Document:

exhibit10-11.htm

1993 STOCK OPTION PLAN OF

HI-SHEAR TECHNOLOGY CORP.

Hi-Shear Technology Corp., a corporation organized under the laws of the State of Delaware (the "Company"), hereby adopts this 1993 Stock Option Plan (the "Plan"). The purposes of this Plan are as follows:

(1)           To further the growth, development, and financial success of the Company by providing additional incentives to its Directors, Officers and Employees and employees of companies who do business with the Company by assisting them to become owners of capital stock of the
Company and thus permitting them to benefit directly from its growth, development and financial success.

(2)           To enable the Company to obtain and retain the services of the type of directors, officers, and employees considered essential to the long-range success of the Company by providing and offering them an opportunity to become owners of capital stock of the Company under
options, including options that are intended to qualify as "incentive stock options" under Section 422 of the Internal Revenue Code of 1986, as amended.

ARTICLE I

DEFINITIONS

Whenever the following terms are used in this Plan, they shall have the meaning specified below unless the context clearly indicates to the contrary. The masculine pronoun shall include the feminine and neuter, and the singular shall include the plural, where the context so indicates.

"AO Option" shall mean an Accelerated Ownership Non-Qualified Stock Option granted in accordance with Section 4.5 hereof.

"Board" shall mean the Board of Directors of the Company.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Committee" shall mean the Stock Option Committee of the Board, appointment as provided in Section 6.1.

"Common Stock" shall mean the common stock of the Company.

"Companion Grant" shall have the definition set forth in Section 4.9 hereof.

"Company" shall mean Hi-Shear Technology Corp. In addition, "Company" shall mean any corporation assuming, or issuing new employee stock options in substitution for, Options outstanding under the Plan, in a transaction to which Section 425(a) of the Code applies.

"Director" shall mean a member of the Board.

“Employee” shall mean any employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of the Code) of the Company, whether such employee is so employed at the time this Plan is adopted or becomes so employed subsequent to the adoption of this Plan, and except with respect
to any Incentive Stock Options, consultants or advisors of the Company.

“Incentive Stock Option” shall mean an Option which qualifies under Section 422 of the Code and which is designated as an Incentive Stock Option by the Committee.

“Non-Qualified Option” shall mean an Option which is not an Incentive Stock Option and which is designated as a Non-Qualified Option by the Committee.

“Officer” shall mean an officer of the Company.

“Option” shall mean an option to purchase capital stock of the Company granted under the Plan. “Options” includes both Incentive Stock Options and Non-Qualified Options.

“Optionee” shall mean a Director, Officer or Employee to whom an Option is granted under the Plan.

“Plan” shall mean this 1993 Stock Option Plan of the Company.

“Restricted Stock” shall mean common stock of the Company granted under the conditions set forth in Section 4.10.

“Secretary” shall mean the secretary of the Company.

“Securities Act” shall mean the Securities Act of 1993, as amended.

“Termination of Employment” shall mean the time when the employee-employer relationship or directorship between the Optionee and the Company is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death or retirement, but excluding terminations where
there is a simultaneous reemployment by the Company. The Committee, in its absolute discretion, shall determine the effect of all other matters and questions relating to Termination of Employment, including, but not by way of limitation, the question of whether a Termination of Employment resulted from a discharge for god cause, and all questions of whether particular leaves of absence constitute Terminations of Employment; provided, however, that, with respect to Incentive Stock Options, a leave of absence interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then applicable Regulations and Revenue Rulings under said Section.

ARTICLE II

SHARES SUBJECT TO PLAN

Section 2.1 - Shares Subject to Plan

The shares of stock subject to Options shall be shares of the Company's par value $.001 Common Stock. The aggregate number of such shares which may be issued upon exercise of Options or as Restricted Stock shall not exceed 500,000.

Section 2.2 - Limitation on Incentive Stock Option Grants

Subject to the overall limitations of Section 2.1, the aggregate fair market value (determined as of the time the Option is granted) of stock with respect to which "incentive stock options" (within the meaning of Section 422 of the Code) are exercisable for the first time by any Director, Officer or Employee in any calendar year (under
the Plan and all other incentive stock option plans of the Company) shall not exceed $100,000.

Section 2.3 - Unexercised Options

If any Option expires or is canceled without having been fully exercised, or is forfeited under the terms of a Restricted Stock grant, the number of shares subject to such Option or grant but as to which such Option was not exercised prior to its expiration or cancellation or shares which were forfeited may again be optioned or granted
hereunder, subject to the limitations of Sections 2.1 and 2.2.

Section 2.4 - Changes in Company's Shares

In the event that the outstanding shares of Common Stock of the Company are hereafter changed into or exchanged for a different number or kind of shares or other securities of the Company, or of another corporation, by reason or reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, appropriate adjustments shall be made by the Committee in the number and kind of shares for the purchase of which Options may be granted, including adjustments of the limitations in Sections 2.1 and 2.2 on the maximum number and kind of shares which may be issued on exercise of Options or Restricted Stock which may be issued.

ARTICLE III

GRANTING OF OPTIONS

Section 3.1 - Eligibility

Any Director, Officer or Employee of the Company shall be eligible to be granted Options, except as provided in Sections 3.2 and 6.4(a). However, no Incentive Stock Option shall be granted to any Director or other person who is not an Employee of the Company.

Section 3.2 – Qualification of Incentive Stock Options

No Incentive Stock Option shall be granted unless such Option, when granted, qualified as an “incentive stock option” under Section 422 of the Code.

Section 3.3 – Granting of Options

	
(a)  
	
The Committee shall from time to time, in its absolute discretion:

	
(i)  
	
Determine which individuals are Directors, Officers or Employees or employees of persons whom the Company does business and select among those persons (including those to whom Options have been previously granted under the Plan) such of them as in its opinion should be granted Options; and

	
(ii)  
	
Determine the number of shares to be subject to such Options granted to such selected persons, and determine whether such Options are to be Incentive Stock Options or Non-Qualified Options, whether stock appreciation rights should be granted for all or part of the Options granted, and, if Non-Qualified Options, whether such options are AO Options; and

	
(iii)  
	
Determine the terms and conditions of such Options, consistent with the Plan.

	
(b)  
	
Upon the selection of a Director, Officer, Employee or other person to be granted an Option, the Committee shall instruct the Secretary to issue such Option and may impose such conditions upon the grant of such Option as it deems appropriate. Without limiting the generality of the preceding sentence, the Committee may, in its discretion and on such terms
as it deems appropriate, require as a condition to the grant of a No-Qualified Option that the Optionee surrender for cancellation some or all of the unexercised Non-Qualified Options which have been previously granted to him. A Non-Qualified Option the grant of which is conditioned upon surrendered Non-Qualified Option, may contain such other terms as the Committee deems appropriate and shall be exercisable in accordance with its terms, without regard to the number of shares, priced, option period, or any other
terms or condition of the surrendered Non-Qualified Option.

ARTICLE IV

TERMS OF OPTIONS

Section 4.1 – Option Agreement

Each Option shall be evidenced by a written Stock Option Agreement, which shall be executed by the Optionee and an authorized Officer of the Company and which shall contain such terms and conditions as the Committee shall determine, consistent with the Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be necessary to qualify Options as “incentive stock options” under Section 422 of the Code.

Section 4.2 - Option Price

(a)           The price of the share subject to each Option shall be set by the Committee; provided, however, that the price per share of shares subject to an Incentive Stock Option shall be not less than 100% of the fair market value of such shares on the date such Option is granted,
or 110% of the fair market value if the Optionee holds 10% or more of the Company's Common Stock, and that the price per share of shares subject to a Non-Qualified Option shall not be less than 85% of the fair market value of such shares on the date such Option is granted.

(b)           For purposes of the Plan, the fair market value of a share of the Company's stock as of a given date shall be: (i) the closing price of a share of the Company's stock on the principal exchange on which shares of the Company's stock are then trading, if any, on such date,
or if shares were not traded on such date, then on the next preceding trading day during which the sale occurred; or (ii) if such stock is not traded on an exchange but is quoted on NASDAQ or a successor quotation system, (1) the last sales price (if the stock is then listed as a National Market Issue under the NASD National Market System) or (2) the mean between the closing representative bid and asked prices (in all other cases) for the stock on such date as reported by NASDAQ or such successor quotation system;
or (iii) if such stock is not publicly traded on an exchange and not quoted on NASDAQ or a successor quotation system, the mean between the closing bid and the asked prices for the stock on such date as determined in good faith by the Committee; or (iv) if the Company's stock is not publicly traded, the fair market value established by the Committee acting in good faith.

Section 4.3 - Commencement of Exercisability

(a)           Except as the Committee may otherwise provide, or in the case of death or disability of the Optionee, (i) no Option may be exercised in whole or in part during the six months after such Option is granted, and (ii) the Company common stock acquired under this Plan shall
not be sold for at least six months after acquisition.

(b)           Subject to the provisions of Sections 4.3(a), 4.3(c) and 7.3, Options shall become exercisable at such times and in such installments (which may be cumulative) as the Committee shall provide in the terms of each individual Option; provided, however, that by a resolution
adopted after an Option is granted the Committee may, on such terms and conditions as it may determine to be appropriate and subject to Sections 4.3(a), 4.3(c) and 7.3, accelerate the time at which such Option or any portion thereof may be exercised.

(c)           No portion of an Option which is unexercisable at Termination of Employment shall thereafter become exercisable.

Section 4.7 - Adjustments in Outstanding Options

In the event that the outstanding shares of the stock subject to Options are charged into or exchanged for a different number or kind of shares of the Company or other securities of the Company by reason of merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend or combination of shares, the Committee
shall make an appropriate and equitable adjustment in the number and kind of shares as to which all outstanding Options, or portions thereof then unexercised, shall be exercisable, to the end that after such event the Optionee's proportionate interest shall be maintained as before the occurrence of such event. Such adjustment in an outstanding Option shall be made without change in the total price applicable to the Option or the unexercised portion of the Option (except for any change in the aggregate price resulting
from rounding-off of share quantities or prices) and with any necessary corresponding adjustment in Option price per share; provided, however, that, in the case of Incentive Stock Options, each such adjustment shall be made in such manner as not to constitute a "modification" within the meaning of Section 424(b)(3) of the Code. Any such adjustment made by the Committee shall be final and binding upon all Optionees, the Company and all other interested persons.

Section 4.8 - Merger. Consolidation. Acquisition. Liquidation or Dissolution

The Committee shall provide by the terms of each Option that, upon or in connection with the merger or consolidation of the Company with or into another corporation, the acquisition by another corporation or person of all or substantially all of the Company's assets or 80% or more of the Company's then outstanding voting stock or the liquidation
or dissolution of the Company, such Option shall be assumed or an equivalent option substituted by any successor corporation of the Company. The Committee may also, in its absolute discretion and on such terms and conditions as it deems appropriate, provide, either by the terms of such Option or by a resolution adopted prior to the occurrence of such merger, consolidation, acquisition, liquidation or dissolution, that, for some period of time prior to such event, such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in Section 4.3(a), Section 4.3(b), and/or any installment provisions of such Option.

Section 4.9 - Stock Appreciation Rights

Stock appreciation rights may be granted, at the discretion of the Committee, separately or concurrently with the grant of any Option granted under the Plan ("Companion Grant"). A stock appreciation right shall extend to all or a portion of the shares covered by the Companion Grant. If a stock appreciation right extends to less than all
the shares covered by the Companion Grant and if a portion of the Option contained in the Companion Grant is thereafter exercised, the number of shares subject to the unexercised stock appreciation right shall be reduced only if and to the extent that the remaining portion of the Option contained in the Companion Grant covers fewer shares that the unexercised stock appreciation right would otherwise cover. A stock appreciation right shall entitle the Optionee (subject to the conditions and limitations set forth
below), under surrender of a then exercisable portion of the Option contained in the Companion Grant (subject to the maximum number of shares to which the stock appreciation right extends), to receive payment of an amount determined pursuant to subparagraph (b) of the following paragraph.

Stock Appreciation Rights.  The Plan Administrator is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:

 

(a)  A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the Fair Market Value of one share of Stock on the
date the grant of such Stock Appreciation Right.

 

(b)  The Plan Administrator shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements),
the time or times at which Stock Appreciation Rights shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with any other Award, and any other terms and conditions of any Stock Appreciation Right.
Stock Appreciation Rights may be either freestanding or in tandem with other Awards.

 

(c) Restricted Stock.  The Plan Administrator is authorized to grant Restricted Stock to Participants on the following terms and conditions. Restricted Stock shall be subject to such restrictions on transferability, risk
of forfeiture, and other restrictions, if any, as the Plan Administrator may impose, or as otherwise provided in this Plan. The restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Plan Administrator may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and any Award agreement relating
to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Plan Administrator). During the restricted period applicable to the Restricted Stock, subject to Section 10(b) below, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined, or otherwise encumbered
by the Participant.

 

ARTICLE V

EXERCISE OF OPTIONS

Section 5.1 – Person Eligible to Exercise

During the lifetime of the Optionee, only heor a legal representative thereof may exercise an Optin granted to himor her, or any portion thereof. After the death of the Optionee, any exercisable portion of an Option may, prior to time when such portion becomes unexercisable under Section 4.4 or Section 4.7, be exercised by his personal
representative or by an person empowered to do so under the deceased Optionee's will or under the then applicable laws of descent and distribution.

Section 5,2 - Partial Exercise

At any time and from time to time prior to the time when any exercisable Option or exercisable portion thereof becomes unexercisable under Section 4.4 or Section 4.7, such Option or portion thereof may be exercised in whole or in part; provided, however, that the Company shall not be required to issue fractional shares and the Committee
may, by the terms of the Option, require any partial exercise to be with respect to a specified minimum number of shares.

Section 5.3 - Manner of Exercise

An exercisable Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary or his office of all of the following prior to the time when such Option or such portion becomes unexercisable under Section 4.4. or Section 4.7:

(a)           Notice in writing signed by the Optionee or other person then entitled to exercise such Option or portion, stating that such Option or portion is exercised, such notice complying with all applicable rules established by the Committee; and

(b)           (i)           Full payment (in cash or by check) for the shares with respect to which such Option or portion is thereby exercised; or

(ii)           Shares of any class of the Company's stock owned by the Optionee duly endorsed for transfer to the Company with a fair market value (as determinable under Section 4.2(b)) on the date of delivery equal to the aggregate Option price of the shares with respect to which
such Option or portion is thereby exercised; or

(iii)           With the consent of the Committee, a full recourse promissory note bearing interest (at least at such rate as shall then preclude the imputation of interest under the Code or any successor provision) and payable upon such terms as may be prescribed by the Committee.
The Committee may also prescribe the form of such note and the security to be given for such note. No Option may, however, be exercised by delivery of a promissory note or by a loan from the Company when or where such loan or other extension of credit is prohibited by law; or

(iv)           Any combination of the consideration provided in the foregoing subsections (i), (ii), and (iii); and

(c)           Such representations and documents as the Committee, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal or state securities laws or regulations. The Committee may, in
its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer orders to its transfer agents and registrars; and

(d)           In the event that the Option or portion thereof shall be exercised pursuant to Section 5.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option or portion thereof.

Section 5.4 – Conditions to Issuance of Stock Certificates

The shares of stock issuable and deliverable upon the exercise of an Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have been reacquired by the Company. The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:

(a)           The completion of any registration or other qualification of such shares under any state or federal law or under the rulings or regulations of the Securities ad Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or advisable; and

(b)           The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and

(c)           The payment to the Company of all amounts which it is required to withhold under federal, state or local law in connection with the exercise of the Option.

Section 5.5 – Rights as Shareholders

The holders of Options shall not be, nor have any of the rights of, shareholders of the Company in respect to any shares purchasable upon the exercise of any part of an Option unless and until certificates representing such shares have been issued by the Company to such shareholders.

Section 5.6 – Transfer Restrictions

The Committee, in its absolute discretion, may impose such restrictions on the transferability of the shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the respective Stock Option Agreement. The Committee may require the
Director, within two years from the date of granting such option or one year after the transfer of such shares to such Director, Officer or Employee. The Committee may direct that the certificates evidencing shares acquired by exercise of an Option refer to such requirement to give prompt notice of disposition.

Section 5.7 - Withholding Tax

Should any amount be required to be withheld for payment of taxes under the Code from an Optionee with respect to the exercise of any Option, Optionee in his discretion may pay such withholding tax in shares of the Company's Common Stock, at the fair market value of such Common Stock on the date of payment.

Section 5.8 - Reports

The Company shall provide to each Optionee a copy of the Company's annual report when released to the Company's stockholders.

ARTICLE VI

ADMINISTRATION

Section 6.1 - Stock Option Committee

The Committee shall consist of at least two Directors, appointed by and holding office at the pleasure of the Board. Appointment of Committee member shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Committee shall be filled by the Board.

After the Company's Common Stock becomes registered under the Securities Exchange Act of 1934, as amended, unless otherwise provided by the Board, no Options, stock appreciation rights or Restricted Stock may be granted to any member of the Committee. No person shall be eligible to serve on the Committee unless he is then a "disinterested
person" within the meaning of Rule 16b-3 which has been adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, if and as such Rule is then in effect.

Section 6.2 - Duties and Powers of Committee

It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan and the Options and to adopt or amend such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret,
amend or revoke any such rules. The Committee may accelerate the exercise date of any option and determine the right of any person to exercise the rights on behalf of any Optionee. Any such interpretations and rules in regard to Incentive Stock Options shall be consistent with the basic purpose of the plan to grant "incentive stock options" within the meaning of Section 422 of the Code. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee
under the Plan.

ARTICLE VII

OTHER PROVISIONS

Section 7.1 – Options Not Transferrable

No Option or interest or right therein or part thereof shall be liable for debts, contracts or engagements of the Optionee or his successors in interest or shall be subject to disposition by transfer, alienation or any other means whether such disposition be voluntary or involuntary or by operation
of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), any attempted disposition thereof shall by null an void and of no effect; provided, however, that nothing in this Section 7.1 shall prevent transfers by will or by the applicable laws of descent and distribution.

Section 7.2 – Amendment, Suspension or Termination of the Plan

The Plan may be wholly or partially amended or otherwise modified, suspended or terminated at anytime or from time to time by the Board or the Committee. Neither the amendment, suspension nor termination of the Plan shall, without the consent of the holder of the Option, alter or impair any
rights or obligations under any Option therefore granted. No Option may be granted during any period of suspension nor after termination of the Plan, and in no event may any Option be granted under this Plan after the first to occur of the following events:

	
(a)  
	
The expiration of ten years from the date the Plan is adopted; or

(b)           The expiration of ten years from the date the Plan is approved by the Company’s shareholders under Section 7.3.

Section 7.3 - Approval of Plan by Shareholders

This Plan will be submitted for the approval of the Company's shareholders within 12 months after the date of the Board's initial adoption of the Plan. Incentive Stock Options may be granted prior to such shareholder approval; provided, however, that such Incentive Stock Options shall not be exercisable prior to the time when the Plan
is approved by the shareholders; provided, further, that if such approval has not been obtained at the end of said 12-month period, all Incentive Stock Options previously granted under the Plan shall thereupon be canceled and become null and void.

Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans

The adoption of this Plan shall not affect any other compensation or incentive plans in effect for the Company. Nothing in this Plan shall be construed to limit the right of the Company (a) to establish any other forms of incentives or compensation for employees of the Company or (b) to grant or assume options otherwise than under this
Plan in connection with any proper corporate purpose, including, but no by way of limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise of the business, stock or assets of any corporation, firm or association.

Section 7.5 - Titles

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

* * * *

I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Hi-Shear Technology Corp. on 12/20     , 1993.

Executed this 23rd day of December, 1993.

/s/

Asst. Secretary

Corporate Sealexhibit10-642.htm

	
For Bank Use Only
	
Reviewed by _____________

	
Due MARCH 2, 2009
	  
	
Customer # 1105510939
	
Loan # 281

AMENDMENT TO NOTE

This amendment (the "Amendment"), dated as of the date specified below, is by and between the borrower (the "Borrower") and the bank (the "Bank") identified below.

RECITALS

A.      The Borrower has executed a Note (the "Note"), payable to the Bank dated JANUARY 25, 2008, and as amended and replaced from time to time, and the Borrower (and if applicable, certain third parties) have executed the collateral documents
which may or may not be identified in the Note and certain other related documents (collectively the "Loan Documents"), setting forth the terms and conditions upon which the Borrower may obtain loans from the Bank from time to time in the stated amount of $ 1,000,000.00, as may be amended from time to time.

B.      The Borrower has requested that the Bank permit certain modifications to the Note as described below.

C.      The Bank has agreed to such modifications, but only upon the terms and conditions outlined in this Amendment.

AGREEMENT

In consideration of the mutual covenants contained herein, and for other good and valuable consideration, the Borrower and the Bank agree as follows:

£ Change in. Payment Schedule. If checked here, effective upon the date of this Amendment, any payment terms are amended as follows:

£ Change in Late Payment Fee. If checked here, subject to applicable law, if any payment is not made on or before its due date, the Bank may collect a delinquency charge of __.____% 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.

£ Change in Closing Fee. If checked here and subject to applicable law, the Borrower will pay the Bank a closing fee of $ ____________ (apart from any prior closing fee) contemporaneously with the execution of
this Amendment. This fee is in addition to ail other fees, expenses and other amounts due hereunder.

T Change in Maturity Date. if checked here, any references in the Note to the maturity date or date of final payment are hereby deleted and replaced with “MARCH
2, 2009”.

£ Change in Maximum Loan Amount. If checked here, all references in the Note (whether or not numerically) to the maximum loan amount are hereby deleted and replaced with "$_______", which evidences an additional
$_______ available to be advanced subject to the terms and conditions of the Note.

  

  

  

£ Temporary Increase in Loan. Amount, if checked here, notwithstanding the principal amount of the Note, the principal amount that may be borrowed thereunder shall increase from $______to $______ effective
______ through ______ annually. On ______ through ______ annually, the principal amount that may be borrowed thereunder shall revert to $______ and any loans outstanding in excess of that amount will be immediately due and payable without further demand by the Bank.

£ Change in Multiple Advance Termination Date. If checked here, ail references in the Note to the termination date for multiple advances are hereby deleted and replaced with "______".

£ Change in Paid-ln-Full Period. It checked here, all revolving loans under the Note must be paid in full for a period of at least ______ consecutive days during each fiscal year. Any previous Paid-in-Full
provision is hereby replaced with this provision.

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 tor 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.

Effectiveness of Prior Documents. Except as specifically amended hereby, the Note and the other Loan Documents shall remain in full force and effect in accordance with their respective terms. All warranties and representations contained in the Note and the other Loan Documents are
hereby reconfirmed as of the date hereof. Ail collateral previously provided to secure the Note continues as security, and all guaranties guaranteeing the Note remain in full force and effect. This is an amendment, not a novation.

Preconditions to Effectiveness. This Amendment shall only become effective upon execution by the Borrower and the Bank, and approval by any other third party required by the Bank,

No Waiver of Defaults; Warranties. This Amendment shall not be construed as or be deemed to be a waiver by the Bank of existing defaults by the Borrower, whether known or undiscovered. All agreements, representations and warranties made herein shall survive the execution of this Amendment,

Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be considered an original, but when taken together shall constitute one document.

Authorization. The Borrower represents and warrants that the execution, delivery and performance of this Amendment and the documents referenced herein are within the authority of the Borrower and have been duly authorized by all necessary action.

Transferable Record. The note, as amended, is a 'transferable record" as defined in applicable law relating to electronic transactions. Therefore, the holder of the note, as amended, may, on behalf of Borrower, create a microfilm or optical disk or other electronic image of the note,
as amended, that is an authoritative copy as defined in such law. The holder of the note, as amended, may store the authoritative copy of such note, as amended, 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.

Attachments. All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Amendment, are hereby expressly incorporated herein by reference.

Dated as of: JANUARY 20, 2009.

	
{Individual Borrower)
	
Hi-Shear Technology Corporation

	  	
Borrower Name (Organization)

	  	  
	  	
a Delaware Corporation

	  	  
	
Borrower Name N/A
	
By: /s/ George W. Krahan

	  	
Name and Title: George W. Krahan, Chief Executive Officer

	  	  
	
Borrowed Name N/A
	
By: /s/ Jan L. Hauhe

	  	
Jan L. Hauhe, Chief Financial Officer Name and Title:

	  	  
	
Agreed to:
	  
	  	  
	
U.S. BANK N.A. (Bank)
	  
	  	  
	
By: /s/ David J. Clarke
	  
	  	  
	
Name and Title: David J. Clarke

 Vice President
	  

  

  

  

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 Technology 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, than 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.

  

  

  

	
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 20, 2009
	  
	
Agreed to:
	  
	  	  
	
U.S. BANK N.A.
	  
	
(Bank)
	  
	  	  
	
By: /s/ David J. Clarke
	  
	  	  
	
Name and Title: David J. Clarke

               Vice President
	  
	  	  
	  	  
	  	
Hi-Shear Technology Corporation

	
(Individual)
	
Name (Organization)

	
Printed Name:
	
a Delaware Corporation

	  	
By: George W.Trahan, Chief Executive Officer

	
(Individual)
	
Name and Title: /s/ George W.Trahan

	  	
By: Jan L. Hauhe, Chief. Financial Officer

	
Printed Name:
	
Name and Title: /s/ Jan L. Hauhe

	
(Individual)
	
By:

	  	
Name and Title:

	
Printed Name:
	
By:

	  	
Name and Title:

	
(Individual)
	
By:

	  	
Name and Title:

	  	
By:

	  	
Name and Title:

	  	  
	
(Individual)
	  
	  	  
	
Printed Name:
	  
	  	  
	
(Individual) Printed Name:
	  
	  	  
	
Printed Name:

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