Document:

Form of Indemnification Agreement

 Exhibit 10(xvi) 
 INDEMNIFICATION AGREEMENT 
 This Indemnification Agreement made this
         day of             , 2008, between Oak Ridge Financial Services, Inc., a North Carolina corporation (the
“Corporation”) and , a director, officer, employee, agent, or representative (as hereinafter defined) of the Corporation (the “Indemnitee”). 
 WHEREAS, the Corporation and the Indemnitee are each aware of the exposure to litigation of officers, directors, employees, agents, and representatives of the Corporation as such
persons exercise their duties to the Corporation, 
 WHEREAS, the Corporation and the Indemnitee are
also aware of conditions in the insurance industry that have affected and may continue to affect the Corporation’s ability to obtain appropriate liability insurance on an economically acceptable basis, 
 WHEREAS, the Corporation desires to continue to benefit from the services of highly qualified, experienced, and
otherwise competent persons such as the Indemnitee, and 
 WHEREAS, the Indemnitee desires to serve or
to continue to serve the Corporation as a director, officer, employee, or agent or as a director, officer, employee, agent, or trustee of another corporation, joint venture, trust, or other enterprise in which the Corporation has a direct or
indirect ownership interest, for so long as the Corporation continues to provide, on an acceptable basis, adequate and reliable indemnification against certain liabilities and expenses that may be incurred by the Indemnitee. 
 NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows. 
 1. Indemnification.
Subject to the exclusions contained in section 9 of this Agreement, the Corporation shall indemnify the Indemnitee with respect to his or her activities as a director, officer, employee, or agent of the Corporation and/or as a person who is serving
or has served at the request of the Corporation (“representative”) as a director, officer, employee, agent, or trustee of another corporation, joint venture, trust, or other enterprise, domestic or foreign, in which the Corporation has a
direct or indirect ownership interest (an “affiliated entity”) against expenses (including, without limitation, attorneys’ and experts’ fees, judgments, fines, and amounts paid or payable in settlement) actually and reasonably
incurred (“Expenses”) in connection with any claim against Indemnitee that is the subject of any threatened, pending, or completed action, suit, or other type of proceeding, whether civil, criminal, administrative, investigative, or
otherwise and whether formal or informal (a “Proceeding”), to which Indemnitee was, is, or is threatened to be made a party by reason of facts which include Indemnitee’s being or having been such a director, officer, employee, agent,
or representative, to the extent of the highest and most advantageous to the Indemnitee, as determined by the Indemnitee, of one or any combination of the following — 
  

	 	(a)	The benefits provided by the Corporation’s Articles of Incorporation (“Articles”) or Bylaws, or the Articles of Incorporation or Bylaws of an affiliated entity of
which the Indemnitee serves as a representative, in each case as in effect on the date hereof, 

  

	 	(b)	The benefits provided by the Corporation’s Articles or Bylaws, or the Articles of Incorporation or Bylaws of an affiliated entity of which the Indemnitee serves as a
representative, in each case as in effect at the time Expenses are incurred by the Indemnitee, 

  

	 	(c)	The benefits allowable under North Carolina law in effect at the date hereof or as amended to increase the scope of indemnification, 

  

	 	(d)	The benefits allowable under the law of the jurisdiction under which the Corporation exists at the time Expenses are incurred by the Indemnitee, 

  

	 	(e)	The benefits available under any liability insurance obtained by the Corporation in effect when a claim is made against Indemnitee, 

  

	 	(f)	The benefits available under any liability insurance obtained by the Corporation in effect at the time Expenses are incurred by the Indemnitee, and 

  

	 	(g)	Such other benefits as are or may be otherwise available to Indemnitee. 

 Combination of two or more of the benefits provided by (a) through (g) shall be available to the extent that the Applicable Document (as hereafter defined) does not require that the benefits provided therein
be exclusive of other benefits. The document or 

 
law providing for the benefits listed in items (a) through (g) above is called the “Applicable Document” in this Agreement. The
Corporation hereby undertakes to use its best efforts to assist Indemnitee, in all proper and legal ways, to obtain the benefits selected by Indemnitee under item (a) through (g) above. 
 For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans for employees of the Corporation or of
any affiliated entity, without regard to ownership of such plans; references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to any employee benefit plan; references to “serving at the request of the
Corporation” shall include any service as a director, officer, employee, or agent of the Corporation which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries;
references to the masculine shall include the feminine; references to the singular shall include the plural and vice versa; and if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in the best interests of
the participants and beneficiaries of an employee benefit plan, he or she shall be deemed to have acted in a manner consistent with the standards required for indemnification by the Corporation under the Applicable Documents. 
 2. Insurance. The Corporation shall maintain liability insurance for so long as Indemnitee’s services are covered hereunder, provided
and to the extent that such insurance is available on a basis acceptable to the Corporation. However, the Corporation agrees that the provisions hereof shall remain in effect regardless of whether liability or other insurance coverage is at any time
obtained or retained by the Corporation. But payments made to Indemnitee under an insurance policy obtained or retained by the Corporation shall reduce the obligation of the Corporation to make payments hereunder by the amount of the payments made
under any such insurance policy. 
 3. Payment of Expenses. At Indemnitee’s request, after receipt of written notice under
section 5 hereof and an undertaking in the form of Exhibit A attached hereto by or on behalf of Indemnitee to repay such amounts so paid on Indemnitee’s behalf if it shall ultimately be determined under the Applicable Document that Indemnitee
is not entitled to be indemnified by the Corporation for such Expenses, the Corporation shall pay the Expenses as and when incurred by Indemnitee. That portion of Expenses representing attorneys’ fees and other costs incurred in defending any
proceeding shall be paid by the Corporation within 30 days after the Corporation receives the request and reasonable documentation evidencing the amount and nature of the Expenses, subject to its also having received such a notice and undertaking.

 4. Additional Rights. The indemnification provided in this Agreement shall not be exclusive of any other indemnification or
right to which Indemnitee may be entitled and shall continue after Indemnitee has ceased to occupy a position as an officer, director, employee, agent, or representative as described in section 1 above with respect to Proceedings relating to or
arising out of Indemnitee’s acts or omissions during his or her service in such position. The benefits provided to Indemnitee under this Agreement for the Indemnitee’s service as a representative of an affiliated entity shall be payable if
and only if and only to the extent that reimbursement to Indemnitee by the affiliated entity with which Indemnitee has served as a representative, whether pursuant to agreement, applicable law, articles of incorporation or association, bylaws or
regulations of the entity, or insurance maintained by such affiliated entity, is insufficient to compensate Indemnitee for Expenses actually incurred and otherwise payable by the Corporation under this Agreement. Any payments in fact made to or on
behalf of the Indemnitee directly or indirectly by the affiliated entity with which Indemnitee served as a representative shall reduce the obligation of the Corporation hereunder. 
 5. Notice to Corporation. Indemnitee shall provide to the Corporation prompt written notice of any Proceeding brought, threatened,
asserted, or commenced against Indemnitee with respect to which Indemnitee may assert a right to indemnification hereunder; provided, however, that failure to provide such notice shall not in any way limit Indemnitee’s rights under this
Agreement. 
 6. Cooperation in Defense and Settlement. Indemnitee shall not make any admission or effect any settlement
without the Corporation’s written consent unless Indemnitee shall have determined to undertake his or her own defense in such matter and has waived the benefits of this Agreement. The Corporation shall not settle any Proceeding to which
Indemnitee is a party in a manner that would impose any Expense on Indemnitee without his or her written consent. Neither Indemnitee nor the Corporation will unreasonably withhold consent to the proposed settlement. Indemnitee and the Corporation
shall cooperate to the extent reasonably possible with each other and with the Corporation’s insurers in attempts to defend and/or settle such Proceeding. 
 7. Assumption of Defense. Except as otherwise provided below, the Corporation jointly with any other indemnifying party similarly notified may assume Indemnitee’s defense in any Proceeding, with
counsel mutually satisfactory to Indemnitee and the Corporation. After notice from the Corporation to Indemnitee of the Corporation’s election to assume such defense, the Corporation will not be liable to Indemnitee under this Agreement for
Expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ counsel in such Proceeding, but the fees and
expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at Indemnitee’s expense unless: 
  

	 	(a)	The employment of counsel by Indemnitee has been authorized by the Corporation, 

	 	(b)	Counsel employed by the Corporation initially is unacceptable or later becomes unacceptable to Indemnitee and such unacceptability is reasonable under then existing circumstances,

  

	 	(c)	Indemnitee shall have reasonably concluded that there may be a conflict of interest between Indemnitee and the Corporation (or another party being represented jointly with the
Corporation) in the conduct of the defense of such Proceeding, or 

  

	 	(d)	The Corporation shall not have employed counsel promptly to assume the defense of such Proceeding, 

 in each of which cases the fees and expenses of counsel shall be at the expense of the Corporation and subject to payment pursuant to this Agreement. The Corporation shall not be entitled to assume the defense of
Indemnitee in any Proceeding brought by or on behalf of the Corporation or as to which Indemnitee shall have made either of the conclusions provided for in clauses (b) or (c) above. 
 8. Enforcement. If a dispute or controversy arises under this Agreement between Indemnitee and the Corporation with respect to whether the
Indemnitee is entitled to indemnification for any Proceeding or for Expenses incurred, then for each such dispute or controversy the Indemnitee may seek to enforce the Agreement through legal action or, at Indemnitee’s sole option and written
request, through arbitration. If the Indemnitee requests arbitration, the dispute or controversy shall be submitted by the parties to binding arbitration in the County of Guilford, State of North Carolina, before a single arbitrator agreeable to
both parties; provided, however, that indemnification for any claim, issue, or matter in a Proceeding brought against Indemnitee by or in the right of the Corporation and as to which Indemnitee is adjudged liable for negligence or misconduct
in the performance of his or her duty to the Corporation shall be submitted to arbitration only to the extent permitted under the Applicable Document and applicable law then in effect. If the parties cannot agree on a designated arbitrator within 15
days after arbitration is requested in writing by the Indemnitee, the arbitration shall proceed in the County of Guilford, State of North Carolina, before an arbitrator appointed by the American Arbitration Association. In either case, the
arbitration proceeding shall commence promptly under the rules then in effect of that Association. And the arbitrator agreed to by the parties or appointed by that Association shall be an attorney other than an attorney who has been or is associated
with a firm having associated with it an attorney who has been retained by or performed services for the Corporation or Indemnitee at any time during the five years preceding commencement of arbitration. The award shall be rendered in such form that
judgment may be entered thereon in any court having jurisdiction thereof. The prevailing party shall be entitled to prompt reimbursement of any costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in
connection with such legal action or arbitration; provided, however, that the Indemnitee shall not be required to reimburse the Corporation unless the arbitrator or court resolving the dispute determines that Indemnitee acted in bad faith in
bringing the action or arbitration. 
 9. Exclusions. Notwithstanding the scope of indemnification available to Indemnitees
from time to time under any Applicable Document, no indemnification, reimbursement or payment shall be required of the Corporation hereunder with respect to: 
  

	 	(a)	Any claim or any part thereof as to which Indemnitee shall have been determined by a court of competent jurisdiction, from which no appeal is or can be taken, by clear and
convincing evidence, to have acted with deliberate intent to cause injury to the Corporation or with reckless disregard for the best interests of the Corporation, 

  

	 	(b)	Any claim or any part thereof arising out of acts or omissions for which applicable law prohibits elimination of liability, 

  

	 	(c)	Any claim or any part thereof arising under Section 16(b) of the Securities Exchange Act of 1934 pursuant to which Indemnitee shall be obligated to pay any penalty, fine,
settlement or judgment, 

  

	 	(d)	Any obligation of Indemnitee based upon or attributable to the Indemnitee gaining in fact any improper personal benefit, gain, profit or advantage to which he or she was not
entitled, or 

  

	 	(e)	Any proceeding initiated by Indemnitee without the consent or authorization of the Board of Directors of the Corporation, provided that this exclusion shall not apply with respect
to any claims brought by Indemnitee (1) to enforce his or her rights under this Agreement or (2) in any Proceeding initiated by another person or entity whether or not such claims were brought by Indemnitee against a person or entity who
was otherwise a party to such proceeding. 

 Nothing in this section 9 shall eliminate or diminish the Corporation’s obligations to advance that
portion of Indemnitee’s Expenses representing attorneys’ fees and other costs incurred in defending any proceeding pursuant to section 3 of this Agreement. 
 Furthermore, anything herein to the contrary notwithstanding, nothing in this Agreement requires indemnification, reimbursement or payment by the Corporation, and the Indemnitee shall not be entitled to demand
indemnification, reimbursement or payment under this Agreement, if and to the extent indemnification, reimbursement or payment constitutes a “prohibited indemnification payment” within the meaning of Federal Deposit Insurance Corporation
Rule 359.1(l)(1) [12 CFR 359.1(l)(1)]. 
 10. Extraordinary Transactions. The Corporation covenants and agrees that in the
event of any merger, consolidation, or reorganization in which the Corporation is not the surviving entity, any sale of all or substantially all of the assets of the Corporation, or any liquidation of the Corporation (each such event is hereinafter
referred to as an “extraordinary transaction”), the Corporation shall – 
  

	 	(a)	Have the obligations of the Corporation under this Agreement expressly assumed by the survivor, purchaser or successor, as the case may be, in such extraordinary transaction, or

  

	 	(b)	Otherwise adequately provide for the satisfaction of the Corporation’s obligations under this Agreement, in a manner acceptable to Indemnitee. 

 11. No Personal Liability. Indemnitee agrees that neither the directors nor any officer, employee, representative, or agent of the
Corporation shall be personally liable for the satisfaction of the Corporation’s obligations under this Agreement, and Indemnitee shall look solely to the assets of the Corporation for satisfaction of any claims hereunder. 
 12. Severability. If any provision, phrase, or other portion of this Agreement is determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable, in whole or in part, and such determination becomes final, such provision, phrase, or other portion shall be deemed to be severed or limited, but only to the extent required to render the remaining provisions and
portions of the Agreement enforceable, and the Agreement as thus amended shall be enforced to give effect to the intention of the parties insofar as that is possible. 
 13. Subrogation. If any payments are made under this Agreement, the Corporation shall be subrogated to the extent thereof to all rights to indemnification or reimbursement against any insurer or other
entity or person vested in the Indemnitee, who shall execute all instruments and take all other actions as shall be reasonably necessary for the Corporation to enforce such rights. 
 14. Governing Law. The parties hereto agree that this Agreement shall be construed and enforced in accordance with and governed by the laws
of the State of North Carolina. 
 15. Notices. All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by
like notice. Unless otherwise changed by notice, notice shall be properly addressed to the Indemnitee if addressed to the address of the Indemnitee on the books and records of the Corporation at the time of the delivery of such notice, and properly
addressed to the Corporation if addressed to Oak Ridge Financial Services, Inc., 2211 Oak Ridge Road, P.O. Box 2, Oak Ridge, North Carolina 27310. 
 16. Termination. This Agreement may be terminated by either party upon not less than 60 days’ prior written notice delivered to the other party, but such termination shall not diminish the obligations of Corporation
hereunder with respect to Indemnitee’s activities before the effective date of termination. 
 17. Amendments and Binding
Effect. This Agreement and the rights and duties of Indemnitee and the Corporation hereunder may not be amended, modified or terminated except by written instrument signed and delivered by the parties hereto. This Agreement is binding upon and
shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and assigns. 
 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 
  

							
	INDEMNITEE	 	 	 	OAK RIDGE FINANCIAL SERVICES, INC.
				
	  
	 		 	By:	 	  

				
		 		 	Its:	 	  

 Exhibit 1 
 FORM OF UNDERTAKING 
 THIS
UNDERTAKING has been entered into by
                                       
  (“Indemnitee”) pursuant to an Indemnification Agreement dated                     , 2008 (the “Indemnification
Agreement”), between Oak Ridge Financial Services, Inc. (the “Corporation”), a North Carolina corporation, and Indemnitee. 
 RECITALS: 
 A. Under the Indemnification Agreement, the Corporation has agreed to pay Expenses (within
the meaning of the Indemnification Agreement) as and when incurred by Indemnitee in connection with any claim against Indemnitee that is the subject of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, or
investigative, to which Indemnitee was, is, or is threatened to be made a party by reason of facts that include Indemnitee’s being or having been a director, officer, or representative (within the meaning of the Indemnification Agreement) of
the Corporation, 
 B. Such a claim has arisen against Indemnitee and Indemnitee has notified the Corporation thereof in accordance
with the terms of Section 5 of the Indemnification Agreement (hereinafter the “Proceeding”), and 
 C. Indemnitee
believes that Indemnitee should prevail in the Proceeding, and it is in the interest of both Indemnitee and the Corporation to defend against the claims against Indemnitee thereunder. 
 NOW, THEREFORE, Indemnitee hereby agrees that in consideration of the Corporation’s advance
payment of Indemnitee’s Expenses incurred before final disposition of the Proceeding, Indemnitee hereby undertakes to reimburse the Corporation for any and all expenses paid by the Corporation on behalf of Indemnitee before final disposition of
the Proceeding if the Indemnitee is determined under the Applicable Document (within the meaning of the Indemnification Agreement) to be required to repay such amounts to the Corporation under the Indemnification Agreement and applicable law,
provided that if Indemnitee is entitled under the Applicable Document to indemnification for some or a portion of such Expenses, Indemnitee’s obligation to reimburse the Corporation shall only be for those Expenses for which Indemnitee is
determined to be required to repay such amounts to the Corporation. Such reimbursement or arrangements for reimbursement by Indemnitee shall be consummated within 90 days after a determination that Indemnitee is required to repay such amounts to the
Corporation under the Indemnification Agreement and applicable law. 
 Further, the Indemnitee agrees to reasonably cooperate with the
Corporation concerning such proceeding. 
 IN WITNESS WHEREOF, the
undersigned has set his or her hand this          day of             ,
20        . 
  

	
	  

	IndemniteeSettlement Agreement and Mutual Release

 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 

	 	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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