Due JANUARY 1, 2007



                                        Customer # 1105510939   Loan #



                                    TERM NOTE

                            (For Term Loan Agreement)



$ 1,400,000.00                                                 DECEMBER 18, 2002



         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 FOUR HUNDRED THOUSAND AND

NO/100________________________________________________________________

Dollars($ 1,400,000.00).



  Interest.



The unpaid principal balance will bear interest at an annual rate equal to

0.500% plus the prime rate announced by the Bank.



The interest rate hereunder will be adjusted each time that the prime rate

changes.



   Payment Schedule.



Principal is payable in 47 installments of $29,166.67 each, beginning FEBRUARY

1, 2003, 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 payment equal to all unpaid principal on JANUARY 1, 2007, the maturity

date.



Interest is payable beginning FEBRUARY 1, 2003, 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.



         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.



         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.



         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.



           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% 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.



           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.



           This Term Note constitutes the Note issued under a Term Loan

           Agreement dated as of the date hereof between the Borrower and the

           Bank, to which Agreement reference is hereby made for a statement of

           the terms under which the loan evidenced hereby was made and a

           description of the terms and conditions upon which the maturity of

           this Note may be accelerated, and for a description of the collateral

           securing this Note.

{PAGE}



         All documents attached hereto, including any appendices, schedules,

riders, and exhibits to this Term Note, are hereby expressly incorporated by

reference.



The Borrower hereby acknowledges the receipt of a copy of this Note.



(individual Borrower)                      HI-SHEAR TECHNOLOGY, CORP.

                                           Borrower Name (Organization)



                                           a DELAWARE Corporation



Borrower Name            N/A               By   /s/ George W. Trahan

                                                ---------------------

                                            Name and Title  GEORGE TRAHAN,

                                                            PRESIDENT/CEO





Borrower Name            N/A               By:  /s/ Gregory Smith

                                                ---------------------

                                             Name and Title  GREGORY SMITH, VP

                                                             FINANCE/CFO



{PAGE}



                                                                     1105510939-



                               TERM LOAN AGREEMENT



     This Term Loan Agreement (the "Agreement") is made and entered into by and

between the undersigned borrower (the "Borrower") and the undersigned bank (the

"Bank") as of the date set forth on the last page of this Agreement.



                                                          ARTICLE I. LOANS



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



           X    SINGLE ADVANCE TERM LOAN. As of the date hereof, the Borrower

          ---   has obtained a term loan from the Bank in the amount of $

                1,400,000.00 (the "Loan Amount"). The term loan is evidenced by

                a single promissory note of the Borrower to the order of the

                Bank in the principal amount of the Loan Amount and dated as of

                the date hereof (the "Note").



                Multiple Advance Term Loan. Prior to n/a or the earlier

                termination hereof, the Borrower may obtain advances from the

                Bank in an aggregate amount not exceeding $ n/a (the "Loan

                Amount'). The term loans will be evidenced by a single

                promissory note of the Borrower to the Bank in the principal

                amount of the Loan Amount and dated as of the date hereof (the

                "Note"). Although the Note will be 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.



    1.2 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 or interest due under the Note or other

amount due hereunder on the due date with respect thereto.



    1.3 Closing Fee. The Borrower will pay the Bank a one-time closing fee of $

n/a contemporaneously with execution of this Agreement. This fee is in addition

to all other fees, expenses and other amounts due hereunder.



    1.4. Compensating Balances. The Borrower will maintain on deposit with the

Bank in non-interest bearing accounts average daily collected balances, in

excess of that required to support account activity and other credit facilities

extended to the Borrower by the Bank, an amount at least equal to the sum of (i)

$ n/a and (ii) n/a % of the Loan Amount as computed on a monthly basis. If the

Borrower fails to keep and maintain such balances, it will pay a deficiency fee,

payable within five days after receipt of a statement therefor calculated on the

amount by which the Borrower's average daily balances are less than the

requirements set forth above, computed at a rate equal to the rate set forth in

the Note.



    1.5 Expenses and Attorneys' Fees. The Borrower will reimburse the Bank and

any Participant (defined below) 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 Agreement or any of the other Loan Documents (defined

below), 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, including

all attorneys' fees, before and after judgment, and the costs of preservation

and/or liquidation of any collateral.



    1.6 Conditions to Borrowing. The Bank will not be obligated to make (or

continue to make) advances hereunder unless (i) the Bank has received executed

originals of the Note and all other documents or agreements applicable to the

loans described herein, including but not limited to the documents specified in

Article III (collectively with this Agreement the "Loan Documents"), in form and

content satisfactory to the Bank; (ii) if the loan is secured, the Bank has

received confirmation satisfactory to it that the Bank has a properly perfected

security interest, mortgage or lien, with the proper priority, (iii) the Bank

has received certified copies of the Borrower's governance documents and

certification of entity status satisfactory to the Bank and all other relevant

documents; (iv) the Bank has received a certified copy of a resolution or

authorization in form and content satisfactory to the Bank authorizing the loan

and all acts contemplated by this Agreement and all related documents, and

confirmation of proper authorization of all guaranties and other acts of third

parties contemplated hereunder; (v) if required by the Bank, the Bank has been

provided with Opinion of the Borrower's counsel in form and content satisfactory



{PAGE}



to the Bank confirming the matters outlined in Section 2.2 and such other

matters as the Bank requests; (vi) no default exists under this Agreement or

under any other Loan Documents, or under any other agreements by and between the

Borrower and the Bank; and (vii) all proceedings taken in connection with the

transactions contemplated by this Agreement (including any required

environmental assessments), and all instruments, authorizations and other

documents applicable thereto, are satisfactory to the Bank and its counsel.



                      ARTICLE II. WARRANTIES AND COVENANTS



   While any part of the credit granted to the Borrower under this Agreement or

the other Loan Documents is available or any obligations under any of the Loan

Documents are unpaid or outstanding, the Borrower continuously warrants and

agrees as follows:



2.1 ACCURACY OF INFORMATION. All information, certificates or statements given

to the Bank pursuant to this Agreement and the other Loan Documents will be true

and complete when given.



2.2 Organization and Authority; Litigation. This Agreement and the other Loan

Documents are the legal, valid and binding obligations of the Borrower,

enforceable against the Borrower in accordance with their terms. The execution,

delivery and performance of this Agreement 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. 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.

There is no litigation or administrative proceeding threatened or pending

against the Borrower which would, if adversely determined, have a material

adverse effect on the Borrowers financial condition or its property.



2.3 EXISTENCE; BUSINESS ACTIVITIES; ASSETS; CHANGE OF CONTROL. The Borrower will

(i) preserve its existence, rights and franchises; (ii) not make any material

change in the nature or manner of its business activities; (iii) not liquidate,

dissolve, merge or consolidate with or into another entity or change its form of

organization; (iv) not amend its organizational documents in any manner that may

conflict with any term or condition of the Loan Documents; and (v) not sell,

lease, transfer or otherwise dispose of all or substantially all of its assets.

Other than the transfer to a trust beneficially controlled by the transferor, no

event shall occur which causes or results in a transfer of majority ownership of

the Borrower while any Obligations are outstanding or while the Bank has any

obligation to provide funding to the Borrower.



2.4 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. Advances by the Bank hereunder

will be used exclusively by the Borrower for the purposes represented to the

Bank. The Borrower will not, without the prior written consent of the Bank,

redeem, purchase, or retire any of the capital stock or declare or pay any

dividends, or make any other payments or distributions of a similar type or

nature including withdrawal distributions. The Borrower will not use any of the

loan proceeds to purchase or carry "margin" stock (as defined in Regulation U of

the Board of Governors of the Federal Reserve System). No part of any of the

proceeds will be used for speculative investment purposes, including, without

limitation, speculating or hedging in the commodities and/or futures market.



2.5 Environmental Matters. Except as disclosed in a written schedule attached to

this Agreement (if no schedule is attached, there are no exceptions), there

exists no uncorrected violation by the Borrower of any federal, state or local

laws (including statutes, regulations, ordinances or other governmental

restrictions and requirements) relating to the discharge of air pollutants,

water pollutants or process waste water or otherwise relating to the environment

or Hazardous Substances as hereinafter defined, whether such laws currently

exist or are enacted in the future (collectively "ENVIRONMENTAL LAWS"). The term

"HAZARDOUS SUBSTANCES" will mean any hazardous or toxic wastes, chemicals or

other substances, the generation, possession or existence of which is prohibited

or governed by any Environmental Laws. The Borrower is not subject to any

judgment, decree, order or citation, or a party to (or threatened with) any

litigation or administrative proceeding, which asserts that the Borrower (i) has

violated any Environmental Laws; (ii) is required to clean up, remove or take

remedial or other action with respect to any Hazardous Substances (collectively

"Remedial Action"); or (iii) is required to pay all or a portion of the cost of

any Remedial Action, as a potentially responsible party. Except as disclosed on

the Borrower's environmental questionnaire provided to the Bank, there are not

now, nor to the Borrower's knowledge after reasonable investigation have there

ever been, any Hazardous Substances (or tanks or other facilities for the

storage of Hazardous Substances) stored, deposited, recycled or disposed of on,

under or at any real estate owned or occupied by the Borrower during the periods

that the Borrower owned or occupied such real estate, which if present on the

real estate or in soils or ground water, could require Remedial Action. To the

Borrowers knowledge, there are no proposed or pending changes in Environmental

Laws which would adversely affect the Borrower or its business, and there are no

conditions existing currently or likely to exist while the Loan Documents are in

effect which would subject the Borrower to Remedial Action or other liability.

The Borrower currently complies with and will continue to timely comply with all

applicable Environmental Laws; and will provide the Bank, immediately upon

receipt, copies of any correspondence, notice, complaint, order or other

document from any source asserting or alleging any circumstance or condition

which requires or may require a financial contribution by the Borrower or

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