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                                  EXHIBIT 10.1

                                     For Bank Use Only , Reviewed by
                                     Due JANUARY 18,2008
                                     Customer #  1105510939         Loan #

                       INSTALLMENT OR SINGLE PAYMENT NOTE

$ 1,000,000.00  JANUARY 18, 2007
FOR VALUE RECEIVED, the undersigned borrower (the "Borrower"), promises to pay
to the order of U. S. BANK N. A. (the "Bank"), the principal sum of ONE MILLION
AND NO/100_ Dollars ($ 1,000,000.00) (the "Loan Amount").

1. TERMS FOR ADVANCE(S). [CHOOSE ONE:]

     ___  SINGLE ADVANCE.

     X    MULTIPLE ADVANCES. Prior to JANUARY 18,2008 or the earlier termination
          hereof, the Borrower may obtain advances from the Bank under this
          Installment or Single Payment Note (the "NOTE") in an aggregate amount
          not exceeding the Loan Amount. Although this Note is expressed as
          payable in the full Loan Amount, the Borrower will be obligated to pay
          only the amounts actually disbursed hereunder, together with accrued
          interest on the outstanding balance at the rates and on the dates
          specified therein and such other charges provided for herein.

2. INTEREST.
The unpaid principal balance will bear interest at an annual rate described in
the Interest Rate Rider attached to this Note.

3. PAYMENT SCHEDULE.
Interest is payable beginning FEBRUARY 18, 2007, and on the same date of each
consecutive month thereafter (except that if a given month does not have such a
date, the last day of such month), plus a final interest payment with the final
payment of principal.

Principal is payable on JANUARY 18, 2008.

4. CLOSING FEE. If checked here, the Borrower will pay the Bank a one-time
closing fee of $ n/a contemporaneously with execution of this Note. This fee is
in addition to all other fees, expenses and other amounts due hereunder.

5. LATE PAYMENT FEE. Subject to applicable law, if any payment is not made on or
before its due date, the Bank may collect a delinquency charge of 5.00% of the
unpaid amount. Collection of the late payment fee shall not be deemed to be a
waiver of the Bank's right to declare a default hereunder.

6. CALCULATION OF INTEREST. Interest will be computed for the actual number of
days principal is unpaid, using a daily factor obtained by dividing the stated
interest rate by 360.

7. DEFAULT INTEREST RATE. Notwithstanding any provision of this Note to the
contrary, upon any default or at any time during the continuation thereof
(including failure to pay upon maturity), the Bank may, at its option and
subject to applicable law, increase the interest rate on this Note to a rate of
5% per annum plus the interest rate otherwise payable hereunder. Notwithstanding
the foregoing and subject to applicable law, upon the occurrence of a default by
the Borrower or any guarantor involving bankruptcy, insolvency, receivership
proceedings or an assignment for the benefit of creditors, the interest rate on
this Note shall automatically increase to a rate of 5% per annum plus the rate
otherwise payable hereunder.

8. MAXIMUM RATE. In no event will the interest rate hereunder exceed that
permitted by applicable law. If any interest or other charge is finally
determined by a court of competent jurisdiction to exceed the maximum amount
permitted by law, the interest or charge shall be reduced to the maximum
permitted by law, and the Bank may credit any excess amount previously collected
against the balance due or refund the amount to the Borrower.

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9. ADDITIONAL TERMS.

10. FINANCIAL INFORMATION. The Borrower will (i) maintain accounting records in
accordance with generally recognized and accepted principles of accounting
consistently applied throughout the accounting periods involved; (ii) provide
the Bank with such information concerning its business affairs and financial
condition (including insurance coverage) as the Bank may reasonably request; and
(iii) without request, provide the Bank with annual financial statements
prepared by an accounting firm acceptable to the Bank within 120 days of the end
of each fiscal year.

11. CREDIT BALANCES; SETOFF. As additional security for the payment of the
obligations described in this Note or any document securing or related to the
loan evidenced by this Note (collectively the "LOAN DOCUMENTS",) and any other
obligations of the Borrower to the Bank of any nature whatsoever (collectively
the "OBLIGATIONS"), the Borrower hereby grants to the Bank a security interest
in, a lien on and an express contractual right to set off against all depository
account balances, cash and any other property of the Borrower now or hereafter
in the possession of the Bank and the right to refuse to allow withdrawals from
any account (collectively "SETOFF"). The Bank may, at any time upon the
occurrence of a default hereunder (notwithstanding any notice requirements or
grace/cure periods under this or other agreements between the Borrower and the
Bank) Setoff against the Obligations WHETHER OR NOT THE OBLIGATIONS (INCLUDING
FUTURE INSTALLMENTS) ARE THEN DUE OR HAVE BEEN ACCELERATED, ALL WITHOUT ANY
ADVANCE OR CONTEMPORANEOUS NOTICE OR DEMAND OF ANY KIND TO THE BORROWER, SUCH
NOTICE AND DEMAND BEING EXPRESSLY WAIVED.

12. ADVANCES AND PAYING PROCEDURE. The Bank is authorized and directed to credit
any of the Borrower's accounts with the Bank (or to the account the Borrower
designates in writing) for all loans made hereunder, and the Bank is authorized
to debit such account or any other account of the Borrower with the Bank for the
amount of any principal, interest or expenses due under the Note or other amount
due hereunder on the due date with respect thereto. Payments due under the Note
and other Loan Documents will be made in lawful money of the United States. All
payments may be applied by the Bank to principal, interest and other amounts due
under the Loan Documents in any order which the Bank elects. If, upon any
request by the Borrower to the Bank to issue a wire transfer, there is an
inconsistency between the name of the recipient of the wire and its
identification number as specified by the Borrower, the Bank may, without
liability, transmit the payment via wire based solely upon the identification
number.

13. DEFAULTS. NOTWITHSTANDING ANY CURE PERIODS DESCRIBED BELOW, THE BORROWER
SHALL IMMEDIATELY NOTIFY THE BANK IN WRITING WHEN THE BORROWER OBTAINS KNOWLEDGE
OF THE OCCURRENCE OF ANY DEFAULT SPECIFIED BELOW. Regardless of whether the
Borrower has given the required notice, the occurrence of one or more of the
following shall constitute a default:

     (a)  NONPAYMENT. The Borrower shall fail to pay (i) any interest due on
          this Note or any fees, charges, costs or expenses under the Loan
          Documents by 5 days after the same becomes due; or (ii) any principal
          amount of this Note when due.
     (b)  NONPERFORMANCE. The Borrower or any guarantor of the Borrower's
          Obligations to the Bank ("GUARANTOR") shall fail to perform or observe
          any agreement, term, provision, condition, or covenant (other than a
          default occurring under (a), (c), (d), (e), (f) or (g) of this
          paragraph 13) required to be performed or observed by the Borrower or
          any Guarantor hereunder or under any other Loan Document or other
          agreement with or in favor of the Bank.
     (c)  MISREPRESENTATION. Any financial information, statement, certificate,
          representation or warranty given to the Bank by the Borrower or any
          Guarantor (or any of their representatives) in connection with
          entering into this Note or the other Loan Documents and/or any
          borrowing thereunder, or required to be furnished under the terms
          thereof, shall prove untrue or misleading in any material respect (as
          determined by the Bank in the exercise of its judgment) as of the time
          when given.
     (d)  DEFAULT ON OTHER OBLIGATIONS. The Borrower or any Guarantor shall be
          in default under the terms of any loan agreement, promissory note,
          lease, conditional sale contract or other agreement, document or
          instrument evidencing, governing or securing any indebtedness owing by
          the Borrower or any Guarantor to the Bank or any indebtedness in
          excess of $10,000 owing by the Borrower to any third party, and the
          period of grace, if any, to cure said default shall have passed.
     (e)  JUDGMENTS. Any judgment shall be obtained against the Borrower or any
          Guarantor which, together with all other outstanding unsatisfied
          judgments against the Borrower (or such Guarantor), shall exceed the
          sum of $10,000 and shall remain unvacated, unbonded or unstayed for a
          period of 30 days following the date of entry thereof.

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     (f)  INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) The Borrower or any
          Guarantor shall die or cease to exist; or (ii) any Guarantor shall
          attempt to revoke any guaranty of the Obligations described herein, or
          any guaranty becomes unenforceable in whole or in part for any reason;
          or (iii) any bankruptcy, insolvency or receivership proceedings, or an
          assignment for the benefit of creditors, shall be commenced under any
          Federal or state law by or against the Borrower or any Guarantor, or
          (iv) the Borrower or any Guarantor shall become the subject of any
          out-of-court settlement with its creditors; or (v) the Borrower or any
          Guarantor is unable or admits in writing its inability to pay its
          debts as they mature: or (vi) if the Borrower is a limited liability
          company, any member thereof shall withdraw or otherwise become
          disassociated from the Borrower.
     (g)  ADVERSE CHANGE: INSECURITY; (i) There is a material adverse change in
          the business, properties, financial condition or affairs of the
          Borrower or any Guarantor, or in any collateral securing the
          Obligations: or (ii) the Bank in good faith deems itself insecure.

14. TERMINATION OF LOANS; ADDITIONAL BANK RIGHTS. Upon the occurrence of any of
the events identified in paragraph 13, the Bank may at any time (notwithstanding
any notice requirements or grace/cure periods under this or other agreements
between the Borrower and the Bank) (i) immediately terminate its obligation, if
any, to make additional loans to the Borrower; (ii) Setoff; and/or (iii) take
such other steps to protect or preserve the Bank's interest in any collateral,
including without limitation, notifying account debtors to make payments
directly to the Bank, advancing funds to protect any collateral and insuring
collateral at the Borrower's expense; all without demand or notice of any kind,
all of which are hereby waived.

15. ACCELERATION OF OBLIGATIONS. Upon the occurrence of any of the events
identified in paragraph 13(a) through 13(e) and 13(g), and the passage of any
applicable cure periods, the Bank may at any time thereafter, by written notice
to the Borrower, declare the unpaid principal balance of any Obligations,
together with the interest accrued thereon and other amounts accrued hereunder
and under the other Loan Documents, to be immediately due and payable; and the
unpaid balance shall thereupon be due and payable, all without presentation,
demand, protest or further notice of any kind, all of which are hereby waived,
and notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents. Upon the occurrence of any event under paragraph 13(f),
the unpaid principal balance of any Obligations, together with all interest
accrued thereon and other amounts accrued hereunder and under the other Loan
Documents, shall thereupon be immediately due and payable, all without
presentation, demand, protest or notice of any kind, all of which are hereby
waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. NOTHING CONTAINED IN PARAGRAPH 13 OR 14 OR THIS
PARAGRAPH SHALL LIMIT THE BANK'S RIGHT TO SETOFF AS PROVIDED IN THIS NOTE.

16. COLLATERAL. This Note is secured by any and all security interests, pledges,
mortgages/deeds of trust (except any mortgage/deed of trust expressly limited by
its terms to a specific obligation of Borrower to Bank) or liens now or
hereafter in existence granted to the Bank to secure indebtedness of the
Borrower to the Bank (unless prohibited by law), including, without limitation,
as described in the following documents: Security Agreement dated 12/31/01.

17. GUARANTIES. This Note is guarantied by each and every guaranty now or
hereafter in existence guarantying the indebtedness of the Borrower to the Bank
(except for any guaranty expressly limited by its terms to a specific separate
obligation of Borrower to the Bank) including, without limitation, the
following:

18. ADDITIONAL BANK RIGHTS. Without affecting the liability of any Borrower,
endorser, surety or guarantor, the Bank may, without notice, renew or extend the
time for payment, accept partial payments, release or impair any collateral
security for the payment of this Note, or agree not to sue any party liable on
it.

19. WARRANTIES. The Borrower makes the following warranties: (A) This Note and
the other Loan Documents are the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their terms. (B)
The execution, delivery and performance of this Note and all other Loan
Documents to which the Borrower is a party (i) are within the borrower's power;
(ii) have been duly authorized by all appropriate entity action; (iii) do not
require the approval of any governmental agency; and (iv) will not violate any
law, agreement or restriction by which the Borrower is bound. (C) If the
Borrower is not an individual, the Borrower is validly existing and in good
standing under the laws of its state of organization, has all requisite power
and authority and possesses all licenses necessary to conduct its business and
own its properties.

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20. WAIVERS; RELATIONSHIP to Other Documents. All Borrowers, endorsers, sureties
and guarantors waive presentment, protest, demand, and notice of dishonor. No
delay on the part of the Bank in exercising any right, power or privilege
hereunder or under any of the other Loan Documents will operate as a waiver
thereof, nor will any single or partial exercise of any right, power or
privilege hereunder preclude other or further exercise thereof or the exercise
of any other right, power or privilege. The warranties, covenants and other
obligations of the Borrower (and rights and remedies of the Bank) in this Note
and all related documents are intended to be cumulative and to supplement each
other.

21. EXPENSES AND ATTORNEYS' FEES. Upon demand, the Borrower will immediately
reimburse the Bank and any participant in the Obligations ("PARTICIPANT") for
all attorneys' fees and all other costs, fees and out-of-pocket disbursements
incurred by the Bank or any Participant in connection with the preparation,
execution, delivery, administration, defense and enforcement of this Note or any
of the other Loan Documents, including attorneys' fees and all other costs and
fees (a) incurred before or after commencement of litigation or at trial, on
appeal or in any other proceeding, (b) incurred in any bankruptcy proceeding and
(c) related to any waivers or amendments with respect thereto (examples of costs
and fees include but are not limited to fees and costs for: filing, perfecting
or confirming the priority of the Bank's lien, title searches or insurance,
appraisals, environmental audits and other reviews related to the Borrower, any
collateral or the loans, if requested by the Bank). The Borrower will also
reimburse the Bank and any Participant for all costs of collection before and
after judgment, and the costs of preservation and/or liquidation of any
collateral.

22. APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT Liability;
Severability. This Note and all other Loan Documents shall be governed by and
interpreted in accordance with the internal laws of the State of California
except to the extent superseded by Federal law. THE BORROWER HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE COUNTY
OR FEDERAL JURISDICTION OF THE BANK'S BRANCH WHERE THE LOAN WAS ORIGINATED, AND
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS,
CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS NOTE, THE COLLATERAL, ANY OTHER
LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein shall affect the Bank's
rights to serve process in any manner permitted by law, or limit the Bank's
right to bring proceedings against the Borrower in the competent courts of any
other jurisdiction or jurisdictions. This Note, the other Loan Documents and any
amendments hereto (regardless of when executed) will be deemed effective and
accepted only upon the Bank's receipt of the executed originals thereof. If
there is more than one Borrower, the liability of the Borrowers shall be joint
and several, and the reference to "Borrower" shall be deemed to refer to all
Borrowers. Invalidity of any provision of this Note shall not affect the
validity of any other provision.

23. SUCCESSORS. The rights, options, powers and remedies granted in this Note
and the other Loan Documents shall be binding upon the Borrower and the Bank and
their respective successors and assigns, and shall inure to the benefit of the
Borrower and the Bank and the successors and assigns of the Bank, including
without limitation any purchaser of any or all of the rights and obligations of
the Bank under the Note and the other Loan Documents. The Borrower may not
assign its rights or obligations under this Note or any other Loan Documents
without the prior written consent of the Bank.

24. DISCLOSURE. The Bank may, in connection with any sale or potential sale of
all or any interest in the Note and other Loan Documents, disclose any financial
information the Bank may have concerning the Borrower to any purchaser or
potential purchaser. From time to time, the Bank may, in its discretion and
without obligation to the Borrower, any Guarantor or any other third party,
disclose information about the Borrower and this loan to any Guarantor, surety
or other accommodation party. This provision does not obligate the Bank to
supply any information or release the Borrower from its obligation to provide
such information, and the Borrower agrees to keep all Guarantors, sureties or
other accommodation parties advised of its financial condition and other matters
which may be relevant to their obligations to the Bank.

25. COPIES; ENTIRE AGREEMENT; MODIFICATION. The Borrower hereby acknowledges the
receipt of a copy of this Note and all other Loan Documents. This Note is a
"transferable record" as defined in applicable law relating to electronic
transactions. Therefore, the holder of this Note may, on behalf of Borrower,
create a microfilm or optical disk or other electronic image of this Note that
is an authoritative copy as defined in such law. The holder of this Note may
store the authoritative copy of such Note in its electronic form and then
destroy the paper original as part of the holder's normal business practices.
The holder, on its own behalf, may control and transfer such authoritative copy
as permitted by such law.

<PAGE>

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND
SIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT
CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS
AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL
ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT
BETWEEN BORROWER AND THE BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW
IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTER RECEIPT BY BORROWER
OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR IMPLIED
MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BE
RELIED UPON.

26. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND THE
BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS
THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING
THEREFROM OR CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE
OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

27. ATTACHMENTS. ALL DOCUMENTS ATTACHED HERETO, INCLUDING ANY APPENDICES,
SCHEDULES, RIDERS, AND EXHIBITS TO THIS INSTALLMENT OR SINGLE PAYMENT NOTE, ARE
HEREBY EXPRESSLY INCORPORATED BY REFERENCE.

(Individual Borrower)          Hi-Shear Technology Corporation
                               Borrower Name (Organization)

                               a Delaware Corporation

Borrower Name   N/A            By /s/ George W. Trahan
                               Name and Title:  George W. Trahan, President/CEO

Borrower Name   N/A            By /s/ Gregory J. Smith
                               Name and Title:  Gregory J. Smith, VP Finance/CFO

Borrower Address:  24225 Garnier St, Torrance, CA 90505
Borrower Telephone No.:

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U.S. BANK                                                             1105510939

                                ADDENDUM TO NOTE

     This Addendum is made part of the Installment or Single Payment Note dated
as of the date of this Addendum (the "NOTE") by the undersigned borrower (the
"BORROWER") in favor of U. S. BANK N.A. (the "BANK") in the original principal
amount of $ 1,000,000.00. The warranties, covenants and other terms described
below are hereby added to the Note.

          INCORPORATION OF LOAN AGREEMENT. Borrower and Bank entered
          into a loan agreement dated MARCH 23, 2000 (as amended,
          extended, or restated from time to time, the "LOAN
          AGREEMENT") which Loan Agreement remains in full force and
          effect and is incorporated in its entirety herein by
          reference as though fully set forth herein. The warranties,
          covenants and other obligations of Borrower (and the rights
          and remedies of Bank) that are outlined in the Note and the
          Loan Agreement are intended to supplement each other. In the
          event of any inconsistencies in any of the terms of the Note
          and the Loan Agreement, all terms will be cumulative so as
          to give Bank the most favorable rights set forth in the
          conflicting documents, except that if there is a direct
          conflict between the Note and the Loan Agreement, the terms
          of the Note shall control as to the loan covered by the Note
          and the terms of the Loan Agreement shall control as to the
          loans specifically covered by the Loan Agreement. The
          provisions of the Loan Agreement shall continue in full
          force and effect with respect to the Note notwithstanding
          termination of the Loan Agreement subsequent to the date
          hereof unless the documentation terminating the Loan
          Agreement expressly states that the representations,
          warranties and covenants of the Borrower as set forth in the
          Loan Agreement no longer apply to the Note. The Note is in
          addition to any notes referred to in the Loan Agreement.



Dated as of January 18, 2007

(Individual Borrower)          Hi-Shear Technology Corporation
                               Borrower Name (Organization)

Borrower Name   n/a            a Delaware Corporation

                               By:  /s/ George W. Trahan
Borrower Name   n/a            Name and Title: George W. Trahan, President/CEO

                               By:  /s/ Gregory J. Smith
                               Name and Title: Greorgy J. Smith, VP Finance/CFO

<PAGE>

U.S. BANK                                                             1105510939

                               INTEREST RATE RIDER

This Rider is made part of the Installment or Single Payment and Note (the
"NOTE") in the original amount of $1,000,000.00 by the undersigned borrower (the
"BORROWER") in favor of U. S. BANK N. A. (the BANK") as of the date identified
below. The following interest rate description is hereby added to the Note:

Interest Rate Options. Interest on each advance hereunder shall accrue at one of
the following per annum rates selected by the Borrower ("n/a" indicates rate
option is not available, but Prime Rate Loan option must always be selected) (i)
upon notice to the Bank, -0.250% plus the prime rate announced by the Bank from
time to time, as and when such rate changes (a "Prime Rate Loan"); (ii) upon a
minimum of two New York Banking Days prior notice. 2.000%, plus the 1, 2, 3, 6
or 12 month LIBOR rate quoted by the Bank from Telerate Page 3750 or any
successor thereto (which shall be the LIBOR rate in effect two New York Banking
Days prior to commencement of the advance), adjusted for any reserve requirement
and any subsequent costs arising from a change in government regulation (a
"LIBOR Rate Loan"); or (iii) upon notice to the Bank, n/a % plus the rate,
determined solely by the Bank, at which the Bank would be able to borrow funds
of comparable amounts in the Money Markets for a 1, 2, 3, 6 or 12 month period,
adjusted for any reserve requirement and any subsequent costs arising from a
change in government regulation (a "Money Market Rate Loan"). The term "New York
Banking Day" means any day (other than a Saturday or Sunday) on which commercial
banks are open for business in New York, New York. The term "Money Markets"
refers to one or more wholesale funding markets available to the Bank, including
negotiable certificates of deposit, commercial paper, eurodollar deposits, bank
notes, federal funds, interest rate swaps or others. No LIBOR Rate Loan or Money
Market Rate Loan may extend beyond the maturity of this Note. In any event, if
the Loan Period for a LIBOR Rate Loan or Money Market Rate Loan should happen to
extend beyond the maturity of this Note, such loan must be prepaid at the time
this Note matures. If a LIBOR Rate Loan or Money Market Rate Loan is prepaid
prior to the end of the Loan Period for such loan, whether voluntarily or
because prepayment is required due to the Note maturing or due to acceleration
of this Note upon default or otherwise, the Borrower agrees to pay all of the
Bank's costs, expenses and Interest Differential (as determined by the Bank)
incurred as a result of such prepayment. The term "Loan Period" means the period
commencing on the advance date of the applicable LIBOR Rate Loan or Money Market
Rate Loan and ending on the numerically corresponding day 1, 2, 3, 6 or 12
months thereafter matching the interest rate term selected by the Borrower;
provided, however, (a) if any Loan Period would otherwise end on a day which is
not a New York Banking Day, then the Loan Period shall end on the next
succeeding New York Banking Day unless the next succeeding New York Banking Day
falls in another calendar month, in which case the Loan Period shall end on the
immediately preceding New York Banking Day; or (b) if any Loan Period begins on
the last New York Banking Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of the Loan
Period), then the Loan Period shall end on the last New York Banking Day of the
calendar month at the end of such Loan Period. The term "Interest Differential"
shall mean that sum equal to the greater of zero or the financial loss incurred
by the Bank resulting from prepayment, calculated as the difference between the
amount of interest the Bank would have earned (from like investments in the
Money Markets as of the first day of the LIBOR Rate Loan or Money Market Rate
Loan) had prepayment not occurred and the interest the Bank will actually earn
(from like investments in the Money Markets as of the date of prepayment) as a
result of the redeployment of funds from the prepayment. Because of the
short-term nature of this facility, the Borrower agrees that the Interest
Differential shall not be discounted to its present value. Any prepayment of a
LIBOR Rate Loan or Money Market Rate Loan shall be in an amount equal to the
remaining entire principal balance of such loan.

In the event the Borrower does not timely select another interest rate option at
least two New York Banking Days before the end of the Loan Period for a LIBOR
Rate Loan or Money Market Rate Loan, the Bank may at any time after the end of
the Loan Period convert the LIBOR Rate Loan or Money Market Rate Loan to a Prime
Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate
Loan or Money Market Rate Loan shall continue to accrue interest at the same
rate as the interest rate in effect for such LIBOR Rate Loan or Money Market
Rate Loan prior to the end of the Loan Period.

The Bank's internal records of applicable interest rates shall be determinative
in the absence of manifest error. Each LIBOR Rate Loan, and each Money Market
Rate Loan shall be in a minimum principal amount of $100,000.

<PAGE>


Dated as of January 18, 2007

(Individual Borrower)           Hi-Shear Technology Corporation
                                Borrower Name (Organization)

Borrower Name  n/a              a Delaware Corporation

                                By: /s/ George W. Trahan
Borrower Name  n/a              Name and Title: George W. Trahan, President/CEO

                                By: /s/ Gregory J. Smith
                                Name and Title: Gregory J. Smith, VP Finance/CFO

<PAGE>

U.S. BANK                                                             1105510939

                     CALIFORNIA JUDICIAL REFERENCE AGREEMENT

This California Judicial Reference Agreement ("AGREEMENT") is entered into in
connection with any existing financing (other than consumer purpose financing)
("FINANCING") provided by U.S. BANK N.A. ("BANK") to Hi-Shear Technoloqy
Corporation ("BORROWER") evidenced, secured and/or supported by one or more
promissory notes, loan agreements, security agreements, mortgages/deeds of
trust, guaranties and/or other documents signed by the undersigned parties (said
promissory note and such other agreements, together with amendments,
modifications, substitutions and replacements thereto, are hereinafter referred
to as the "LOAN DOCUMENTS").

For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto (collectively, the "PARTIES") agree as
follows:

1.   Any and all disputes, claims and controversies arising out of the Loan
     Documents or the transactions contemplated thereby (including, but not
     limited to, actions arising in contract or tort and any claims by a Party
     against Bank related in any way to the Financing) (individually, a
     "DISPUTE") that are brought before a forum in which pre-dispute waivers of
     the right to trial by jury are invalid under applicable law shall be
     subject to the terms of this Agreement in lieu of the jury trial waivers
     otherwise provided in the Loan Documents.
2.   Any and all Disputes shall be heard by a referee and resolved by judicial
     reference pursuant to California Code of Civil Procedure Sections 638 et
     seq.
3.   The referee shall be a retired California state court judge or an attorney
     licensed to practice law in the State of California with at least ten (10)
     years' experience practicing commercial law. The Parties shall not seek to
     appoint a referee that may be disqualified pursuant to California Code of
     Civil Procedure Section 641 or 641.2 without the prior written consent of
     all Parties.
4.   If the Parties are unable to agree upon a referee within ten (10) calendar
     days after one Party serves a written notice of intent for judicial
     reference upon the other Party or Parties, then the referee will be
     selected by the court in accordance with California Code of Civil Procedure
     Section 640(b).
5.   The referee shall render a written statement of decision and shall conduct
     the proceedings in accordance with the California Code of Civil Procedure,
     the Rules of Court, and California Evidence Code, except as otherwise
     specifically agreed by the parties and approved by the referee. The
     referee's statement of decision shall set forth findings of fact and
     conclusions of law. The decision of the referee shall be entered as a
     judgment in the court in accordance with the provisions of California Code
     of Civil Procedure Sections 644 and 645. The decision of the referee shall
     be appealable to the same extent and in the same manner that such decision
     would be appealable if rendered by a judge of the superior court.
6.   Nothing in this Agreement shall be deemed to apply to or limit the right of
     Bank (a) to exercise self help remedies such as (but not limited to)
     setoff, or (b) to foreclose judicially or nonjudicially against any real or
     personal property collateral, or to exercise judicial or nonjudicial power
     of sale rights, (c) to obtain from a court provisional or ancillary
     remedies (including, but not limited to, injunctive relief, a writ of
     possession, prejudgment attachment, a protective order or the appointment
     of a receiver), or (d) to pursue rights against a Party in a third-party
     proceeding in any action brought against Bank (including actions in
     bankruptcy court). Bank may exercise the rights set forth in the foregoing
     clauses (a) through (d), inclusive, before, during or after the pendency of
     any judicial reference proceeding. Neither the exercise of self help
     remedies nor the institution or maintenance of an action for foreclosure or
     provisional or ancillary remedies or the opposition to any such provisional
     remedies shall constitute a waiver of the right of any Party, including,
     but not limited to, the claimant in any such action, to require submission
     to judicial reference the merits of the Dispute occasioning resort to such
     remedies. No provision in the Loan Documents regarding submission to
     jurisdiction and/or venue in any court is intended or shall be construed to
     be in derogation of the provisions in any Loan Document for judicial
     reference of any of Dispute.
7.   If a Dispute includes multiple claims, some of which are found not subject
     to this Agreement, the Parties shall stay the proceedings of the Disputes
     or part or parts thereof not subject to this Agreement until all other
     Disputes or parts thereof are resolved in accordance with this Agreement.
     If there are Disputes by or against multiple parties, some of which are not
     subject to this Agreement, the Parties shall sever the Disputes subject to
     this Agreement and resolve them in accordance with this Agreement.

<PAGE>

8.   During the pendency of any Dispute which is submitted to judicial reference
     in accordance with this Agreement, each of the Parties to such Dispute
     shall bear equal shares of the fees charged and costs incurred by the
     referee in performing the services described in this Agreement. The
     compensation of the referee shall not exceed the prevailing rate for like
     services. The prevailing party shall be entitled to reasonable court costs
     and legal fees, including customary attorney fees, expert witness fees,
     paralegal fees, the fees of the referee and other reasonable costs and
     disbursements charged to the party by its counsel, in such amount as is
     determined by the Referee.
9.   In the event of any challenge to the legality or enforceability of this
     Agreement, the prevailing Party shall be entitled to recover the costs and
     expenses from the non-prevailing Party, including reasonable attorneys'
     fees, incurred by it in connection therewith.
10.  THIS AGREEMENT CONSTITUTES A "REFERENCE AGREEMENT" BETWEEN OR AMONG THE
     PARTIES WITHIN THE MEANING OF AND FOR PURPOSES OF CALIFORNIA CODE OF CIVIL
     PROCEDURE SECTION 638.


Dated as of: JANUARY 18, 2007
Agreed to:
        U.S. BANK N.A.
        (Bank)

By:               /s/ David Clarke
                  David Clarke
Name and Title:   Vice President

                               Hi-Shear Technology Corporation
(Individual)                   Name (Organization)

                               a Delaware Corporation
Printed Name:

(Individual)                   By: /s/ George W. Trahan
                               Name and Title:  George W. Trahan, President/CEO
Printed Name:

(Individual)                   By: /s/ Gregory J. Smith
                               Name and Title:  Gregory J. Smith, VP Finance/CEO
Printed Name:

(Individual)                   By:
                               Name and Title:
Printed Name:

(Individual)                   By:
                               Name and Title:
Printed Name:

(Individual)                   By:
                               Name and Title:
Printed Name:

(Individual)                   By:
                               Name and Title:
Printed Name:

(Individual)

Printed Name: