Exhibit 10.3
SETTLEMENT
AGREEMENT
THIS AGREEMENT is dated as of
June 30, 2009, between Hi-Shear Technology Corporation
(“HSTC”) and United Space Alliance, LLC
(“USA”).
WHEREAS, HSTC and USA are parties in
the case of HSTC v. USA, Case No. 05-2000-CA-024754 in the
Circuit Court for the Eighteenth Judicial Circuit, in and for
Brevard County, Florida (“Case No. 24754’);
and
WHEREAS, HSTC has filed a complaint
against Pacific Scientific Energetic Materials Company (“Pac
Sci”) in Case No. 05-2004-CA-022186 in the Circuit Court
of the Eighteenth Judicial Circuit, in and for Brevard County,
Florida (“Case No. 22186”), and Case
No. 22186 remains pending in that Court; and
WHEREAS, appellate proceedings
arising out of Case No. 24754 are currently pending in the
Florida Fifth District Court of Appeal and in the United States
Supreme Court; and
WHEREAS, USA has initiated
collection efforts against HSTC under the law and procedure of the
State of California (“California Collection
Proceedings”); and
WHEREAS, the parties desire to avoid
the time and expense of further litigation and wish to resolve all
disputes with one another; and
WHEREAS, on or before May 29,
2009, the parties reached a verbal agreement on the settlement
amount to be paid by HSTC, which is memorialized in Paragraph 1 of
this Agreement;
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is
acknowledged by HSTC and USA, the parties agree as
follows:
1.
Payment —HSTC shall pay USA the total sum of
$1,600,000 in four separate installments of $400,000. The first
$400,000 payment is due and payable on the Effective Date, which
shall be defined as the later of June 30, 2009, or the date of
complete execution of this Agreement. The second $400,000 payment
is due and payable on September 30, 2009. The third $400,000
payment is due and payable on December 31, 2009. The fourth
and last payment is due and payable on March 31, 2010. No
interest shall be charged on the unpaid balance to be paid to USA
in this Agreement. HSTC may prepay the amount owed under this
Agreement at any time. All payments under this agreement shall be
by wire transfer in accordance with the wiring instructions
attached to this Agreement as Exhibit A. The initial payment
shall be tendered to counsel for HSTC on the Effective Date.
Subsequent payments shall be made to arrive on the due
date.
2.
Default —HSTC shall be in default of this
Settlement Agreement if (A) HSTC fails to make any payment
when due under Paragraph 1 of this Agreement; or (B) HSTC
sustains a major adverse change in its financial condition, defined
as an increase in HSTC’s debt by $1,000,000 over the amount
of debt on HSTC’s financial statements as of March 19,
2009. In
the event of a default by HSTC and a failure to
cure the default within five calendar days of receipt of a written
notice of default, USA shall be entitled to immediate entry of a
Final Judgment in the amount of all sums remaining to be paid
pursuant to Paragraph 1 of this Agreement. USA shall be entitled to
post-judgment interest at the prevailing statutory rate on the
Final Judgment entered pursuant to this provision. HSTC waives any
defenses to levy, execution, and collection efforts on that Final
Judgment if entered.
3.
General Release of HSTC —USA hereby releases
and forever discharges HSTC, and its employees, officers, agents,
predecessors, successors, insurers, legal representatives, assigns,
member companies, directors, shareholders, advisory board and
members thereof, parents, subsidiaries and affiliates, from any and
all actions, causes of action, claims, damages, executions, liens,
judgments and demands whatsoever, in law or in equity, for, upon or
by reason of any matter, cause, damage, loss, or injury of any
nature occurring prior to the Effective Date, including but not
limited to all matters which were or could have been asserted in
Case No. 24754, and any obligations arising thereunder. This
release extends and applies to, and also covers and includes, all
unknown, unforeseen, unanticipated and unsuspected matters, causes,
injuries, damages, loss and liability, and the consequences
thereof, as well as those now disclosed and known to
exist.
4.
General Release of USA —HSTC hereby releases
and forever discharges USA, and its employees, offic
