EXHIBIT 10.47

SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF ALL CLAIMS

This Settlement Agreement and Mutual Release (“Settlement Agreement”) is made
and entered into as of the Effective Date (as hereinafter defined) with respect
to the claims of the Orange County Water District (“OCWD”) against AC Products,
Inc. (“AC Products”) in the litigation entitled Orange County Water District v.
Northrop Corporation, et al., including all related counter-claims and
cross-claims and cross-actions.

I.    RECITALS

This Settlement Agreement arises out of the disputes regarding alleged soil and
groundwater contamination by the presence of volatile organic compounds,
including without limitation chlorinated hydrocarbons. The Parties recognize,
and the terms of this Settlement Agreement reflect, that AC Products has
conducted significant extraction and treatment of groundwater that was
contaminated and that this effort has resulted in a significant expenditure of
money by AC Products. The Parties further recognize that AC Products is
committing herein to conduct additional work which also may result in a
significant expenditure of money by AC Products.

The Parties desire to settle all of their disputes relating to or arising from
contamination asserted or that could have been asserted in the OCWD Action. The
Parties represent they understand they are waiving significant legal rights by
signing this Settlement Agreement and enter into this Settlement Agreement
voluntarily and with full understanding of its terms. The Parties acknowledge
that by entering into this Settlement Agreement each Party in no way admits
responsibility for debts, liability and/or obligations owed to any other Party,
or to third parties, and that this Settlement Agreement is made in the spirit of
compromise for the sole purpose of avoiding the uncertainties and expense of
further litigation.

This Settlement Agreement shall control the rights, duties and obligations of
the respective Parties.

II.    DEFINITIONS

A. AC Products. The term “AC Products” shall include AC Products, Inc. and each
of its past and present directors, managers, officers, ,employees, attorneys,
successors, insurers, and assigns.

B. AC Products Site. The term “AC Products Site” refers to the AC Products
facility at 172 La Jolla Avenue, Placentia, California.

C. Effective Date. This Settlement Agreement shall become binding and
enforceable upon the “Effective Date,” which shall be the date upon which both
of the following shall have occurred:

 

  1. The Settlement Agreement has been approved and executed by the Parties; and

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  2. The Trial Court determines the settlement is in good faith pursuant to
California Code of Civil Procedure Sections 877.6 and 1060 and the time for any
petition for writ of mandamus, appeal or other authorized challenge to such
determinations shall have run without such challenge having been timely filed
(or, in the event of such challenge having timely been filed, the time that any
such challenge shall have been resolved such that the settlement is finally
adjudicated to have been in good faith as set forth above.

D. OCWD. “OCWD” shall include the Orange County Water District and each of its
past and present directors, managers, officers, employees, attorneys,
predecessors, successors, insurers, and assigns.

E. OCWD Action. The term “OCWD Action” shall refer to the litigation entitled
Orange County Water District v. Northrop Corporation, et al., Orange County
Superior Court Action No. 04CC00715, as identified above.

F. OCWD Site. The term “OCWD Site” shall include the Forebay Project Area, also
known as the North Basin Groundwater Protection Area, located principally in the
cities of Placentia, Fullerton, and Anaheim, as partially depicted in the map
attached hereto as Exhibit A, including, without limitation, all aquifers and
water producing zones therewithin.

G. Parties. OCWD and AC Products are the “Parties” to this Settlement Agreement.

H. Covered Substances. “Covered Substances” shall mean: trichloroethylene (TCE),
tetrachloroethylene (perchloroethylene or PCE), 1,1-dichloroethylene (1,1-DCE),
1,2-dichloroethane (1,2-DCA), 1,4-dioxane (1,4-D), 1,1,1-trichloroethane
(1,1,1-TCA), 1,1,2-trichloroethane (1,1,2-TCA), 1,2-3-trichloropropane (TCP),
1,1-dichloroethane (1,1 -DCA), methylene chloride, trans-1, 2,-dichloroethylene
(trans-1, 2-DCE) and cis-1, 2-dichloroethylene (cis-1,2-DCE) or any other
volatile organic chemical, specifically including the future impact of such
substances on groundwater, and any degradation or transformation products of the
substances referenced above.

I. Settled Claims. The term “Settled Claims” shall include:

Any and all demands, actions, causes of action, suits, obligations, assessments,
damages, liabilities, investigation costs, claims, remediation costs,
restoration, costs, administrative claims, other costs, losses, or expenses
(including attorneys’ fees and expert witness fees) of any kind or nature
whatsoever (whether legal or equitable, past, present or future, ascertained or
unascertained, known or unknown, suspected or unsuspected) (“Claims”) arising
directly or indirectly out of, relating to, resulting from or in any way
connected with (i) actual or threatened groundwater contamination by a Covered
Substance under or emanating from the AC Products Site (“AC Products’ Plume”);
(ii) the investigation and/or remediation of any such actual or threatened
contamination by a Covered Substance, and any other action or response arising
out of, relating to, or resulting from such actual or threatened contamination;
(iii) any AC Products releases (including any AC Products’ operations that may
have contributed to the release) on or prior to the Effective Date of this
Settlement Agreement which allegedly contributed to any such actual or
threatened groundwater contamination from Covered Substances; and /or (iv) any
fact or circumstance that has or could have been raised as part of the OCWD
Action against AC Products.

 

  1. The term “Settled Claims” does not include claims related to any release of
a Covered Substance if OCWD demonstrates that the release occurred after the
Effective Date of this Settlement Agreement (passive migration of Covered
Substance in soil or groundwater will not be considered a “release of Covered
Substances” for purposes of this Settlement Agreement).

 

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III.    TERMS OF AGREEMENT

In consideration for the execution of this Settlement Agreement, and the
recitals (which shall be deemed substantive provisions hereof), terms,
obligations and covenants contained herein, the Parties agree to the following:

A. Settlement Payment And Obligations:

 

  1. Settlement Amount:

AC Products will pay to the OCWD two million dollars ($2,000,000) in two equal
installments of one million dollars ($1,000,000) each, in accordance with such
payment instructions as shall be provided at least five (5) business days in
advance in writing to AC Products by the OCWD. The first payment shall be due on
or before October 31, 2007 and the second payment shall be due on or before
February 15, 2008.

 

  2. Other Settlement Obligations:

 

  (a) AC Products will continue to operate existing extraction wells P-2 and P-3
until it is mutually agreed by the Parties that one or both wells shall be
transferred to the OCWD, which transfer(s) shall be made at the request of the
OCWD, in its discretion and without any charge to the OCWD for the wells by AC
Products, or, in lieu of such an agreement, until it is mutually agreed by the
Parties that one or more wells shall be abandoned and sealed in compliance with
all applicable laws, such cost of abandonment and sealing to be borne by
AC Products, or, absent either of the foregoing, at an average annual extraction
basis sufficient to hydraulically contain the AC Products’ Plume until its PCE
concentrations are at or below five (5) micrograms per liter in four consecutive
quarterly sampling events.

 

  (b) AC Products agrees to comply with all existing Santa Ana Regional Water
Quality Control Board orders associated with the AC Products Site.

 

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  (c) AC Products agrees to provide all soil and groundwater data and all
technical submissions to OCWD contemporaneously with their submission to any
regulatory agency and any nonprivileged data, modeling work or submissions not
previously provided to OCWD within thirty (30) days of the Effective Date.

B. Full And Final Settlement. The Settlement Amount shall represent the total,
full and final settlement of the OCWD Action against AC Products.

C. Dismissal Of AC Products. Within five (5) days after the Effective Date, OCWD
shall dismiss with prejudice its complaint against AC Products in the OCWD
Action, each Party to bear its own costs and attorneys’ fees.

D. Waiver Of Claims; Mutual Releases. In consideration of the relinquishment of
any and all respective legal and equitable rights and claims of each of the
Parties against each other Party with reference to the Settled Claims:

 

  1. The OCWD hereby forever releases and discharges AC Products from the
Settled Claims;

 

  2. AC Products hereby forever releases and discharges OCWD from the Settled
Claims; and

 

  3. Apart from AC Products, the OCWD is not releasing any other parties to the
OCWD Action or any non-parties, and this Settlement Agreement does not release
or apply to any Claim that the OCWD may have asserted or may in the future
assert against any other person or entity, including any other defendants in the
OCWD Action, including any Claim against such other person or entity respecting
a release of a Covered Substance under or emanating from any property other than
the AC Products Site.

E. Mutual Release. The Parties hereby agree that the release in the Settlement
Agreement will be a mutual release by, between, and among both Parties as to any
and all Settled Claims of whatever sort.

F. Waiver Of Civil Code Section 1542. This is a full and final release applying
to all unknown and unanticipated injuries or damages arising out of the Settled
Claims as well as to those Claims now known or unknown and Claims disclosed or
undisclosed. The Parties waive all rights or benefits which they now have or in
the future may have under the terms of Section 1542 of the Civil Code of the
State of California, which reads:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

 

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G. Known And Unknown Claims. Each of the Parties hereto understands and agrees
that this Settlement Agreement applies to all known and unknown and
unanticipated Claims arising from the Parties’ conduct (including acts or
omissions).

H. No Admission Of Liability. This Settlement Agreement results from a
compromise of disputed Claims and the payments and other consideration hereunder
is not to be construed as an admission of liability or responsibility on the
part of any Party or Parties hereto, each of whom denies liability for any of
the Claims or other allegations referred to herein.

I. Ownership Of Claims. The Parties warrant and represent that they have not
heretofore assigned or transferred, or purported to assign or transfer, to any
person or entity, any Settled Claim or released Claim described in this
Settlement Agreement.

J. Binding Upon Parties And Others. This Settlement Agreement shall be binding
upon the Parties, and each of their past, present, and future successors, heirs
and assigns, and shall inure to the benefit of the Parties and each of their
past, present, and future successors, heirs and assigns.

K. Attorneys’ Fees And Costs. Each of the Parties is to bear all costs and
attorneys’ fees which it incurred in connection with the OCWD Action.

L. Further Cooperation. The Parties shall cooperate and promptly execute any and
all documents and perform any and all acts necessary to effectuate the
provisions of this Settlement Agreement. The Parties to this Settlement
Agreement agree to execute any further documentation that may be required to
carry out the purpose of this Settlement Agreement. Furthermore, any future
modifications to this Settlement Agreement must be in writing and signed by both
Parties to this Settlement Agreement in order to be effective.

M. Entire Agreement. This Settlement Agreement shall constitute the entire
agreement between the Parties with respect to the subject matter of this
Settlement Agreement and shall supersede and replace any previous agreements and
understandings between or among the Parties, whether written or oral, with
respect to the subject matter of this Settlement Agreement. This Settlement
Agreement represents the final agreement between and among the Parties and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the Parties. There are no unwritten oral agreements between the
Parties respecting the subject matter of this Settlement Agreement.

N. Authority. Each Party warrants and represents to each other Party that the
undersigned representative for such Party has full and complete authority to
execute this Settlement Agreement and bind said Party to the terms hereof. Each
Party further warrants and represents that it has negotiated this Settlement
Agreement through its respective counsel and that such Party has voluntarily
executed it after consulting with counsel of its own choosing.

O. Severability. Any provision of this Settlement Agreement held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Settlement Agreement and the effect thereof
shall be confined to the

 

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provisions held unenforceable. The Parties expressly agree that all the terms
and provisions of this Settlement Agreement are contractual in nature and not
merely recitals.

P. Notices. All notices, requests, and other communications must be in writing
and will be deemed to have been duly given if (a) mailed certified mail, return
receipt requested (in which case such notice, request or communication shall be
deemed to have been given three (3) business days after mailing) or (b) by
overnight courier (in which case such notice, request or communication shall be
deemed to have been given two (2) business days after sending), to the Parties
at the following addresses:

 

If to AC Products:    Joseph Matrange, President    AC Products, Inc.    172 E.
La Jolla    Placentia, CA 92870       With a copy to:    Richard J. McNeil, Esq.
   Irell & Manella LLP    840 Newport Center Drive, Suite 400    Newport Beach,
CA 92660    If to OCWD:    Craig Miller    Orange County Water District    10500
Ellis Avenue    Fountain Valley, CA 92708       With a copy to:    Duane Miller,
Esq.    Miller, Axline & Sawyer    1050 Fulton Avenue, Suite 100    Sacramento,
CA 95825

Q. No Waiver. The provisions of this Settlement Agreement may not be changed,
discharged, terminated, altered or waived orally, but only by an instrument in
writing signed by the Parties. The failure of any Party to enforce its rights
under this Settlement Agreement on any occasion shall not operate as or be
deemed to be a waiver of any future enforcement or exercise of such rights.

R. No Construction Against Drafters. No provisions of this Settlement Agreement
shall be construed against or interpreted to the disadvantage of any Party by
any court or other governmental or judicial authority by reason of such Party’s
having or being deemed to have drafted, prepared or imposed such provision.

S. No Representative Relationship. Nothing in this Settlement Agreement shall be
deemed to create a partnership, joint venture or principal and agent
relationship among the Parties. Nothing in this Settlement Agreement shall limit
or restrict the ability of any Party, at its own expense and on its own behalf,
to assert a Claim, commence litigation or other legal proceeding, or negotiate
to settle any Claims against any non-Parties.

 

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T. No Assignment. No Party to this Settlement Agreement may assign or transfer
all or any part of any right, obligation, or interest under this Settlement
Agreement. Any attempted assignment or transfer shall be null, void and without
effect, unless consent is sought and granted in advance and in writing by the
other Party. Except as otherwise provided in this Settlement Agreement, the
releases, promises, covenants and agreements contained herein shall be binding
upon and inure to the benefit of the Parties, and their respective
successors-in-interest, permitted assignees, heirs, executors and
administrators.

U. Jurisdiction To Enforce Settlement. Pursuant to California Code of Civil
Procedure Section 664.6, the Parties request that the Superior Court of Orange
County (Civil Complex Division) retain jurisdiction over the Parties to enforce
this Settlement Agreement until performance in full of the terms of this
Settlement Agreement. This Settlement Agreement may be enforced by any Party by
a motion brought under California Code of Civil Procedure Section 664.6 in the
Superior Court of Orange County (Civil Complex Division).

V. Dispute Resolution. All disputes, Claims or controversies arising out of or
relating to this Settlement Agreement, other than enforcement of this Settlement
Agreement pursuant to Section III. U, supra, shall be subject to arbitration
before a mutually-acceptable, neutral arbitrator subject to the following terms
and conditions:

 

  1. Good Faith Negotiation: In the event of any dispute among the Settling
Parties arising out of or relating to this Settlement Agreement, the Settling
Parties agree to try in good faith to settle the dispute by negotiation and/or
mediation.

 

  2. Allocation Of Burdens: In any arbitration proceeding with respect to AC
Products’ “Other Settlement Obligations” under paragraph III.A.2 of this
Settlement Agreement, AC Products shall bear the burden of proving that its
extraction wells have contained the PCE contamination constituting the AC
Products’ Plume.

 

  3. Arbitration: If the dispute cannot be resolved to the Settling Parties’
mutual satisfaction through negotiation and/or mediation within thirty (30) days
after notice is given that a dispute exists which may require resolution through
this Section IIII. V, the dispute shall be resolved through binding arbitration.
It is the intent of the Settling Parties that the arbitration shall be
structured in such a way as to minimize costs and delay. The arbitration shall
be conducted in accordance with the Judicial Arbitration and Mediation Service
(“JAMS”) Comprehensive Arbitration Rules and Procedures (“JAMS Rules”) as
attached hereto as Exhibit B, as modified by the following stipulations and any
order of the arbitrator:

The arbitration hearing shall be held before Judge Charles Vogel (ret.) at JAMS
or Judge Howard B. Wiener (ret.); however, if Judge Vogel or Judge Wiener is not
available within a reasonable period of time or declines to serve, the

 

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arbitration hearing shall be held before a single arbitrator, if the Parties
agree upon a single arbitrator. If the Parties cannot agree upon a single
arbitrator, then each shall elect an arbitrator from JAMS, and those arbitrators
shall select a third arbitrator from JAMS who shall be the single arbitrator for
the dispute. If the two arbitrators are unable to agree upon a third arbitrator
within 15 days of their appointment, the third arbitrator shall be randomly
selected by JAMS. Any reference to an “arbitrator” in this Settlement Agreement
shall be deemed a reference to the arbitrator selected pursuant to this
subsection. Unless otherwise ordered by the arbitrator, each arbitrating party’s
presentation at the arbitration hearing shall be limited to seven (7) hours, and
the hearing shall be completed within three (3) business days.

The arbitration decision shall be rendered not later than thirty (30) days after
the final day of the hearing and shall be judicially enforceable, non-appealable
and binding, and shall have the same issue preclusion effect as a final judgment
rendered by a court of competent jurisdiction with respect to any pending or
subsequent disputes among such parties arising out of or relating to this
Settlement Agreement.

If the arbitrator desires the assistance of a technical expert to aid in
deciding the dispute, the technical expert shall be chosen by agreement of the
arbitrating parties or, absent such agreement, by the arbitrator, subject to the
arbitrating parties’ right to disqualify the expert for conflict of interest.

Arbitration costs, arbitrator’s fees and reasonable attorneys’ fees and costs
may be awarded to the prevailing parties, if any, in whole or in part, in the
discretion of the arbitrator.

The OCWD represents to AC Products that Judge Vogel and Judge Wiener have
disclosed to the OCWD that neither of them has a conflict of interest affecting
either of their impartiality at this time. Pursuant to California Code of Civil
Procedure Section 1281.9, Settling Parties waive any further or separate written
disclosure from Judge Vogel or Justice Wiener, subject, however, to California
Code of Civil Procedure Section 1281.91, to the extent applicable. The Settling
Parties agree to utilize Judge Vogel or Judge Wiener as the arbitrator
notwithstanding that he has served, or been requested to serve, as a mediator in
connection with this litigation and the Parties agree that this fact does not
and will not act as a basis for disqualification.

The Trial Court shall retain jurisdiction of the Action to enforce an
arbitration decision rendered under this Settlement Agreement pursuant to
California Code of Civil Procedure Sections 664.6 and 1285, et seq.

 

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W. Governing Law. This Settlement Agreement is to be governed by and construed
in accordance with the laws of the State of California, applied without regard
to its laws applicable to choice of law or conflicts of law.

X. Multiple Counterparts. This Settlement Agreement may be executed in multiple
counterparts, including facsimile or email copies of signature pages, each of
which shall be deemed an original, but all of which constitute the same
Settlement Agreement.

 

September 4, 2007     /s/ Joseph Matrange (Dated)    

AC PRODUCTS, INC.

By: Joseph Matrange

Its: President

November 8, 2007     /s/ Phillip L. Anthony (Dated)    

ORANGE COUNTY WATER DISTRICT

By: Phillip L. Anthony

Its: President

November 8, 2007     /s/ Michael R. Markus (Dated)    

ORANGE COUNTY WATER DISTRICT

By: Michael R. Markus

Its: General Manager

APPROVED AS TO FORM

 

September 4, 2007     IRELL & MANELLA LLP (Dated)           /s/ Richard J.
McNeil    

RICHARD J. McNEIL

Attorney for AC Products, Inc.

November 9, 2007     MILLER, AXLINE & SAWYER (Dated)           /s/ Duane C.
Miller    

DUANE C. MILLER

Attorney for Plaintiff Orange County Water District

 

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