration shall be paid to certain financial and legal advisors to the Company in connection with the consummation of the transactions contemplated hereby (the “ Company Transaction Expenses ”).

Notwithstanding any other provision of this Agreement to the contrary, it is the intent of the parties that the consummation of Merger I and Merger II, taken together, as two intertwined steps of an overall pre-arranged transaction, qualify as a reorganization described in Section 368(a) of the Code. Furthermore, the parties agree that at the request of Company, the portion of the Merger Consideration consisting of Basin Common Stock may be increased and the Cash Consideration decreased by an amount deemed reasonably necessary by the Company to satisfy the “continuity of shareholder interest requirement” imposed by the Treasury Regulations promulgated under Section 368(a) of the Code.

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Section 3.03 Cash Consideration Adjustment . The Cash Consideration shall be subject to adjustment as follows:

(a) Estimated Closing Balance Sheet . At the Closing, the Company shall deliver to Parent an estimated closing balance sheet (the “ Estimated Closing Balance Sheet ”), including a calculation of Working Capital. “ Working Capital “ shall mean the Company’s current assets less the Company’s current liabilities, in each case as reflected on the relevant balance sheet; it being understood that the amounts to be paid after the Closing to the employees of the Company listed on Schedule 3.03(a) (“ Retention Bonuses ”) shall be treated as a current liability for purposes of the calculation of Working Capital, even if not so treated in the Company Financial Statements. “ Target Working Capital ” shall be equal to negative One Hundred Fifty-Seven Thousand Seven Hundred Eighty-Five Dollars, or $(157,785). The Cash Consideration paid at Closing shall be adjusted as follows (the “ Estimated Cash Consideration Adjustment ”):

(i) To the extent that the calculation of Working Capital in the Estimated Closing Balance Sheet is greater than the Target Working Capital, the Cash Consideration paid at Closing shall be increased by such difference. Such additional Cash Consideration shall be allocated to the Stockholders in accordance with the percentages set forth on Schedule A .

(ii) To the extent that the calculation of Working Capital in the Estimated Closing Balance Sheet is less than the Target Working Capital, the Cash Consideration paid at Closing shall be decreased by such difference. The remaining Cash Consideration shall be allocated to the Stockholders in accordance with the percentages set forth on Schedule A , with final amounts to be agreed upon by Parent and the Stockholders’ Representative.

(b) Final Closing Balance Sheet . Parent shall have the right to audit the Estimated Closing Balance Sheet, including the calculation of Working Capital, within sixty (60) calendar days of delivery of the Estimated Closing Balance Sheet. Within sixty (60) calendar days after the Closing Date, the Parent and the Company shall cause an independent accounting firm acceptable to the Parent and Stockholders’ Representative to prepare and deliver to Parent and Stockholders’ Representative an audited balance sheet of the Company as of the Closing Date (the “ Final Closing Balance Sheet ”), which shall be prepared on the same basis and in the same form as the Estimated Closing Balance Sheet. After delivery of the Final Closing Balance Sheet, the Cash Consideration delivered as of the Closing shall be adjusted as follows (the “ Final Cash Consideration Adjustment ”):

(i) To the extent that the calculation of Working Capital in the Final Closing Balance Sheet is greater than the calculation of Working Capital set forth in the Estimated Closing Balance Sheet, Parent shall pay to Stockholders’ Representative (for distribution to the Stockholders) such difference. In addition, as of the time of such payment, all Working Capital Escrowed Funds and any other property held in the Working Capital Escrow Account shall be distributed to the Stockholders’ Representative (for distribution to the Stockholders).

(ii) To the extent that the calculation of Working Capital in the Final Closing Balance Sheet is less than the calculation of Working Capital set forth in the Estimated Closing Balance Sheet, the difference shall be delivered to Parent from the Working Capital Escrow Account pursuant to the terms of the Escrow Agreement and this Section 3.03 . To the extent such difference in the Estimated Closing Balance Sheet from the Final Closing Balance Sheet exceeds the Working Capital Escrowed Funds held in the Working Capital Escrow Account, the Stockholders’ Representative shall deliver such excess amounts to Parent on behalf of the Stockholders. To the extent such difference in the Estimated Closing Balance Sheet from the Final Closing Balance Sheet is less than the Working Capital Escrowed Funds held in the Working Capital Escrow Account, after payment of the difference to Parent, the remaining funds held in the Working Capital Escrow Account shall be distributed to the Stockholders’ Representative (for distribution to the Stockholders).

(c) Final Closing Balance Sheet; Binding . Subject to clause (d) of this Section 3.03 , the Final Closing Balance Sheet delivered to the Parent and Stockholders’ Representative shall be deemed to be and shall be final, binding and conclusive on the parties hereto.

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(d) Disputes . Stockholders’ Representative may dispute any amounts reflected on the Final Closing Balance Sheet; provided , however , that Stockholders’ Representative shall have notified the Parent in writing of each disputed item, specifying the estimated amount thereof in dispute and setting forth, in reasonable detail, the basis for such dispute, within twenty (20) calendar days of the Parent’s delivery of the Final Closing Balance Sheet to Stockholders’ Representative. In the event of such a dispute, Stockholders’ Representative and the Parent shall use reasonable efforts to resolve such dispute, provided that if such dispute is not resolved within fifteen (15) calendar days of Stockholders’ Representative’s notice to Parent set forth above, the parties shall submit the items in dispute for resolution to an independent accounting firm of national reputation mutually acceptable to Stockholders’ Representative and the Parent (the “ Independent Accounting Firm ”), which shall, within thirty (30) calendar days after such submission, determine and report to Stockholders’ Representative and the Parent upon such remaining disputed items, and such report shall be final, binding and conclusive on Stockholders’ Representative and the Parent. The fees and disbursements of the Independent Accounting Firm shall be allocated between Stockholders’ Representative and the Parent in the same proportion that the aggregate amount of such disputed items so submitted to the Independent Accounting Firm that is unsuccessfully disputed by each such party (as finally determined by the Independent Accounting Firm) bears to the total amount of such remaining disputed items so submitted.

(e) Final Cash Consideration Adjustment . The Final Closing Balance Sheet shall be deemed final for the purposes of this Section 3.03 upon the earlier of (x) the failure of Stockholders’ Representative to notify the Parent of a dispute within twenty (20) calendar days following the Parent’s delivery of the Final Closing Balance Sheet to Stockholders’ Representative, and (y) the resolution of all disputes, pursuant to Section 3.03(d) , by the Independent Accounting Firm. Within fifteen (15) calendar days after the Final Closing Balance Sheet is deemed final, (i) in the case of Section 3.03(b)(i) , the Parent shall pay to Stockholders’ Representative the requisite dollar amount, if any, required pursuant to Section 3.03(b) and (ii) in the case of Section 3.03(b)(ii) , the requisite dollar amount shall be delivered to Parent from the Working Capital Escrow Account or the Stockholders’ Representative, as required by Section 3.03(b)(ii). Notwithstanding anything foregoing to the contrary, Stockholders shall be jointly and severally liable for any amounts due to Parent from Stockholder Representative under this Section 3.03 to the extent the Working Capital Escrowed Funds are insufficient for payment of such requisite dollar amount; provided , however , if the amount owed to Parent is greater than the Working Capital Escrowed Funds nothing hereunder shall limit Parent from obtaining the entire amount owed to Parent from Stockholders’ Representative.

(f) Cooperation . The parties agree and undertake to provide each other with reasonable access to the Company’s books and records and personnel to the extent reasonably necessary to assist in the preparation of the statements referred to in this Section 3.03 .

Section 3.04 Effect of Merger I on the Capital Stock of the Company and Merger Sub . As of the Merger I Effective Time, by virtue of Merger I and without any action on the part of the holder of any shares of Company Common Stock or any shares of capital stock of Merger Sub:

(a) Capital Stock of Merger Sub . Each issued and outstanding share of capital stock of Merger Sub shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.001 per share, of the Intermediate Surviving Corporation.

(b) Cancellation of Treasury Stock . Each share of Company Common Stock that is owned by the Company or by a wholly owned subsidiary of the Company shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(c) Conversion of Company Common Stock . The issued and outstanding shares of Company Common Stock (other than shares to be canceled in accordance with this Section 3.04 ) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to the Merger Consideration as set forth on Schedule A . As of the Merger I Effective Time, all such shares of Company

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Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive, upon the surrender of such certificates, (i) cash that constitutes part of the Merger Consideration, (ii) certificates representing the shares of Basin Common Stock that constitute part of the Merger Consideration and (iii) any cash in lieu of fractional shares of Basin Common Stock to be issued or paid in consideration therefor.

Section 3.05 Effect of Merger II on Capital Stock of Intermediate Surviving Corporation and on the Capital Stock of NewCo . As of the Merger II Effective Time, by virtue of Merger II and without any action on the part of the holder of any shares of capital stock of the Intermediate Surviving Corporation or any capital stock of NewCo:

(a) Capital Stock of Intermediate Surviving Corporation . Each issued and outstanding share of capital stock of the Intermediate Surviving Corporation shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Entity.

(b) Capital Stock of NewCo . Each issued and outstanding share of capital stock of NewCo shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Entity.

Section 3.06 Exchange of Certificates .

(a) Exchange Agent . Immediately following the Merger I Effective Time, Parent shall deposit with Computershare Trust Company, N.A. or such other bank or trust company as may be designated by Parent and the Company (the “ Exchange Agent ”), for the benefit of the Stockholders, for exchange in accordance with this ARTICLE III , through the Exchange Agent, or deliver to the Stockholders’ Representative, certificates representing 462,746 shares of Basin Common Stock issuable pursuant to Section 3.04(c) .

(b) Exchange Procedures . As soon as reasonably practicable after the consummation of the Mergers, the Parties shall or shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates (the “ Certificates ”) which immediately prior to the Merger I Effective Time represented outstanding shares of Company Common Stock, other than shares to be canceled or retired in accordance with Section 3.04(b) , (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of Basin Common Stock and cash which constitute the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Basin Common Stock which such holder has the right to receive and cash, in accordance with the allocation set forth on Schedule A , pursuant to the provisions of this ARTICLE III (and the Certificate so surrendered shall forthwith be canceled). Until surrendered as contemplated by this Section 3.06(b) , each Certificate shall be deemed at any time after the Merger I Effective Time to represent only the right to receive Merger Consideration upon such surrender.

(c) Distributions with Respect to Unexchanged Shares . No dividends or other distributions with a record date after the Merger I Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Basin Common Stock issuable as Merger Consideration represented thereby until the surrender of such Certificate in accordance with this ARTICLE III . Subject to the effect of applicable laws (the “ Applicable Laws ”), following surrender of any Certificate, there shall be paid to the holder of the certificate representing whole shares of Basin Common Stock in respect of Merger Consideration issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Merger I Effective Time theretofor paid with respect to such whole shares of Basin Common Stock.

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(d) No Further Ownership Rights in Company Common Stock . All shares of Basin Common Stock issued upon the surrender for exchange of Certificates in accordance with the terms of this ARTICLE III (including any cash paid pursuant to Section 3.06(e) ) shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the shares of Company Common Stock theretofore represented by such Certificates, and there shall be no further registration of transfers on the stock transfer books of the Intermediate Surviving Corporation of the shares of Company Common Stock which were outstanding immediately prior to the Merger I Effective Time. If, after the Merger I Effective Time, Certificates are presented to the Intermediate Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this ARTICLE III , except as otherwise provided by Law.

(e) No Fractional Shares . No certificates or scrip representing fractional shares of Basin Common Stock shall be issued upon the surrender for exchange of Certificates. In lieu of any such fractional interests, each holder of shares of Company Common Stock exchanged pursuant this ARTICLE III who would otherwise have been entitled to receive a fraction of a share of Basin Common Stock (after taking into account all shares of Basin Common Stock to which such holder is entitled pursuant to Section 3.06(b) shall be entitled to receive cash (without interest) in an amount equal to the product of such fractional part of a share of Basin Common Stock multiplied by $10.65.

(f) Termination of Exchange Fund . Any Basin Common Stock which remains undistributed to the holders of Certificates for six months after the Merger I Effective Time shall be delivered to Parent, upon demand, and any holders of Certificates who have not theretofore complied with this ARTICLE III shall thereafter look only to Parent for payment of their claim for Merger Consideration.

(g) No Liability . None of Parent, Merger Sub, the Company, the Intermediate Surviving Corporation, Newco, the Surviving Entity or the Exchange Agent shall be liable to any Person in respect of any shares of Basin Common Stock (or dividends or distributions with respect thereto) delivered by the Exchange Agent to a public official pursuant to any applicable abandoned property, escheat or similar Applicable Law.

(h) Lost Certificates . In the event that any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in such reasonable amount as Parent may determine as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate, Basin Common Stock and cash in respect of Merger Consideration, and any unpaid dividends or distributions with respect to Basin Common Stock, to which they are entitled pursuant to this Agreement.

Section 3.07 Withholdings . Parent, the Exchange Agent, and Merger Sub shall be entitled to, or shall cause the Company to, deduct and withhold from the consideration otherwise payable to any party pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to such payment under the Code and the rules and regulations promulgated thereunder, or under any provision of Tax Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the party in respect of which such deduction and withholding was made.

Section 3.08 Certain Excluded Assets and Liabilities . Prior to or simultaneous with the Merger I Effective Time, pursuant to an Agreement for Sale and Purchase of Real Property among the Company, the Stockholders and Craft Real Estate, LLC, a Tennessee limited liability company (the “ Craft Entity ”), substantially in the form attached hereto as Exhibit C (the “ Asset Purchase Agreement ”), the Company Affiliate shall (i) acquire the assets of the Company which are listed on Schedule 3.08(i) (the “ Excluded Assets ”), and (ii) assume the liabilities of the Company which are listed on Schedule 3.08(ii) (the “ Excluded Liabilities ”), provided that the Company Affiliate may elect at its option to pay or otherwise discharge any of the Excluded Liabilities as of the Merger I Effective Time. “ Affiliate ” with respect to any person, means any person directly or indirectly controlling, controlled by or under common control with, another person. It is understood by all parties to this Agreement that, as of the Merger I Effective Time, neither Parent nor the Company shall have the title to or ownership of any Excluded Assets, nor shall Parent or the Company have any responsibility for or obligation with respect to the Excluded Liabilities.

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Section 3.09 Appointment of Representative .

(a) In order to efficiently administer the transactions contemplated hereby, including the defense and/or settlement of any claims for which the Stockholders may be required to indemnify the Parent Indemnified Parties pursuant to this Agreement, the Stockholders hereby agree to the appointment of Frank S. Craft as the Stockholders’ Representative (the “ Stockholders’ Representative “). The Stockholders’ Representative is hereby authorized to take any and all action as is contemplated to be taken by the Stockholders by the terms of this Agreement, provided that, the Stockholders’ Representative shall not consent to the entry of any judgment or enter into any settlement which affects or binds any of the Stockholders without the prior written consent of such Stockholder (which consent shall not be unreasonably withheld). All decisions and actions by the Stockholders’ Representative shall be binding upon all of the Stockholders and no Stockholder shall have the right to object, dissent, protest or otherwise contest the same. By their execution of this Agreement, the Stockholders agree that:

(i) the Parent shall be able to rely exclusively on the instructions and decisions of the Stockholders’ Representative as to the settlement of claims for indemnification by the Parent pursuant to this Agreement, or any other actions taken by the Stockholders’ Representative hereunder, and no party hereunder shall have any cause of action against the Parent in reliance upon the instructions or decisions of the Stockholders’ Representative;

(ii) to the extent this Agreement requires that Parent give notice to or seek the consent of Stockholders with respect to any matter referred to herein, the Parent shall be entitled to give such notice to or seek such consent from the Stockholders’ Representative;

(iii) all actions, decisions and instructions of the Stockholders’ Representative shall be final, conclusive and binding upon the Stockholders;

(iv) the provisions of this Section 3.09 are irrevocable and coupled with an interest, and shall be enforceable notwithstanding any rights or remedies that any Stockholder may have in connection with the transactions contemplated by this Agreement;

(v) the provisions of this Section 3.09 shall be binding upon the executors, heirs, legal representatives, successors and assigns of each Stockholder, and any references in this Agreement to a Stockholder shall mean and include the successors to the Stockholders’ rights hereunder, whether pursuant to testamentary disposition, the laws of descent and distribution or otherwise; and

(vi) in case of the resignation or the death or inability to act of Frank S. Craft, a successor shall be named by Stockholders holding more than fifty percent (50%) of the Shares of the Company prior to the Closing.

(b) The term “ Stockholders’ Representative “ as used herein shall be deemed to include a successor representative.

(c) The Stockholders’ Representative shall not be liable to the Stockholders for any act done or omitted to be done hereunder while acting in good faith and in the exercise of reasonable judgment. Each Stockholder agrees to jointly and severally indemnify and hold harmless the Stockholders’ Representative from and against any Damages incurred without gross negligence or willful misconduct on the part of the Stockholders’ Representative and arising out of or in connection with the acceptance or administration of the Stockholders’ Representative’s duties hereunder.

Section 3.10 Legends . The shares of Basin Common Stock to be issued to the Stockholders pursuant to this Agreement shall not have been registered and shall be characterized as “restricted securities” under the federal securities laws, and under such laws such shares may be resold without registration under the Securities Act of 1933, as amended (the “ Securities Act ”), only in certain limited circumstances. Each certificate evidencing shares of Basin Common Stock to be issued pursuant hereto shall bear the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

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AMENDED (THE “SECURITIES ACT”). SUCH SHARES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION WITHOUT AN EXEMPTION UNDER THE SECURITIES ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

and any legends required by applicable state securities laws. Notwithstanding the foregoing, no opinion of counsel shall be necessary in connection with any transfer of Basin Common Stock by any Stockholder to any other Stockholder, or by any Stockholder to any of its Affiliates which provide to Parent the necessary securities law representations under Section 4.03 hereof.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND THE COMPANY

As an inducement to the Parent to enter into this Agreement and to consummate the transactions contemplated hereby, and except as set forth in the Disclosure Schedule provided by Stockholders to the Parent on the date hereof and accepted in writing by the Parent (the “ Disclosure Schedule ”), each Stockholder, jointly and severally together with the other Stockholders and the Company, hereby represents and warrants to and agrees with the Parent with respect to the Shares listed next to the name of such Stockholder on Schedule A hereto that:

Section 4.01 Title to Shares . Such Stockholder owns the Shares beneficially and of record, free and clear of all claims, charges, liens, contracts, rights, options, security interests, mortgages, encumbrances and restrictions of every kind and nature (together, “ Claims ”). Other than restrictions on transfer imposed under federal or state securities laws, there is no restriction affecting the ability of such Stockholder to transfer the legal and beneficial title and ownership of the Shares to the Parent and, upon delivery thereof to the Parent pursuant to the terms of this Agreement and of payment of the Merger Consideration at the Closing, the Parent will acquire record and beneficial title to the Shares free and clear of all Claims. Such Stockholder is not a party to any option, warrant, purchase right or other contract or commitment that could require such Stockholder to sell, transfer or otherwise dispose of any capital stock of the Company (other than this Agreement). Such Stockholder is not a party to any voting trust, proxy or other agreement or understanding with respect to the voting of any capital stock of the Company. Such Stockholder confirms its percentage ownership of the Company as set forth on Schedule A.

Section 4.02 Stockholders’ Organization and Authority to Execute and Perform Agreement . Such Stockholder, other than Stockholders that are individuals, is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Said Stockholder has the full legal right and power and all authority and approval required by law to enter into this Agreement and the other documents and instruments contemplated hereby and to perform its obligations hereunder and thereunder. Each Stockholder has duly executed and delivered this Agreement and the other documents and instruments contemplated hereby to which it is a party, and this Agreement and such other documents and instruments constitute the legal, valid and binding obligation of said Stockholder enforceable in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditor’s rights generally and by general equitable principles. Neither the execution and delivery of this Agreement and the other documents and instruments contemplated hereby, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement and such other documents and instruments in compliance with the terms and conditions hereof and thereof by said Stockholder will (a) conflict with or result in any violation of any certificate or articles of incorporation, bylaws or other governing document of said Stockholder, or any judgment, decree, order, statute, law, rule or regulation applicable to said Stockholder or to the Shares of said Stockholder, (b) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body (as defined herein) or other person or entity, (c) violate, conflict with or result in a breach,

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default or termination (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any mortgage, indenture, note, lease, license, agreement or other instrument or obligation to which said Stockholder is a party or by which said Stockholder or its Shares is bound, or (d) result in the creation of any Claim of any kind or nature on, or with respect to its Shares.

Section 4.03 Purchase For Investment . Such Stockholder is acquiring the shares of Basin Common Stock for investment for its own account and not with a view to the distribution or public offering thereof within the meaning of the Securities Act. Such Stockholder understands that the shares of Basin Common Stock have not been registered under the Securities Act and may not be sold or transferred without such registration or an exemption therefrom. Such Stockholder is sufficiently experienced in financial and business matters to be capable of evaluating the risk of investment in Basin Common Stock and to make an informed decision relating thereto. Such Stockholder has the knowledge and experience in business and financial affairs and the financial capability for making the investment, can afford a complete loss of the investment, and the investment is a suitable one for such Stockholder. Such Stockholder is an “accredited investor” as defined in Regulation D under the Securities Act.

Section 4.04 No Stockholder Brokers’ Fees . Such Stockholder has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Parent or the Company could become liable or obligated.

Section 4.05 Capitalization . The authorized, issued and outstanding capital stock of the Company consists on the date hereof, and will on the Closing Date consist solely of 1,000 shares of Common Stock, having no par value, of which 520.824 shares are issued and outstanding and owned by the Stockholders, as set forth on Schedule A, free and clear of all Claims, in each case with no personal liability attaching to the ownership thereof. All of such shares are duly authorized, validly issued, fully paid and nonassessable and were issued in full compliance with all federal, state and local rules, laws and regulations. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company are as set forth in the Company’s Articles of Incorporation, as amended (the “ Company Articles of Incorporation ”), and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable in accordance with all applicable laws. There are, and at the Closing Date there will be, no shares held in the corporate treasury of the Company and no shares reserved for issuance. As of the date hereof there are, and as of the Closing Date there will be, no outstanding subscriptions, options, warrants, rights, calls or convertible securities, stock appreciation rights (phantom or otherwise), phantom stock rights, joint venture, partnership or other commitments of any nature relating to shares of the capital stock of the Company, other than 254.817 treasury shares reserved by the Company for the issuance of phantom stock of which shares of phantom stock, 40.245 are currently outstanding as of the date hereof and none of which will be outstanding as of the Closing Date. As of the date hereof there is, and as of the Closing Date the Company will have, no obligation (contingent or other) to issue, sell or otherwise cause to become outstanding any of its capital stock, or to purchase, redeem or otherwise acquire any of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of the Company’s capital stock, other than a power of attorney signed by each Stockholder in favor of Frank S. Craft and naming him as such Stockholder’s attorney-in-fact.

Section 4.06 Organization and Qualification .

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Arkansas and is duly licensed or qualified to transact business as a foreign corporation and is in good standing in each jurisdiction in which the nature of the Company’s business or the character of the properties owned or leased by the Company requires such licensing or qualification, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not in the aggregate be expected to have a material adverse effect on the business or operations of the Company.

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(b) The Company is not in default under or in violation of any provision of the Company Articles of Incorporation or the Company’s Bylaws.

Section 4.07 Subsidiaries . The Company does not (a) own of record or beneficially, directly or indirectly, (i) any shares of capital stock or securities convertible into capital stock of any other corporation or (ii) any participating interest in any partnership, joint venture or other non-corporate business enterprise or (b) control, directly or indirectly, any other entity.

Section 4.08 Corporate Power and Authority . The Company has the corporate power and authority to own and hold its properties and to carry on its business as presently conducted and contemplated to be conducted. The Company has the corporate power and authority to execute, deliver and perform this Agreement and the other documents and instruments contemplated hereby. The execution, delivery and performance of this Agreement and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by the Company. This Agreement, and each of the other agreements, documents and instruments to be executed and delivered by the Company have been duly executed and delivered by, and constitute the legal, valid and binding obligation of, the Company enforceable against the Company in accordance with their terms.

Section 4.09 Validity, Etc . Neither the execution and delivery of this Agreement and the other documents and instruments contemplated hereby, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement and such other agreements in compliance with the terms and conditions hereof and thereof will (i) conflict with or result in violation of the Company Articles of Incorporation or the Company’s Bylaws, or any judgment, decree, order, statute, law, rule or regulation applicable to the Company, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body or other person or entity, or (iii) violate, conflict with or result in a breach, default or termination (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any mortgage, indenture, note, lease, license, agreement or other instrument or obligation related to the Company or any of its assets or the consummation of the transactions contemplated hereby or thereby.

Section 4.10 Company Financial Statements . The Company has previously furnished to the Parent the audited balance sheet of the Company at August 31, 2006 (the “ Company Balance Sheet ”), and the related statements of income and cash flow and notes thereto for the fiscal year ended August 31, 2006 (the “ Audited Financial Statements ”), which have been prepared in accordance with U.S. generally accepted accounting principles consistently applied (“ GAAP ”), and fairly present in all material respects the financial position of the Company as of the date thereof, and the results of its operations and cash flows for the periods ended on the date thereof. The Company has also previously furnished to the Parent an unaudited balance sheet as of June 30, 2007 (the “ Interim Balance Sheet ” and together with the “ Audited Financial Statements ,” the “ Company Financial Statements ”), which fairly presents in all material respects the financial position of the Company as of the date thereof. The Company Financial Statements are attached hereto as Schedule 4.10 .

Section 4.11 Absence of Undisclosed Liabilities . Except as and to the extent of the amounts specifically reflected or reserved against in the Company Balance Sheet or the Interim Balance Sheet, the Company does not have any liabilities or obligations of any nature whatsoever, due or to become due, accrued, absolute, contingent or otherwise except for liabilities and obligations incurred since the date of the Interim Balance Sheet in the ordinary course of business consistent with past practice and reflected accurately in its books and records (none of which results from, arises out of or relates to any breach of contract, breach of warranty, infringement or violation of law).

Section 4.12 Absence of Adverse Change; Conduct of Business . Except as contemplated in this Agreement, since August 31, 2006, the Company has conducted its business only in the ordinary course of business consistent with past practice, and there has been no material adverse change in the business, operations or financial condition of the Company. Without limiting the foregoing, since August 31, 2006, there has not been,

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occurred or arisen any event which would require the consent of the Parent under Section 6.04 had such action been taken after the date of this Agreement.

Section 4.13 Taxes .

(a) Filing of Tax Returns . The Company has duly and timely filed with the appropriate taxing authorities all Tax Returns required to be filed through the date hereof. All such Tax Returns filed are complete and accurate in all material respects. Except as set forth on Schedule 4.13(a) , the Company is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. The Company has paid all Taxes whether or not shown on a Tax Return.

(b) Payment of Taxes . The unpaid Taxes of the Company (i) did not, as of the date of the Company Balance Sheet, exceed the reserve for liability with respect to Taxes (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Company Balance Sheet (rather than in any notes thereto), and (ii) will not as of the Merger I Effective Time exceed such reserve to the extent it is set forth on the face of the Final Closing Balance Sheet (rather than in any notes thereto) and is included in the calculation of the Merger Consideration. Since the date of the Company Balance Sheet, the Company has not incurred any liability for Taxes outside the ordinary course of business or otherwise inconsistent with past custom or practice.

(c) Asset Purchase Agreement Transactions . No liability for Taxes has or will be incurred by the Company in connection with the disposition of the Excluded Assets, the assumption of the Excluded Liabilities or any other transaction consummated pursuant to the Asset Purchase Agreement, beyond amounts reserved therefor on the face of (and not in the notes to) the Final Closing Balance Sheet and included in the calculation of the Merger Consideration.

(d) Audits, Investigations, Disputes or Claims . No deficiencies for Taxes have been claimed, proposed or assessed by any taxing or other Governmental Body against the Company. There are no pending or threatened audits, investigations, disputes or claims or other actions for or relating to any liability for Taxes with respect to the Company, and there are no matters under discussion with any Governmental Body with respect to Taxes. Audits of federal, state and local Tax Returns by the relevant taxing authorities have been completed for the periods set forth on Schedule 4.13(d) and, except as set forth in such Schedule, neither the Company nor any predecessor has been notified that any Taxing Authority intends to audit a Tax Return for any other period. The Company has delivered or made available to Parent complete and accurate copies of federal, state and local Tax Returns of the Company and its predecessors for all Tax years for which the statute of limitations period remains open, and complete and accurate copies of all examination reports and statements of deficiencies assessed against or agreed to by the Company since January 1, 2003. The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. The Company has not received (and is not subject to) any ruling from any Taxing Authority and has not entered into (and is not subject to) any agreement with a Taxing Authority.

(e) Lien . There are no encumbrances for Taxes (other than for current Taxes not yet due and payable) on any of the assets of the Company or any shares of Company capital stock.

(f) Tax Elections . All material elections with respect to Taxes affecting the Company, or its assets, as of the date hereof are set forth on Schedule 4.13(f) . The Company has not: (i) consented at any time under former Section 341(f)(1) of the Code to have the provisions of former Section 341(f)(2) of the Code apply to any disposition of any of its assets; (ii) agreed, or is required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise; (iii) made an election, or is required, to treat any of its assets as owned by another person pursuant to the provisions of Section 168(f) of the Code or as tax-exempt bond financed property or tax-exempt use property within the meaning of Section 168 of the Code; (iv) acquired and does not own any assets that directly or indirectly secure any debt the interest on

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which is tax exempt under Section 103(a) of the Code; (v) made and will not make a consent dividend election under Section 565 of the Code; (vi) or made any of the foregoing elections or is required to apply any of the foregoing rules under any comparable state or local Tax provision.

(g) Affiliated Groups . The Company (i) is not currently a member of a group of corporations which files a combined, consolidated or unitary Tax Return and (ii) has never been a member of an Affiliated group of corporations within the meaning of Section 1504 of the Code or any group that has filed a combined, consolidated or unitary Tax Return. No Stockholder will, as of the Merger I Effective Time, qualify as a “selling affiliate” within the meaning of Treasury Regulations Section 1.338(h)(10)-1(b)(3). The Company has no liability for the Taxes of any person (other than the Company) (i) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.

(h) Tax Sharing Agreements . There are no Tax-sharing agreements or similar arrangements (including indemnity arrangements) with respect to or involving the Company, or its assets, and, after the Merger I Effective Time, neither the Company nor its assets shall be bound by any such Tax-sharing agreements or similar arrangements or have any liability thereunder for amounts due in respect of periods up to and including the Merger I Effective Time.

(i) Partnerships and Single Member LLC’s . The Company (i) is not subject to any joint venture, partnership, or other arrangement or contract which is treated as a partnership for Tax purposes, (ii) does not own a single member limited liability company which is treated as a disregarded entity, and (iii) is not a shareholder of a “controlled foreign corporation” as defined in Section 957 of the Code (or any similar provision of state, local or foreign law).

(j) No Withholding . The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897 of the Code. The transactions contemplated herein are not subject to the tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of law.

(k) Permanent Establishment . The Company does not have and has not had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States of America and such foreign country.

(l) Listed Transaction . The Company has not engaged in (i) a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b), or (ii) a transaction where disclosure was required under the Code or Treasury Regulations (or similar provision of state, local or foreign law) in order to avoid the application of penalties.

(m) Section 355 . The Company has not been the “distributing corporation” (within the meaning of Section 355(c)(2) of the Code) with respect to a transaction described in Section 355 of the Code within the 3-year period ending as of the date of this Agreement.

(n) Positions in Returns . The Company has disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.

(o) Access to Tax Returns . Stockholder has made available to Parent complete and accurate copies of all of the Company’s Tax Returns as filed that have been filed or will be filed (after giving effect to all valid extensions of time for filing) with respect to all Tax periods for which the applicable statute of limitations has not expired. Schedule 4.13(o) lists all jurisdictions in which the Company is required to pay Tax or file a Tax Return under applicable state, local or foreign Tax law.

(p) Definitions . For purposes of this Agreement, (i)  “ Taxes ” means all taxes, including without limitation income, gross receipts, profits, premium, windfall profits, license, ad valorem, value-added, excise, real property, personal property, sales, use, transfer, withholding, social security, unemployment, disability, registration, payroll, employment, franchise, environmental, customs duties, capital stock,

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alternative or add-on minimum, estimated or other tax of any kind whatsoever, imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States of America or any such government, including any interest, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof, (ii)  “ Tax Returns ” means all reports, returns, declarations, statements, claims for refund, forms or other information required to be supplied to a Taxing Authority in connection with Taxes, including any schedule or attachment thereto, and including any amendment thereof, (iii)  “ Code ” means the Internal Revenue Code of 1986, as amended, and (iv) “ Treasury Regulation(s) ” means the Treasury regulations promulgated under the Code.

Section 4.14 Litigation . There is no (a) action, suit, claim or proceeding pending or, threatened, nor any investigation pending or threatened against the Company (whether or not the Company is a party or prospective party thereto), at law or in equity, or before or by any Federal, state, municipal or other governmental or regulatory department, commission, board, bureau, agency or instrumentality, domestic or foreign (a “ Governmental Body ”), (b) arbitration proceeding relating to the Company or (c) governmental inquiry pending or, threatened against, involving or affecting the Company, and there is, to the knowledge of the Company or any Stockholder no basis for any of the foregoing. There are no outstanding orders, writs, judgments, injunctions or decrees of any court, Governmental Body or arbitration tribunal against, involving or affecting the Company. The Company is not in default with respect to any order, writ, injunction or decree known to or served upon it from any court or of any Governmental Body. There is no action or suit by the Company pending or threatened against others.

Section 4.15 Compliance with Law . The Company is not subject to any judgment, order, writ, injunction, or decree that materially adversely affects, individually or in the aggregate, its businesses, operations, properties, assets or condition (financial or otherwise). The Company is in compliance with and is not in default under, all laws, ordinances, legal requirements, rules, regulations and orders applicable to it, its operations, properties, assets, products and services in all material respects.

Section 4.16 Licenses and Permits . The Company has all licenses, permits, consents, approvals and authorizations of or from any public agency or Governmental Body used in or necessary for the conduct of the Company’s business (collectively, the “ Permits ”), all of which are listed on Schedule 4.16 . The Company is in compliance with all of the Permits, all such Permits are in full force and effect and neither the Company nor the Stockholders have received any notice of, nor have reason to believe, that any appropriate authority intends or has threatened to cancel or terminate any of the Permits or that valid grounds for such cancellation or termination exist.

Section 4.17 Benefit Plans .

(a) The term “ Benefit Plan ” shall mean, with respect to any person, an “employee benefit plan” as defined in Section 3(3) of ERISA and any other plan, policy, program practice, agreement, understanding or arrangement (whether written or oral) providing compensation or other benefits to any current or former director, officer, employee or consultant (or to any dependent or beneficiary thereof of such person or any ERISA Affiliate of such person), which are now, or were within the past 6 years, maintained, sponsored or contributed to by such person or any ERISA Affiliate, or under which such person or any ERISA Affiliate has any obligation or liability, whether actual or contingent, including all incentive, bonus, deferred compensation, retention, change-in-control, profit sharing, pension, retirement, vacation, severance, holiday, cafeteria, medical, disability, stock purchase, stock option, stock appreciation, phantom stock, restricted stock or other stock-based compensation plans, policies, programs, practices or arrangements. A Benefit Plan of the Company shall be referred to as a “ Company Benefit Plan .” A Benefit Plan of the Parent shall be referred to as a “ Parent Benefit Plan .”

(b) The term “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974.

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(c) The term “ ERISA Affiliate ” with respect to a person, shall mean any entity (whether or not incorporated) other than such person, that, together with such person, is considered under common control and treated as one employer under Section 414(b), (c), (m) or (o) of the Code.

(d) Schedule 4.17(d) sets forth a true and complete list of each Company Benefit Plan. With respect to each Company Benefit Plan, the Company has delivered or made available to Parent or its counsel true, correct and complete copies of (A) each Company Benefit Plan (or, if not written a written summary of its material terms), including all plan documents, trust agreements, insurance contracts or other funding vehicles and all amendments thereto, (B) all summaries and summary plan descriptions, including any summary of material modifications, (C) the annual reports for the most recent plan year (Form 5500 series) filed with the IRS with respect to such Company Benefit Plan, (D) the most recent actuarial report or other financial statement relating to such Company Benefit Plan, and (E) the most recent determination or opinion letter, if any, issued by the IRS with respect to any Company Benefit Plan and any pending request for such a determination letter. Neither the Company, nor to the knowledge of the Company, any other person or entity, has any express or implied commitment, whether legally enforceable or not, to modify, change or terminate any Company Benefit Plan, other than with respect to a modification, change or termination required by ERISA or the Code.

(e) Each Company Benefit Plan has been administered in accordance with its terms and all applicable laws, including ERISA and the Code, and contributions required to be made under the terms of any of the Company Benefit Plans as of the date of this Agreement have been timely made or, if not yet due, have been properly reflected on the most recent balance sheet filed or incorporated by reference in the Company Financial Statements prior to the date of this Agreement. With respect to the Company Benefit Plans, no event has occurred and there exists no condition or set of circumstances in connection with which the Company could be subject to any liability (except liability for benefits claims and funding obligations payable in the ordinary course of business) under the terms of, or with respect to, such Company Benefit Plans, ERISA, the Code or any other applicable law.

(f) (i) Each Company Benefit Plan which is intended to qualify under Section 401(a), Section 401(k), Section 401(m) or Section 4975(e)(6) of the Code has either received a favorable determination letter from the IRS as to its qualified status or the remedial amendment period for such Company Benefit Plan has not yet expired, and each trust established in connection with any Company Benefit Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code is so exempt, and to the knowledge of the Company no fact or event has occurred that could adversely affect the qualified status of any such Company Benefit Plan or the exempt status of any such trust; (ii) there has been no prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code and other than a transaction that is exempt under a statutory or administrative exemption) with respect to any Company Benefit Plan that could result in liability to the Company or an ERISA Affiliate thereof; (iii) each Company Benefit Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its