Exhibit 10.50

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of February 6, 2008 (this “Agreement”), is between
ASTROTECH SPACE OPERATIONS, INC., a Delaware corporation (“Borrower”), and GREEN
BANK, N.A., a national banking association (“Lender”).

 

RECITALS :

 

Borrower has requested that Lender extend credit to Borrower in the form of a
revolving line of credit in the amount of $2,000,000.00 and a term loan in the
amount of $4,000,000.00.  Lender is willing to make such extensions of credit to
Borrower upon the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

 

ARTICLE I.

 

Definitions

 

Section 1.1.                                   Definitions.  As used in this
Agreement, the following terms have the following meanings:

 

“Advance” means an advance of funds by Lender to Borrower pursuant to
Article II.

 

“Advance Request Form” means a certificate, in substantially the form of
Exhibit “I”, properly completed and signed by Borrower requesting an Advance.

 

“Affiliate” means, with respect to any Person, any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person, including, (a) any Person which beneficially owns or holds ten percent
(10%) or more of any class of voting stock of such Person or ten percent (10%)
or more of the equity interest in such Person, (b) any Person of which such
Person beneficially owns or holds ten percent (10%) or more of any class of
voting shares or in which such Person beneficially owns or holds ten percent
(10%) or more of the equity interests in such Person, and (c) any officer or
director of such Person.

 

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“Assignment of Rents” means the Absolute Assignment of Rents (With License Back)
executed by Holdings in substantially the form of Exhibit D”, as the same may be
amended, supplemented or modified.

 

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“Authorized Representative” means any officer or employee of Borrower who has
been designated in writing by Borrower to Lender to be an Authorized
Representative.  As of the Closing Date, the Authorized Representative is Brian
Harrington.

 

“Borrowing Base” means, at any particular time, an amount equal to eighty
percent (80%) of Eligible Accounts.

 

“Borrowing Base Certificate” means a certificate in the form of Exhibit “J”,
fully completed and executed by Borrower.

 

“Business Day” means any day on which commercial banks are not authorized or
required to close in Houston, Texas.

 

“Capital Expenditures” means for Borrower and its Subsidiaries, all expenditures
for assets which, in accordance with GAAP, are required to be capitalized and so
shown on the consolidated balance sheet of Borrower and its Subsidiaries.

 

“Capitalized Lease Obligations” means, for Borrower and its Subsidiaries, on a
consolidated basis, the obligations of Borrower and its Subsidiaries to pay rent
or other amounts under a lease of (or other agreement conveying the right to
use) real and/or personal property, which obligations, in accordance with GAAP,
are required to be classified and accounted for as a capital lease on a balance
sheet of any such Person.

 

“Closing Date” means the date on which this Agreement has been executed and
delivered by the parties hereto and the conditions set forth in Section 6.1 have
been satisfied.

 

“Collateral” has the meaning specified in Section 5.1.

 

“Collateral Account” means a deposit account number 3300921015 styled “Green
Bank for the benefit of Astrotech Space Operations, Inc.” maintained by Borrower
at Lender, which has been pledged to Lender pursuant to this Agreement and the
Security Agreement.

 

“Commitment” means the obligation of Lender to make Advances hereunder in an
aggregate principal amount at any time outstanding up to but not exceeding
$2,000,000.00, as such amount may be reduced pursuant to Section 2.8 or
otherwise.

 

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“Current Long Term Lease Payments” means for Borrower and its Subsidiaries, on a
consolidated basis, the amount due and payable during the next succeeding twelve
month period on operating leases and capital leases of Borrower and its
Subsidiaries which have a final expiration date more than twelve months from the
date of calculation.

 

“Current Maturities of Long Term Debt” means for Borrower and its Subsidiaries,
on a consolidated basis, the principal amount due and payable during the next
succeeding twelve month period on Debt of Borrower and its Subsidiaries for
borrowed money which has a final maturity more than twelve months from the date
of calculation.

 

“Debt” means for any Person (a) all indebtedness, whether or not represented by
bonds, debentures, notes, securities or other evidences of indebtedness, for the
repayment of money borrowed, including, with respect to Borrower, the
indebtedness evidenced by the Notes and all other indebtedness of Borrower to
Lender, (b) Rate Management Transaction Obligations, (c) all indebtedness
representing deferred payment of the purchase price of property or assets,
(d) all indebtedness under any lease which, in conformity with GAAP, is required
to be capitalized for balance sheet purposes, (e) all indebtedness under
guaranties, endorsements, assumptions or other contingent obligations, in
respect of, or to purchase or otherwise acquire, indebtedness of others, (f) all
indebtedness secured by a Lien existing on property owned, subject to such Lien,
whether or not the indebtedness secured thereby shall have been assumed by the
owner thereof, and (g) any obligation to redeem or repurchase any of such
Person’s capital stock, partnership or membership interests or other ownership
interests as applicable.

 

“Debt Service Coverage Ratio” means for Borrower and its Subsidiaries, on a
consolidated basis, as of any date (a) EBITDA for the period ended as of such
date, minus (b) Non-Financed Capital Expenditures for the period ended as of
such date, minus (c) Distributions for the period ended as of such date, divided
by the sum of (e) Current Maturities of Long Term Debt as of such date, plus
(f) Current Long Term Lease Payments as of such date, plus (g) Interest Expense
for the period ended as of such date.

 

“Default Rate” means the lesser of (a) the sum of the stated rate to be borne by
the Notes plus five percent (5.0%) or (b) the Maximum Rate.

 

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“Distribution” means (a) any distribution, dividend or any other payment or
distribution (in cash, property or obligations) made by Borrower on account of
its capital stock, (b) any redemption, purchase, retirement or other acquisition
by Borrower of any of its capital stock, including any purchase of treasury
stock or other treasury obligations, or (c) the establishment of any fund for
any such distribution, dividend, payment or acquisition.

 

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“EBITDA” means for Borrower and its Subsidiaries, on a consolidated basis for
any period, the sum of (a) Net Income for such period, plus (b) without
duplication and to the extent deducted in determining such Net Income
(i) Interest Expense for such period, plus (ii) Income Tax Expense for such
period, plus (iii) depreciation and amortization for such period, plus
(iv) non-cash charges for such period.

 

“Eligible Accounts” means the aggregate of all accounts receivable owned by
Borrower that are acceptable to Lender in its sole discretion and satisfy the
following conditions: (a) are due and payable within thirty (30) days; (b) have
been outstanding less than ninety-one (91) days past the original date of
invoice; (c) have arisen in the ordinary course of business from services
performed by Borrower to or for the account debtor or the sale by Borrower of
goods in which Borrower had sole ownership where such goods have been shipped or
delivered to the account debtor; (d) represent complete bona fide transactions
which require no further act under any circumstances on the part of Borrower to
make such accounts receivable payable by the account debtor; (e) the goods the
sale of which gave rise to such accounts receivable were shipped or delivered to
the account debtor on an absolute sale basis and not on consignment, a sale or
return basis, a guaranteed sale basis, a bill and hold basis, or on the basis of
any similar understanding; (f) are evidenced by an invoice; (g) do not
constitute pre-billings or other unearned income; (h) do not arise in connection
with contracts which are bonded or insured; (i) the goods the sale of which gave
rise to such accounts receivable were not, at the time of sale thereof, subject
to any Lien, except the security interest in favor of Lender created by the Loan
Documents; (j) are not subject to any provisions prohibiting assignment or
requiring notice of or consent to such assignment; (k) are subject to a
perfected, first priority security interest in favor of Lender and are not
subject to any other Lien; (l) are not subject to setoff, counterclaim, defense,
allowance, dispute or adjustment other than normal discounts for prompt payment,
and the goods of sale which gave rise to such accounts receivable have not been
returned, rejected, repossessed, lost or damaged; (m) the account debtor is not
insolvent or the subject of any bankruptcy or insolvency proceeding and has not
made an assignment for the benefit of creditors, suspended normal business
operations, dissolved, liquidated, terminated its existence, ceased to pay its
debts as they become due, or suffered a receiver or trustee to be appointed for
any of its assets or affairs; (n) are not evidenced by chattel paper or any
instrument of any kind; (o) are owed by a Person or Persons that are citizens of
or organized under the laws of the United States or any State and are not owed
by any Person organized under the laws of a jurisdiction located outside of the
United States of America (“Foreign Persons”), provided, that accounts receivable
owed by

 

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Foreign Persons may constitute Eligible Accounts if (i) payment of such accounts
receivable is insured by a foreign risk insurance policy acceptable to Lender
and the proceeds of such policy have been assigned to Lender by an instrument
satisfactory to Lender, (ii) payment of such accounts receivable is covered by a
letter of credit in form and substance satisfactory to Lender, issued by a
financial institution satisfactory to Lender, and the proceeds of such letter of
credit have

 

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been assigned to Lender by an instrument satisfactory to Lender or (iii) Lender
specifically approves such accounts receivable as Eligible Accounts; (p) if any
accounts receivable are owed by the United States of America or any department,
agency or instrumentality thereof, the Federal Assignment of Claims Act shall
have been complied with; (q) are not owed by an Affiliate of Borrower; and
(r) do not include any amount which constitutes retainage.  No account
receivable owed by an account debtor to Borrower shall be included as an
Eligible Account if more than fifteen percent (15%) of the balances then
outstanding on accounts receivable owed by such account debtor and its
Affiliates to Borrower have remained unpaid for more than ninety (90) days from
the dates of their original invoices.  The amount of any Eligible Accounts owed
by an account debtor to Borrower shall be reduced by the amount of all “contra
accounts” and other obligations owed by Borrower to such account debtor.  In the
event that at any time the accounts receivable from any account debtor and its
Affiliates to Borrower exceed fifty percent (50%) of the accounts receivable of
Borrower, the accounts receivable from such account debtor and its Affiliates
shall not constitute Eligible Accounts to the extent to which such accounts
receivable exceed fifty percent (50%) of the accounts receivable of Borrower.

 

“Environmental Laws” means any and all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any federal, state, county,
municipal or other governmental unit, relating in any way to the environment,
preservation or reclamation of natural resources, the management, release or
threatened release of Hazardous Substance or to health and safety matters.

 

“Environmental Report” means that certain “Phase I” environmental assessment of
the Real Properties, in form and substance satisfactory to Lender, prepared by
Phase Engineering, Inc., dated as of January 11, 2008, satisfactory to Lender
and addressed to Lender or accompanied by reliance letters addressed to Lender.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations and published interpretations thereof.

 

“Event of Default” has the meaning specified in Section 11.1.

 

“GAAP” means generally accepted accounting principles in the United States of
America consistently applied.

 

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“Guarantors” means SPACEHAB and Holdings.

 

“Guaranty Agreement - SPACEHAB” means the Guaranty Agreement executed by
SPACEHAB in favor of Lender in substantially the form of Exhibit “G”, as the
same may be amended, supplemented or modified.

 

“Guaranty Agreement - Holdings” means the Guaranty Agreement executed by
Holdings in favor of Lender in substantially the form of Exhibit “H”, as the
same may be amended, supplemented or modified.

 

“Guaranty Agreements” means the Guaranty Agreement B SPACEHAB and Guaranty
Agreement B Holdings.

 

“Hazardous Substance” means any substance, product, waste, pollutant, material,
chemical, contaminant, constituent or other material which is or becomes listed,
regulated or addressed under any Environmental Law.

 

“Holdings” means Astrotech Florida Holdings, Inc., a Florida corporation.

 

“Income Tax Expense” means for Borrower and its Subsidiaries, on a consolidated
basis for any period, all state and federal income taxes paid or due to be paid
during such period.

 

“Interest Expense” means for Borrower and its Subsidiaries, on a consolidated
basis, for any period, the sum of all interest expense paid or required by its
terms to be paid during such period, as determined in accordance with GAAP.

 

“Lien” means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation, assignment, preference, priority or
other encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law or otherwise.

 

“Loan Documents” means this Agreement and all promissory notes, security
agreements, deeds of trust, assignments, letters of credit, guaranties, and
other instruments, documents and agreements executed and delivered pursuant to
or in connection with this Agreement, as such instruments, documents and
agreements may be amended, modified, renewed, extended or supplemented.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
property or financial condition of Borrower and its Subsidiaries,

 

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taken as a whole, or any Obligated Party and its Subsidiaries, taken as a whole,
(b) the ability of Borrower to pay the Obligations or the ability of Borrower or
any Obligated Party to perform its respective obligations under this Agreement
or any of the other Loan Documents or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents, or the rights or remedies of
Lender hereunder or thereunder.

 

“Maturity Date-Term Loan” means February 6, 2011.

 

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“Maximum Rate” means the maximum rate of nonusurious interest permitted from day
to day by applicable law, including Chapter 303 of the Texas Finance Code (the
“Code”) (and as the same may be incorporated by reference in other Texas
statutes).  To the extent that Chapter 303 of the Code is relevant to Lender for
the purposes of determining the Maximum Rate, Lender may elect to determine such
applicable legal rate pursuant to the “weekly ceiling,” from time to time in
effect, as referred to and defined in Chapter 303 of the Code; subject, however,
to the limitations on such applicable ceiling referred to and defined in the
Code, and further subject to any right Lender may have subsequently, under
applicable law, to change the method of determining the Maximum Rate.

 

“Mortgage” means the Mortgage and Security Agreement executed by Holdings in
favor of Lender, in substantially the form of Exhibit “C”, as the same may be
amended, supplemented or modified.

 

“Net Income” means, for Borrower and its Subsidiaries for any period, the
consolidated net income (or loss) of Borrower and its Subsidiaries for such
period, determined in accordance with GAAP.

 

“No Default Certificate” means a certificate in the form of Exhibit “K”, fully
completed and executed by Borrower.

 

“Non-Financed Capital Expenditures” means for Borrower and its Subsidiaries, on
a consolidated basis, for any period, Capital Expenditures incurred during such
period in connection with which none of Borrower or any Subsidiary incurred Debt
(and including the equity portion of Capital Expenditures in connection with
which Debt is incurred).

 

“Note-A” means the promissory note executed by Borrower payable to the order of
Lender, in substantially the form of Exhibit “A”, as the same may be renewed,
extended or modified and all promissory notes executed in renewal, extension,
modification or substitution thereof.

 

“Note-B” means the promissory note executed by Borrower payable to the order of
Lender, in substantially the form of Exhibit “B”, as the same may be renewed,
extended or modified and all promissory notes executed in renewal, extension,
modification or substitution thereof.

 

“Notes” means Note-A and Note-B.

 

“Obligated Party” means Guarantors and any other Person who is or becomes a
party to any agreement pursuant to which such Person

 

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guarantees or secures payment and performance of the Obligations or any part
thereof.

 

“Obligations” means (a) all obligations, indebtedness and liabilities of
Borrower to Lender under this Agreement and the other Loan Documents, (b) the
Rate Management Transaction Obligations, and (c) all interest accruing thereon
and all reasonable attorneys’ fees and other expenses incurred in the
enforcement or collection thereof.

 

“Organizational Documents” means, for any Person, (a) the articles of
incorporation and bylaws of such Person if such Person is a corporation, (b) the
articles of organization and regulations of such Person if such Person is a
limited liability company, (c) the limited partnership agreement of such Person
if such Person is a limited partnership, or (d) the documents under which such
Person was created and is governed if such person is not a corporation, limited
liability company or limited partnership.

 

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, company, trust, governmental authority or other
entity.

 

“Pledge Agreement” means the Security Agreement-Pledge executed by SPACEHAB in
favor of Lender in substantially the form of Exhibit “F”, as the same may be
amended, supplemented or modified.

 

“Prime Rate”means, on any day, the prime rate as published in The Wall Street
Journal on that day under the section “Money Rates”, and being defined therein
as “the base rate on corporate loans at large U.S. money center commercial
banks.”  If such section of The Wall Street Journal reflects more than one rate
as being the “prime rate”, then the highest rate shall be the Prime Rate.  On
days when The Wall Street Journal is not published, the Prime Rate shall be the
“prime rate” stated in the most recently published edition of The Wall Street
Journal.  In the event The Wall Street Journal ceases to be published
altogether, or ceases to publish the “prime rate”, then Lender or its successors
or assigns shall establish and use a new Prime Rate, in the exercise of its sole
discretion, without any notice to Borrower or any other Person being required. 
The Prime Rate shall automatically fluctuate, upward and downward, without
notice to Borrower or any other Person, as and in the amount the said published
“prime rate” shall fluctuate.  The Prime Rate is a reference rate and does not
necessarily represent Lender’s best or lowest rate or a favored rate, and Lender
disclaims any statement, representation or warranty to the contrary.

 

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“Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between Borrower and
Lender which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to one or more
interest rates, foreign currencies, commodity prices, equity prices or other
financial measures.

 

“Rate Management Transaction Obligations” means any and all obligations and
indebtedness, contingent or otherwise, whether now existing or hereafter
arising, of Borrower to Lender arising under or in connection with any Rate
Management Transaction.

 

“Ratio of Total Liabilities to Tangible Net Worth” means, as of any date,
(a) (i) Total Liabilities minus the sum of (ii) (x) Subordinated Debt, plus
(y) Restricted Cash, plus (z) receivables from Affiliates that can be applied to
payables to Affiliates, divided by (b) Tangible Net Worth.

 

“Real Property” means the real property and interests in real property described
in the Mortgage and all improvements and fixtures thereon and all appurtenances
thereto.

 

“Restricted Cash” means net advances received from the National Reconnaissance
Office under a construction contract at Vandenberg Air Force Base, net of
disbursements.

 

“Security Agreement” means the Security Agreement executed by Borrower in favor
of Lender in substantially the form of Exhibit “E”, as the same may be amended,
supplemented or modified.

 

“SPACEHAB” means SPACEHAB, Incorporated, a Washington corporation, and its
successors and assigns.

 

“Subordinated Debt” means Debt of Borrower to any other Person, the payment of
which has been subordinated to the payment of the Obligations in a manner
reasonably satisfactory to Lender and by a document reasonably satisfactory to
Lender.

 

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“Subsidiary” means any Person of which or in which Borrower or its other
Subsidiaries own or control, directly or indirectly, fifty percent (50%) or more
of (a) the combined voting power of all classes having general voting power
under ordinary circumstances to elect a majority of the directors, managers or
equivalent body of such Person, if it is a corporation, (b) the capital interest
or profits interest of such Person, if it is a partnership, limited liability
company, joint venture or similar entity, or (c) the beneficial interest of such
Person, if it is a trust, association or other unincorporated association or
organization.

 

“Tangible Net Worth” means, as of any date, (a) all amounts which, in conformity
with GAAP, would be included as stockholders’ equity on a consolidated balance
sheet of Borrower and its Subsidiaries, plus (b) Subordinated Debt; provided,
however, there shall be excluded therefrom (i) any amount at which shares of
capital stock of Borrower appear as an asset on Borrower’s or any Subsidiary’s
balance sheet, (ii) goodwill, including any amounts, however designated, that
represent the excess of the purchase price paid for assets, stock or other
ownership interests over the value assigned thereto, (iii) patents, trademarks,
trade names and copyrights, (iv) deferred expenses, (v) loans and advances to
any stockholder, partner, member, owner, director, officer manager or employee
of Borrower, any Subsidiary, any Guarantor or any Affiliate, including any such
loans and advances evidenced by promissory notes, to the extent such loans and
advances to such Persons exceed amounts payable to such Persons, (vi) accounts
receivable or other amounts due from any Subsidiary, any Guarantor or any
Affiliate, and (v) all other assets which are properly classified as intangible
assets.

 

“Termination Date” means 11:00 a.m., Houston, Texas time on February 6, 2009, or
such earlier date on which the Commitment terminates as provided in this
Agreement.

 

“Term Loan” means the loan made by Lender to Borrower pursuant to Article III.

 

“Total Liabilities” means, as of any date, all amounts which, in accordance with
GAAP, would be classified as liabilities on a consolidated balance sheet of
Borrower and its Subsidiaries.

 

“Unmatured Event of Default” means the occurrence of an event or the existence
of a condition which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default.

 

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Section 1.2.                                   Other Definitional Provisions. 
All definitions contained in this Agreement are equally applicable to the
singular and plural forms of the terms defined.  The words “hereof”, “herein”
and “hereunder” and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement.  Unless otherwise specified, all Article and Section references
pertain to this Agreement.  All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.  Terms used herein that are defined
in the Uniform Commercial Code as adopted by the State of Texas, unless
otherwise defined herein, shall have the meanings specified in the Uniform
Commercial Code as adopted by the State of Texas.  In the event that, at any
time, Borrower has no Subsidiaries, all references to the Subsidiaries of
Borrower and the consolidation of certain financial information shall be deemed
to be inapplicable until such time as Borrower has a Subsidiary.

 

ARTICLE II.

 

Revolving Line of Credit

 

Section 2.1.                                   Advances.  Subject to the terms
and conditions of this Agreement, Lender agrees to make one or more Advances to
Borrower from time to time from the date hereof to and including the Termination
Date in an aggregate principal amount at any time outstanding up to but not
exceeding the Commitment; provided that the aggregate amount of all Advances at
any time outstanding shall not exceed the lesser of (a) the Commitment or
(b) the Borrowing Base.  Lender shall have no obligation to make any Advance if
an Event of Default or an Unmatured Event of Default has occurred and is
continuing.  Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, Borrower may borrow, repay and reborrow hereunder.

 

Section 2.2.                                   Note-A.  The obligation of
Borrower to repay the Advances shall be evidenced by Note-A executed by
Borrower, payable to the order of Lender, in the principal amount of the
Commitment.

 

Section 2.3.                                   Repayment of Advances.  Borrower
shall repay the unpaid principal amount of all Advances on the Termination Date.

 

Section 2.4.                                   Interest.  The unpaid principal
amount of the Advances shall bear interest prior to maturity at a varying rate
per annum equal from day to day to the lesser of (a) the Maximum Rate or (b) the
sum of the Prime Rate in effect from day to day plus one and three-fourths
percent (1.75%), and each change in the rate of interest charged on the Advances
shall become effective, without notice to Borrower, on the effective date of
each change in the Prime Rate or the Maximum Rate, as the case may be; provided,
however, if at any time the rate of interest

 

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specified in clause (b) preceding shall exceed the Maximum Rate, thereby causing
the interest on the Advances to be limited to the Maximum Rate, then any
subsequent reduction in the Prime Rate shall not reduce the rate of interest on
the Advances below the Maximum Rate until the aggregate amount of interest
actually accrued on the Advances equals the amount of interest which would have
accrued on the Advances if the interest rate specified in clause (b) preceding
had at all times been in effect.  Accrued and unpaid interest on the Advances
shall be payable on the same day of each month as the day of the month on which
this Agreement is dated.  If an Event of Default has occurred and is continuing,
all principal of the Advances shall bear interest at the Default Rate.

 

Section 2.5.                                   Requests for Advances.  Borrower
shall give Lender notice of each requested Advance by delivery to Lender of an
Advance Request Form executed by an Authorized Representative, properly
completed and containing the information required therein.  Prior to making any
Advance, Lender may require that Borrower deliver a Borrowing Base Certificate
dated a recent date acceptable to Lender evidencing that the amount of the
outstanding Advances plus the requested Advance is less than the lesser of
(a) the Commitment or (b) the Borrowing Base.  Assuming that each Advance
Request Form is in proper form, if Lender receives an Advance Request Form prior
to 12:00 p.m. on any Business Day, Lender will make the requested Advance on the
same Business Day, and if Lender receives an Advance Request Form after
12:00 p.m., Lender will make the requested Advance on the next Business Day. 
Advance Request Forms may be delivered by fax or e-mail.

 

Section 2.6.                                   Use of Proceeds.  The proceeds of
Advances shall be used for general corporate purposes and to make advances to
Affiliates.

 

Section 2.7.                                   Mandatory Prepayment.  If at any
time the outstanding principal amount of the Advances exceeds the Borrowing
Base, Borrower shall immediately prepay the outstanding Advances by the amount
of the excess plus accrued and unpaid interest on the amount so prepaid.

 

Section 2.8.                                   Unused Commitment Fee; Reduction
or Termination of Commitment.  Borrower agrees to pay to Lender a commitment fee
on the average daily unused portion of the Commitment, from and including the
Closing Date to and including the Termination Date, at the rate of one-half
percent (0.50%) per annum based on a 360 day year and the actual number of days
elapsed, payable monthly, in arrears and on the Termination Date.  Borrower
shall have the right at any time to irrevocably terminate the Commitment;
provided that prior to such termination, Borrower shall pay all the outstanding
Advances and pay a termination fee in an amount equal to one percent (1%) of the
Commitment.

 

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Section 2.9.                                   Facility Fee.  Borrower agrees to
pay to Lender a facility fee in the amount of 1% of the Commitment on the
Closing Date.  Such facility fee shall be fully earned when paid.

 

ARTICLE III.

 

Term Loan

 

Section 3.1.                                   Term Loan.  Subject to the terms
and conditions of this Agreement, Lender agrees to make the Term Loan to
Borrower in the principal amount of $4,000,000.00.

 

Section 3.2.                                   Note-B.  The obligation of
Borrower to repay the Term Loan shall be evidenced by Note-B executed by
Borrower, payable to the order of Lender, in the principal amount of
$4,000,000.00.

 

Section 3.3.                                   Interest.  The Term Loan shall
bear interest prior to maturity at a varying rate per annum equal from day to
day to the lesser of (a) the Maximum Rate or (b) the Prime Rate in effect from
day to day plus one and three-fourths percent (1.75%), and each change in the
rate of interest charged on the Term Loan shall become effective, without notice
to Borrower on the effective date of each change in the Prime Rate or the
Maximum Rate, as the case may be; provided, however, if at any time the rate of
interest specified in clause (b) preceding shall exceed the Maximum Rate,
thereby causing the interest on the Term Loan to be limited to the Maximum Rate,
then any subsequent reduction in the Prime Rate shall not reduce the rate of
interest on the Term Loan below the Maximum Rate until the amount of interest
actually accrued on the Term Loan equals the aggregate amount of interest which
would have accrued on the Term Loan if the interest rate specified in clause
(b) preceding had at all times been in effect.  If an Event of Default has
occurred and is continuing, all principal of the Term Loan shall bear interest
at the Default Rate.

 

Section 3.4.                                   Repayment of Principal and
Interest.  The principal of and interest on the Term Loan shall be due and
payable by Borrower as follows:

 

(a)                                  Monthly installments of accrued and unpaid
interest shall be due and payable monthly on the same day of each month as the
day of the month on which this Agreement is dated; and

 

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(b)                                 Monthly installments each in the principal
amount of Twenty-Two Thousand Two Hundred Twenty-Two and 22/100 Dollars
($22,222.22) shall be due and payable on the same day of each month as the day
of the month on which this Agreement is dated; and

 

(c)                                  A final installment in the amount of all
outstanding principal, plus all accrued and unpaid interest, shall be due and
payable on Maturity Date-Term Loan.

 

Section 3.5.                                   Use of Proceeds.  The proceeds of
the Term Loan shall be used for general corporate purposes and to make advances
to Affiliates.

 

Section 3.6.                                   Origination Fee.  Borrower agrees
to pay to Lender an origination fee in the amount of $40,000.00 on the Closing
Date.  Such origination fee shall be fully earned when paid.

 

ARTICLE IV.

 

Payments

 

Section 4.1.                                   Method of Payment.  All payments
of principal, interest and other amounts to be made by Borrower under this
Agreement, the Notes or any other Loan Documents shall be made to Lender at its
designated office, without setoff, deduction or counterclaim in immediately
available funds.  Whenever any payment under this Agreement, the Notes or any
other Loan Document shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next Business Day, and interest shall
continue to accrue during such extension.

 

Section 4.2.                                   Voluntary Prepayment.  Borrower
may prepay the Notes in whole at any time or from time to time in part with
accrued interest to the date of prepayment on the amount so prepaid; provided,
however, that (a) any prepayments of principal of Note-B shall be accompanied by
a prepayment penalty of one percent (1%) of the amount prepaid if such
prepayment is made on or before February 6, 2010, and (b) any prepayments of
principal of Note-B shall be applied to the principal installments due on Note-B
in inverse order of their maturities.

 

Section 4.3.                                   Computation of Interest. 
Interest on the indebtedness evidenced by the Notes shall be computed on the
basis of a year of 360 days and the actual number of days elapsed (including the
first day but excluding the last

 

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day) unless such calculation would result in a usurious rate, in which case
interest shall be calculated on the basis of a year of 365 or 366 days, as the
case may be.

 

ARTICLE V.

 

Collateral

 

Section 5.1.                                   Collateral.  To secure full and
complete payment and performance of the Obligations, Borrower shall execute and
deliver or cause to be executed and delivered the documents described below
covering the property and collateral described therein and in this Section 5.1
(which, together with any other property and collateral which may now or
hereafter secure the Obligations or any part thereof, is sometimes herein called
the “Collateral”):

 

(a)                                  Borrower shall grant to Lender a first
priority security interest in all of its accounts, accounts receivable,
inventory, equipment, machinery, fixtures, chattel paper, documents,
instruments, deposit accounts (including the Collateral Account), investment
property, letter of credit rights, general intangibles and all its other
personal property, whether now owned or hereafter acquired, and all products and
proceeds thereof, pursuant to the Security Agreement.

 

(b)                                 Holdings shall grant to Lender a first
priority Lien on the Real Property pursuant to the Mortgage.

 

(c)                                  SPACEHAB shall grant to Lender a first
priority Lien on the stock of Borrower pursuant to the Pledge Agreement.

 

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(d)                                 Borrower shall execute and cause to be
executed such further documents and instruments as Lender, in its sole
discretion, deems necessary or desirable to evidence and perfect its liens and
security interests in the Collateral.  Borrower authorizes, directs and permits
Lender to file Uniform Commercial Code financing statements with respect to the
Collateral in such jurisdictions as Lender may desire.

 

Section 5.2.                                   Absolute Assignment of Rents. 
Holdings shall grant to Lender title to all Rents (as defined in the Assignment
of Rents) under the Leases (as defined in the Assignment of Rents) pursuant to
the Assignment of Rents (it being understood that Holdings shall only be
permitted under a limited license to collect such Rents until the occurrence of
an Event of Default).

 

Section 5.3.                                   Setoff.  Upon the occurrence of
an Event of Default, Lender shall have the right to set off and apply against
the Obligations in such a manner as Lender may determine, at any time and
without notice to Borrower, any and all deposits (general or special, time or
demand, provisional or final) or other sums at any time credited by or owing
from Lender to Borrower whether or not the Obligations are then due.  As further
security for the Obligations, Borrower hereby grants to Lender a security
interest in all money, instruments and other property of Borrower now or
hereafter held by Lender.  In addition to Lender’s right of setoff and as
further security for the Obligations, Borrower hereby grants to Lender a
security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of Borrower now or hereafter on deposit
with or held by Lender and all other sums at any time credited by or owing from
Lender to Borrower.  The rights and remedies of Lender hereunder are in addition
to other rights and remedies (including, without limitation, to the rights of
setoff) which Lender may have.

 

Section 5.4.                                   Guaranty Agreements.  Guarantors
shall unconditionally and irrevocably guarantee payment and performance of the
Obligations as provided in the Guaranty Agreements by execution and delivery of
the Guaranty Agreements, respectively.

 

ARTICLE VI.

 

Conditions Precedent

 

Section 6.1.                                   Initial Extension of Credit.  The
obligation of Lender to make the initial Advance or fund the Term Loan is
subject to the condition precedent that prior thereto Lender shall have received
all of the documents set forth below in form and substance satisfactory to
Lender.

 

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(a)                                  Certificate - Borrower.  A certificate of
the Secretary or another officer of Borrower acceptable to Lender certifying
(i) resolutions of the board of directors of Borrower which authorize the
execution, delivery and performance by Borrower of this Agreement and the other
Loan Documents to which Borrower is or is to be a party and (ii) the names of
the officers of Borrower authorized to sign this Agreement and each of the other
Loan Documents to which Borrower is or is to be a party together with specimen
signatures of such officers.

 

(b)                                 Organizational Documents - Borrower.  The
articles of incorporation and the bylaws of Borrower certified by the Secretary
or another officer of Borrower acceptable to Lender.

 

(c)                                  Governmental Certificates - Borrower. 
Certificates issued by the appropriate government officials of the state of
incorporation of Borrower as to the existence and good standing of Borrower.

 

(d)                                 Certificate - Holdings.  A certificate of
the Secretary or another officer of Holdings acceptable to Lender certifying
(i) resolutions of the board of directors of Holdings which authorize the
execution, delivery and performance by Holdings of the Mortgage, the Guaranty
Agreement - Holdings and the other Loan Documents to which Holdings is or is to
be a party and (ii) the names of the officers of Holdings authorized to sign the
Mortgage, the Guaranty Agreement - Holdings and each of the other Loan Documents
to which Holdings is or is to be party together with specimen signatures of such
officers.

 

(e)                                  Organizational Documents - Holdings.  The
articles of incorporation and the bylaws of Holdings certified by the Secretary
or another officer of Holdings acceptable to Lender.

 

(f)                                    Governmental Certificates - Holdings. 
Certificates issued by the appropriate government officials of the state of
incorporation of Holdings as to the existence and good standing of Holdings.

 

(g)                                 Certificate - SPACEHAB.  A certificate of
the Secretary or another officer of SPACEHAB acceptable to Lender certifying
(i) resolutions of the board of directors of SPACEHAB which authorize the
execution, delivery and performance by SPACEHAB of the Pledge Agreement, the
Guaranty Agreement - SPACEHAB and the other Loan Documents to which SPACEHAB is
or is to be a party and (ii) the names of the officers of SPACEHAB authorized to
sign the Pledge Agreement, the Guaranty Agreement - SPACEHAB and

 

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each of the other Loan Documents to which SPACEHAB is or is to be party together
with specimen signatures of such officers.

 

(h)                                 Organizational Documents - SPACEHAB.  The
articles of incorporation and the bylaws of SPACEHAB certified by the Secretary
or another officer of SPACEHAB acceptable to Lender.

 

(i)                                     Governmental Certificates - SPACEHAB. 
Certificates issued by the appropriate government officials of the state of
incorporation of SPACEHAB as to the existence and good standing of SPACEHAB.

 

(j)                                     Notes.  The Notes executed by Borrower.

 

(k)                                  Security Agreement.  The Security Agreement
executed by Borrower.

 

(l)                                     Pledge Agreement.  The Pledge Agreement
executed by SPACEHAB.

 

(m)                               Financing Statements.  Uniform Commercial Code
financing statements showing Borrower, SPACEHAB and Holdings as debtor.

 

(n)                                 Guaranty Agreements.  The Guaranty
Agreements executed by Guarantors, respectively.

 

(o)                                 Mortgage.  The Mortgage executed by
Holdings.

 

(p)                                 Assignment of Rents.  The Assignment of
Rents executed by Holdings.

 

(q)                                 Fees.  The facility fee referred to in
Section 2.9 and the origination fee referred to in Section 3.6 (provided that
the amount of $25,000.00 previously paid by Borrower shall be credited against
such fees).

 

(r)                                    Required Deposit.  Evidence that Borrower
has deposited $568,550.40 into the Collateral Account.

 

(s)                                  Appraisal.  A MAI appraisal or appraisals
obtained or to be obtained by Lender from a qualified appraiser satisfactory to
Lender prepared in accordance with the requirements for appraisal standards for
national banks or as otherwise required by applicable law or Lender’s then
current appraisal requirements, which appraisal shall reflect an “as is” fair
market value of the Project acceptable to Lender.

 

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(t)                                    Mortgagee Title Insurance Policy.  A paid
mortgagee policy of title insurance in the amount of $6,000,000.00 insuring that
the Mortgage B Holdings creates in favor of Lender a first priority lien on the
Real Property.  The mortgagee policy of title insurance shall have been issued
at Borrower’s expense by a title insurance company acceptable to Lender, shall
show a state of title and exceptions thereto, if any, acceptable to Lender and
shall contain such endorsements as may be required by Lender.

 

(u)                                 Survey.  A survey of the Real Property
showing (i) a metes and bounds description of the Real Property, (ii) all
recorded or visible boundary lines, building locations, locations of utilities,
easements, rights-of-way, rights of access, building or set-back lines,
dedications and natural and manufactured objects affecting the Real Property,
(iii) any encroachments upon or protrusions from the Real Property, (iv) any
area federally designated as a flood hazard and (v) such other matters as Lender
may require

 

(v)                                 Easements, etc.  Copies of all recorded
easements, rights-of way, restrictive covenants, leases, encumbrances and other
documents and instruments filed of record that affect the Real Properties.

 

(w)                               Environmental Report.  An environmental report
addressed to Lender certifying that the Real Properties and Borrower’s and
Holdings=, as applicable, operations thereon comply with all Environmental Laws,
that the Real Properties are free of Hazardous Substances, and that the Real
Properties and any structures thereon are free of any conditions that present
indoor and outdoor air hazards.

 

(x)                                   Insurance Policies.  Copies of all
insurance policies required by Section 8.5, together with loss payable
endorsements in favor of Lender with respect to all insurance policies covering
Collateral.

 

(y)                                 UCC Search.  A Uniform Commercial Code
search showing all financing statements and other documents or instruments on
file against (a) Borrower in Brevard County, Florida, and the office of the
Secretary of State of Delaware, (b) Holdings in Brevard County, Florida, and the
office of the Secretary of State of Florida, and (c) SPACEHAB in the office of
the Secretary of State of Washington.

 

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(z)                                   Attorneys’ Fees and Expenses.  Evidence
that the costs and expenses (including reasonable attorneys’ fees) referred to
in Section 12.1, to the extent incurred, have been paid in full by Borrower.

 

(aa)                            Additional Documentation.  Such additional
approvals or documents as Lender may reasonably request.

 

Section 6.2.                                   Post Closing Deliveries. 
Borrower will deliver to Lender within sixty (60) days after the Closing Date
evidence that Borrower has submitted an application requesting a waiver/variance
letter from the city of Titusville, Florida, waiving the encroachment of a
building contained on the Real Property which was built within a building set
back line.  Borrower=s failure to deliver a waiver/variance letter from the city
of Titusville, Florida will not constitute an Event of Default.

 

Section 6.3.                                   All Extensions of Credit.  The
obligation of Lender to make any Advance (including the initial Advance) is
subject to receipt by Lender of the items required by Section 2.5, and such
additional approvals or documents as Lender may reasonably request.

 

ARTICLE VII.

 

Representations and Warranties

 

To induce Lender to enter into this Agreement, Borrower represents and warrants
to Lender that:

 

Section 7.1.                                   Existence.  Borrower and each
Subsidiary (a) are duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of organization, (b) have all
requisite power and authority to own their assets and carry on their business as
now being or as proposed to be conducted and (c) are qualified to do business in
all jurisdictions necessary and where failure to so qualify would have a
Material Adverse Effect.  Borrower has the power and authority to execute,
deliver and perform its obligations under this Agreement and the other Loan
Documents to which it is or may become a party.

 

Section 7.2.                                   Financial Statements.  Borrower
has delivered to Lender audited consolidated financial statements of Borrower
and its Subsidiaries as at and for the fiscal year ended June 30, 2007, and
unaudited consolidated financial statements of Borrower and its Subsidiaries for
the three (3) month period ended September 30, 2007.  Such financial statements
are true and correct, have been prepared in accordance with GAAP, and fairly and
accurately present, on a consolidated basis, the financial condition of Borrower
and its Subsidiaries as of the respective dates indicated therein and the
results of operations for the respective periods

 

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indicated therein.  Neither Borrower nor any of its Subsidiaries has any
material contingent liabilities, liabilities for taxes, material forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments not reflected in such financial statements.  There has been no
Material Adverse Effect since the effective date of the most recent financial
statements referred to in this Section.

 

Section 7.3.                                   Requisite Action; No Breach.  The
execution, delivery and performance by Borrower of this Agreement and the other
Loan Documents to which Borrower is or may become a party have been duly
authorized by all requisite action on the part of Borrower and do not and will
not violate or conflict with the Organizational Documents of Borrower or any
law, rule or regulation or any order, writ, injunction or decree of any court,
governmental authority or arbitrator, and do not and will not conflict with,
result in a breach of, or constitute a default under, or result in the
imposition of any Lien (except as permitted by this Agreement) upon any of the
revenues or assets of Borrower or any Subsidiary pursuant to the provisions of
any indenture, mortgage, deed of trust, security agreement, franchise, permit,
license or other instrument or agreement by which Borrower or any Subsidiary or
any of their respective properties is bound, except to the extent such conflict,
violation or breach could not reasonably be expected to result in a Material
Adverse Effect.

 

Section 7.4.                                   Operation of Business.  Borrower,
each Guarantor and each Subsidiary possess all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, or rights thereto, to conduct
their respective businesses substantially as now conducted and as presently
proposed to be conducted.

 

Section 7.5.                                   Litigation and Judgments.  There
is no action, suit, investigation or proceeding before or by any court,
governmental authority or arbitrator pending, or to the knowledge of Borrower,
threatened against or affecting Borrower, any Guarantor or any Subsidiary, that
could, if adversely determined, have a Material Adverse Effect.  There are no
outstanding judgments against Borrower, any Guarantor or any Subsidiary.

 

Section 7.6.                                   Rights in Properties; Liens. 
Borrower, each Guarantor and each Subsidiary have good and marketable title to
or valid leasehold interests in their respective properties and assets, real and
personal, including the properties, assets and leasehold interests reflected in
the financial statements described in Section 7.2, and none of the properties,
assets or leasehold interests of Borrower, any Guarantor or any Subsidiary is
subject to any Lien, except as permitted by this Agreement.

 

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Section 7.7.                                   Enforceability.  This Agreement
constitutes, and the other Loan Documents to which Borrower is a party, when
delivered, shall constitute the legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforceability thereof may be limited by bankruptcy, insolvency
or other laws of general application relating to the enforcement of creditor’s
rights and by equitable principles (where the enforcement is sought by
proceedings in equity or at law).

 

Section 7.8.                                   Approvals.  No authorization,
approval or consent of, and no filing or registration with, any court,
governmental authority or third party is or will be necessary for the execution,
delivery or performance by Borrower of this Agreement and the other Loan
Documents to which Borrower is or may become a party or the validity or
enforceability thereof.

 

Section 7.9.                                   Debt.  Borrower and its
Subsidiaries have no Debt except Debt to Lender and other Debt permitted
pursuant to Section 9.1.

 

Section 7.10.                             Use of Proceeds; Margin Securities. 
None of Borrower, any Guarantor or any Subsidiary is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any extension of credit under this Agreement will
be used to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying margin stock.

 

Section 7.11.                             ERISA.  Borrower, each Guarantor and
each Subsidiary have complied with all applicable minimum funding requirements
and all other applicable and material requirements of ERISA, and there are no
existing conditions that would give rise to liability thereunder.  No Reportable
Event (as defined in Section 4043 of ERISA) has occurred in connection with any
employee benefit plan that might constitute grounds for the termination thereof
by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such plan.

 

Section 7.12.                             Taxes.  Borrower, each Guarantor and
each Subsidiary have filed all tax returns (federal, state and local) required
to be filed (or have filed for extensions thereon), including all income,
franchise, employment, property and sales taxes, and have paid all of their
liabilities for taxes, assessments, governmental charges and other levies that
are due and payable (except for those that are being contested in good faith by
appropriate proceedings diligently conducted,

 

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for which no Lien has been filed of record and for which adequate reserves have
been established), and Borrower knows of no pending investigation of Borrower,
any Guarantor or any Subsidiary by any taxing authority or of any pending but
unassessed tax liability of Borrower, any Guarantor or any Subsidiary.

 

Section 7.13.                             Disclosure.  There is no fact known to
Borrower which has a Material Adverse Effect or which might in the future have a
Material Adverse Effect that has not been disclosed in writing to Lender.

 

Section 7.14.                             Subsidiaries.  Borrower has no
Subsidiaries other than Holdings.  Borrower owns one hundred percent (100%) of
the outstanding stock of Holdings.

 

Section 7.15.                             Compliance with Laws.  None of
Borrower, any Guarantor or any Subsidiary is in violation in any material
respect of any law, rule, regulation, order or decree of any court, governmental
authority or arbitrator, the violation of which is reasonably likely to result
in a Material Adverse Effect.

 

Section 7.16.                             Compliance with Agreements.  Neither
Borrower, any Guarantor nor any Subsidiary is in violation in any material
respect of any document, agreement, contract or instrument to which it is a
party or by which it or its properties are bound, the violation of which is
reasonably likely to result in a Material Adverse Effect.

 

Section 7.17.                             Environmental Matters.  Borrower, each
Guarantor and each Subsidiary, and their respective properties, are in
compliance with all applicable Environmental Laws and neither Borrower, any
Guarantor nor any Subsidiary is subject to any liability or obligation for
remedial action thereunder.  There is no pending or, to Borrower=s knowledge,
threatened investigation or inquiry by any governmental authority of Borrower,
any Guarantor or any Subsidiary or any of their respective properties pertaining
to any Hazardous Substance.  Except in the ordinary course of business and in
compliance with all Environmental Laws, there are no Hazardous Substances
located on or under any of the properties of Borrower, any Guarantor or any
Subsidiary.  Except in the ordinary course of business and in compliance with
all Environmental Laws, neither Borrower, any Guarantor nor any Subsidiary has
caused or permitted any Hazardous Substance to be disposed of on or under or
released from any of its properties.  Borrower, each Guarantor and each
Subsidiary have obtained all permits, licenses and authorizations which are
required under and by all Environmental Laws.

 

Section 7.18.                             Solvency.  Borrower, Guarantors and
their Subsidiaries, on an individual and a consolidated basis, are not
insolvent, Borrower’s, each

 

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Guarantor=s and their Subsidiaries’ assets, on an individual and a consolidated
basis, exceed their liabilities, and Borrower will not be rendered insolvent by
the execution and performance of this Agreement and the Loan Documents.

 

Section 7.19.                             Investment Company Act.  None of
Borrower, any Guarantor or any Subsidiary is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

 

ARTICLE VIII.

 

Affirmative Covenants

 

Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or Lender has any Commitment hereunder, Borrower will
perform and observe the covenants set forth below, unless Lender shall otherwise
consent in writing.

 

Section 8.1.                                   Reporting Requirements.  Borrower
will deliver to Lender:

 

(a)                                  Quarterly Financial Statements - Borrower. 
As soon as available, and in any event within forty-five (45) days after the end
of each quarter of each fiscal year of Borrower, a copy of the financial
statements of Borrower and its Subsidiaries as of the end of such fiscal quarter
and for the portion of the fiscal year then ended, containing, on a consolidated
basis, balance sheets, statements of income, statements of stockholders’ equity
and cash flows in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in reasonable detail
and certified by an officer of Borrower acceptable to Lender to have been
prepared in accordance with GAAP and to fairly and accurately present the
financial condition and results of operations of Borrower and its Subsidiaries,
on a consolidated basis, at the date and for the periods indicated therein.

 

(b)                                 Annual Financial Statements - SPACEHAB.  As
soon as available, and in any event within ninety (90) days after the end of
each fiscal year of SPACEHAB, beginning with the fiscal year ending June 30,
2008, a copy of the annual audited financial statements of SPACEHAB and its
Subsidiaries for such fiscal year on SEC form 10-K, prepared in accordance with
GAAP, and audited and certified without qualification by independent certified
public accountants of recognized standing acceptable to Lender.

 

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(c)                                  Quarterly Financial Statements - SPACEHAB. 
As soon as available, and in any event within forty-five (45) days after the end
of each quarter of each fiscal year of SPACEHAB, a copy of the financial
statements of SPACEHAB and its Subsidiaries as of the end of such fiscal quarter
and for the portion of the fiscal year then ended on SEC form 10-Q, certified by
an officer of SPACEHAB acceptable to Lender to have been prepared in accordance
with GAAP and to fairly and accurately present the financial condition and
results of operations of SPACEHAB and its Subsidiaries, on a consolidated basis,
at the date and for the periods indicated therein.

 

(d)                                 No Default Certificate.  (i) As soon as
available, and in any event within forty-five (45) days after the end of each
fiscal quarter, a No Default Certificate as of the last day of such quarter, and
(ii) together with the financial statements delivered pursuant to
Section 8.1(a), a No Default Certificate as of the last day of the fiscal year
covered by such financial statements, in each case executed by an officer of
Borrower acceptable to Lender and containing detailed calculations of the
covenants contained in Article X.

 

(e)                                  Borrowing Base Certificate.  As soon as
available, and in any event within fifteen (15) days after the end of each
month, a Borrowing Base Certificate as of the last day of such month certified
by an officer of Borrower acceptable to Lender.

 

(f)                                    Monthly Accounts Receivable Reports.  As
soon as available, and in any event within fifteen (15) days after the end of
each month, aged accounts receivable reports for Borrower as of the last day of
such month certified by an officer of Borrower acceptable to Lender.

 

(g)                                 Monthly Accounts Payable Reports.  As soon
as available, and in any event within fifteen (15) days after the end of each
month, aged accounts payable reports for Borrower as of the last day of such
month certified by an officer of Borrower acceptable to Lender.

 

(h)                                 Contracts.  As soon as available, and in any
event within forty-five (45) days after the end of each fiscal quarter of
Borrower, a list of all of Borrower=s contracts in excess of $100,000.00 awarded
and pending as of the last day of such fiscal quarter certified by an officer of
Borrower acceptable to Lender.

 

(i)                                     Tax Returns.  Within fifteen (15) days
following the filing thereof, copies of each federal income tax return filed by
Borrower and Guarantor.

 

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(j)                                     Notice of Litigation.  Promptly after
the commencement thereof, notice of all actions, suits and proceedings before
any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, affecting Borrower, any Guarantor or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect.

 

(k)                                  Judgments.  Within five (5) days of the
rendering thereof, notice of any judgment against Borrower, any Guarantor or any
Subsidiary in an amount which is greater than $25,000.00.

 

(l)                                     Notice of Default.  As soon as possible
and in any event within five (5) days after Borrower=s actual knowledge of the
occurrence of each Event of Default and Unmatured Event of Default, a written
notice setting forth the details of such Event of Default or Unmatured Event of
Default and the action which Borrower has taken and proposes to take with
respect thereto.

 

(m)                               Notice of Material Adverse Effect.  As soon as
possible, and in any event within five (5) days after Borrower becomes aware
thereof, notice of the occurrence of any event or the existence of any condition
which could reasonably be expected to have a Material Adverse Effect.

 

(n)                                 General Information.  Promptly, such other
information concerning Borrower, any Guarantor or any Subsidiary as Lender may
from time to time reasonably request.

 

Section 8.2.                                   Maintenance of Existence; Conduct
of Business.  Borrower will preserve and maintain, and will cause each Guarantor
and each Subsidiary to preserve and maintain, its corporate existence and all of
its leases, privileges, licenses, permits, franchises, qualifications and rights
that are necessary or desirable in the ordinary conduct of its business.

 

Section 8.3.                                   Maintenance of Properties. 
Borrower will maintain, and will cause each Guarantor and each Subsidiary to
maintain, its assets and properties in good condition and repair, normal wear
and tear excepted.

 

Section 8.4.                                   Taxes and Claims.  Borrower will
pay or discharge, and will cause each Guarantor and each Subsidiary to pay or
discharge, at or before maturity or before becoming delinquent (a) all taxes,
levies, assessments and governmental charges imposed on it or its income or
profits or any of its property and (b) all lawful claims for labor, material and
supplies, which, if unpaid, might become a Lien upon

 

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any of its property; provided, however, that none of Borrower, any Guarantor or
any Subsidiary shall be required to pay or discharge any claim, tax, levy,
assessment or governmental charge with respect to which no Lien has been filed
of record, which is being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves have been established.

 

Section 8.5.                                   Insurance.  Borrower will
maintain, and will cause each Guarantor and each Subsidiary to maintain, with
financially sound and reputable insurance companies, workmen’s compensation
insurance, liability insurance and insurance on its property, assets and
business, all at least in such amounts and against such risks as are usually
insured against by Persons engaged in similar businesses and as are reasonably
acceptable to Lender.  Each insurance policy covering Collateral shall name
Lender as lender loss payee and provide that such policy will not be cancelled
without at least thirty (30) days prior written notice to Lender.

 

Section 8.6.                                   Inspection.  At any time and from
time to time after an Event of Default has occurred, or, if no Event of Default
has occurred, two (2) days after notice from Lender, and subject to United
States= export laws and the requirements of the Department of Defense Industrial
Security Manual, Borrower will permit, and will cause each Guarantor and each
Subsidiary to permit, representatives of Lender to examine and make copies of
the books and records of, and visit and inspect the properties or assets of
Borrower, any Guarantor and any Subsidiary and to discuss the business,
operations and financial condition of any such Persons with their respective
officers and employees and with their independent certified public accountants.

 

Section 8.7.                                   Keeping Books and Records. 
Borrower will maintain, and will cause each Guarantor and each Subsidiary to
maintain, proper books of record and account in which full, true and correct
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities.

 

Section 8.8.                                   Compliance with Laws.  Borrower
will comply, and will cause each Guarantor and each Subsidiary to comply, in all
material respects with all applicable laws, rules, regulations and orders of any
court, governmental authority or arbitrator, the violation of which is
reasonably likely to result in a Material Adverse Effect.

 

Section 8.9.                                   Compliance with Agreements. 
Borrower will comply, and will cause each Guarantor and each Subsidiary to
comply, in all material respects with all agreements, contracts and instruments
binding on it or affecting its properties or

 

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business, the violation of which is reasonably likely to result in a Material
Adverse Effect.

 

Section 8.10.                             Further Assurances.  Borrower will
execute and deliver, and will cause each Guarantor and each Subsidiary to
execute and deliver, such further instruments as may be reasonably requested by
Lender to carry out the provisions and purposes of this Agreement and the other
Loan Documents and to preserve and perfect the Liens of Lender in the
Collateral.

 

Section 8.11.                             ERISA.  Borrower will comply, and will
cause each Guarantor and each Subsidiary to comply, with all minimum funding
requirements, and all other material requirements, of ERISA, if applicable, so
as not to give rise to any liability thereunder.

 

Section 8.12.                             Continuity of Operations.  Borrower
will continue to conduct, and will cause each Guarantor and each Subsidiary to
continue to conduct, its primary businesses as conducted as of the Closing Date
and to continue its operations in such businesses.

 

Section 8.13.                             Banking Relationship.  Borrower will,
and will cause each Subsidiary to, establish and maintain its primary banking
depository and disbursement relationship with Lender.

 

Section 8.14.                             Collateral Account.  Borrower hereby
pledges and assigns to Lender, and grants to Lender a security interest in, the
Collateral Account and in all cash, instruments, securities and funds on deposit
therein, all interest and cash or other property received in connection
therewith or in exchange therefor, and all proceeds of all of the above, now or
hereafter existing, as additional collateral security for the Obligations. In
addition to Lender’s common law rights of setoff, Borrower hereby grants to
Lender, if an Event of Default exists, the right to offset all or a portion of
the funds in the Collateral Account. Borrower shall have no right to access or
effect withdrawals from the Collateral Account, and the Collateral Account shall
be maintained in the name of and subject to the sole and exclusive dominion and
control of Lender.  There will be no withdrawals made from the Collateral
Account by Lender unless and until an Event of Default has occurred.  If an
Event of Default exists, Lender may at any time, and from time to time, apply
funds on deposit in the Collateral Account to the Obligations in such order as
Lender may determine.

 

Section 8.15.                             Executive Continuity.  Within four
(4) Business Days of such change, Borrower will, and will cause SPACEHAB and
Holdings to, notify Lender of any change in the AExecutive Officers@ (as defined
by the Securities and Exchange Commission) of Borrower, SPACEHAB or Holdings. 
If the Chief Financial Officer of

 

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Borrower, SPACEHAB or Holdings ceases to hold such position, Borrower will, and
will cause SPACEHAB and Holdings to, within four (4) Business Days of such
occurrence, provide Lender with a plan to replace the then outgoing Chief
Financial Officer of Borrower, SPACEHAB or Holdings, as applicable, with a
Person of equal or higher qualification for such position within thirty (30)
Business Days.

 

ARTICLE IX.

 

Negative Covenants

 

Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or Lender has any Commitment hereunder, Borrower will
perform and observe the covenants set forth below, unless Lender shall otherwise
consent in writing.

 

Section 9.1.                                   Debt.  Borrower will not incur,
create, assume or permit to exist, and will not permit any Subsidiary to incur,
create, assume or permit to exist, any Debt, except (a) Debt to Lender,
(b) Subordinated Debt, (c) accounts payable in the ordinary course of business,
and (d) Debt arising from the endorsement of instruments for collection in the
ordinary course of business.

 

Section 9.2.                                   Limitation on Liens.  Borrower
will not incur, create, assume or permit to exist, and will not permit any
Subsidiary to incur, create, assume or permit to exist, any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, except
(a) Liens in favor of Lender, (b) Permitted Encumbrances, if any, as defined in
the Mortgage, (c) Liens for taxes, assessments or other governmental charges
which are not delinquent or which are being contested in good faith, for which
adequate reserves have been established and with respect to which no Lien has
been filed of record, and (d) Liens of mechanics, materialmen, warehousemen,
carriers or other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business.

 

Section 9.3.                                   Mergers, Acquisitions,
Dissolutions and Disposition of Assets.  Borrower will not, and will not permit
any Subsidiary to, (a) become a party to a merger, consolidation, partnership or
joint venture or purchase or otherwise acquire all or a substantial part of the
assets of any Person or any shares or other evidence of beneficial ownership of
any Person, (b) dissolve or liquidate, (c) amend its Organizational Documents,
(d) sell, lease, assign, transfer or otherwise dispose of substantially all of
its assets, except dispositions of inventory in the ordinary course of business,
(e) create any new Subsidiary or (f) enter into any agreement to do any of the
foregoing.

 

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Section 9.4.                                   Restricted Payments.  Borrower
will not declare or pay any Distribution, except Borrower may pay Distributions
to Guarantor if (a) no Event of Default or Unmatured Event of Default exists,
and (b) no Event of Default or Unmatured Event of Default would arise as a
result of making such Distribution.

 

Section 9.5.                                   Loans and Advances.  Borrower
will not make, and will not permit any Subsidiary to make, any advance, loan or
extension of credit to any Person except for advances to SPACEHAB; provided that
advances to SPACEHAB may be made by Borrower only if (a) at the time of making
such advance, no Event of Default or Unmatured Event of Default exists, and
(b) no Event of Default or Unmatured Event of Default would arise as a result of
making such advance.

 

Section 9.6.                                   Investments.  Borrower will not
make, and will not permit any Subsidiary to make, any capital contribution to or
investment in, or purchase, or permit any Guarantor or any Subsidiary to
purchase, any stock, bonds, notes, debentures, or other securities of any
Person, except (a) readily marketable direct obligations of the United States of
America, (b) fully insured certificates of deposit with maturities of one year
or less from the date of acquisition of Lender or any commercial bank operating
in the United States having capital and surplus in excess of $100,000,000.00,
(c) commercial paper of a domestic issuer if at the time of purchase such paper
is rated in one of the two highest rating categories of Standard and Poor’s
Corporation or Moody’s Investors Service, Inc., and (d) investments made through
Lender or its Affiliates and approved by Lender.

 

Section 9.7.                                   Compliance with Environmental
Laws.  Borrower will not, and will not permit any Guarantor or any Subsidiary
to, (a) use (or permit any tenant to use) any of their respective properties or
assets for the handling, processing, storage, transportation or disposal of any
Hazardous Substance, except in the ordinary course of business and in compliance
with all Environmental Laws, (b) generate any Hazardous Substance, (c) conduct
any activity which is likely to cause a release or threatened release of any
Hazardous Substance, or (d) otherwise conduct any activity or use any of their
respective properties or assets in any manner that is likely to violate any
Environmental Law.

 

Section 9.8.                                   Accounting.  Borrower will not
make, and will not permit any Guarantor or any Subsidiary to make, any change in
accounting treatment or reporting practices, except as required by GAAP.

 

Section 9.9.                                   Change of Business.  Borrower
will not enter into, or permit any Subsidiary to enter into, any type of
business which is materially different from the business in which Borrower or
such Subsidiary is presently engaged.

 

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Section 9.10.                             Transactions With Affiliates. 
Borrower will not enter into, or permit to exist, and will not permit any
Subsidiary to enter into or permit to exist, any transaction, arrangement or
contract (including any lease or other rental agreement) with any of its
Affiliates which is on terms which are less favorable than are obtainable from
any Person who is not an Affiliate of Borrower or such Subsidiary.

 

Section 9.11.                             Compliance with Government
Regulations.  Borrower will not, and will not permit any Guarantor or any
Subsidiary to, (a) be or become subject at any time to any law, regulation or
list of any governmental agency (including, without limitation, the U.S. Officer
of Foreign Asset Control list) that prohibits or limits Lender from making any
advance or extension of credit to Borrower or from otherwise conducting business
with Borrower, or (b) fail to provide documentary and other evidence of
Borrower’s identity as may be requested by Lender at any time to enable Lender
to verify Borrower’s identity or to comply with any applicable law or
regulation, including, without limitation Section 326 of the USA Patriot Act of
2001, 31 U.S.C. Section 5318.

 

ARTICLE X.

 

Financial Covenants

 

Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or Lender has any Commitment hereunder, Borrower will
perform and observe the financial covenants set forth below, unless Lender shall
otherwise consent in writing.

 

Section 10.1.                             Tangible Net Worth.  Borrower will at
all times maintain Tangible Net Worth in an amount not less than
$35,000,000.00.  Tangible Net Worth shall be calculated and tested quarterly as
of the last day of each fiscal quarter of Borrower.

 

Section 10.2.                             Ratio of Total Liabilities to Tangible
Net Worth.  Borrower will at all times maintain a Ratio of Total Liabilities to
Tangible Net Worth of not greater than 0.50 to 1.00.  The Ratio of Total
Liabilities to Tangible Net Worth shall be calculated and tested quarterly as of
the last day of each fiscal quarter of Borrower.

 

Section 10.3.                             Debt Service Coverage Ratio.  Borrower
will at all times maintain a Debt Service Coverage Ratio of not less than 1.25
to 1.00.  The Debt Service Coverage Ratio shall be calculated and tested
quarterly as of the last day

 

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of each quarter of each fiscal year of Borrower, commencing with the quarter
ending December 31, 2007, and, the Debt Service Coverage Ratio shall be
calculated on a cumulative basis for the four quarters ended as of such date (a
“rolling or trailing four quarter” basis).

 

ARTICLE XI.

 

Default

 

Section 11.1.                             Events of Default.  Each of the
following shall be deemed an “Event of Default”:

 

(a)                                  Borrower shall fail to pay (i) principal of
the Obligations when due, or (ii) any portion (other than principal) of the
Obligations within five (5) days of the date when due.

 

(b)                                 Any representation or warranty made or
deemed made by Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice or
financial statement furnished at any time in connection with this Agreement
shall be false, misleading or erroneous in any material respect when made or
deemed to have been made.

 

(c)                                  Borrower or any Obligated Party shall fail
to perform, observe or comply with any covenant, agreement or term contained in
this Agreement or any other Loan Document.

 

(d)                                 Borrower, any Subsidiary, or any Obligated
Party shall commence a voluntary proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or a substantial part of its property or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it or shall make a
general assignment for the benefit of creditors or shall generally fail to pay
its debts as they become due or shall take any corporate action to authorize any
of the foregoing.

 

(e)                                  An involuntary proceeding shall be
commenced against Borrower, any Subsidiary or any Obligated Party seeking
liquidation, reorganization or other relief with respect to it or its debts
under any

 

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bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official for it or a substantial part of its property, and such
involuntary proceeding shall remain undismissed and unstayed for a period of
sixty (60) days.

 

(f)                                    Borrower, any Subsidiary or any Obligated
Party shall fail to discharge within a period of sixty (60) days after the
commencement thereof any attachment, sequestration or similar proceeding or
proceedings involving an aggregate amount in excess of $25,000.00 against any of
its assets or properties.

 

(g)                                 Borrower, any Subsidiary or any Obligated
Party shall fail to satisfy and discharge promptly any judgment or judgments
against it for the payment of money in an aggregate amount in excess of
$25,000.00.

 

(h)                                 Borrower or any Subsidiary shall fail to pay
when due any principal of or interest on any Debt (other than the Obligations),
or the maturity of any such Debt shall have been accelerated, or any such Debt
shall have been required to be prepaid prior to the stated maturity thereof, or
any event shall have occurred that permits (or, with the giving of notice or
lapse of time or both, would permit) any holder or holders of such Debt or any
Person acting on behalf of such holder or holders to accelerate the maturity
thereof or require any such prepayment.

 

(i)                                     Any Obligated Party shall fail to pay
when due any principal of or interest on any Debt (other than the Obligations)
which has a principal amount of more than $25,000.00 on the date of such
failure, or the maturity of any such Debt shall have been accelerated, or any
such Debt shall have been required to be prepaid prior to the stated maturity
thereof, or any event shall have occurred that permits (or, with the giving of
notice or lapse of time or both, would permit) any holder or holders of such
Debt or any Person acting on behalf of such holder or holders to accelerate the
maturity thereof or require any such prepayment.

 

(j)                                     An Event of Default, event of default,
Default or default (however therein defined) shall occur in any document
evidencing Debt of Borrower, any Subsidiary or any Obligated Party to Lender or
its Affiliates.

 

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(k)                                  This Agreement or any other Loan Document
shall cease to be in full force and effect or shall be declared null and void or
the validity or enforceability thereof shall be contested or challenged by
Borrower, any Subsidiary, any Obligated Party or any of their respective owners,
or Borrower or any Obligated Party shall deny that it has any further liability
or obligation under any of the Loan Documents, or any Lien or security interest
created by the Loan Documents shall for any reason cease to be a valid, first
priority perfected security interest in and Lien upon any of the Collateral
purported to be covered thereby.

 

(l)                                     Borrower shall fail to comply with the
provisions of Section 2.7 of this Agreement.

 

Section 11.2.                             Remedies Upon Default.  If any Event
of Default shall occur, Lender may do any one or more of the following:
(a) declare the outstanding principal of and accrued and unpaid interest on the
Notes and the Obligations or any part thereof to be immediately due and payable,
and the same shall thereupon become immediately due and payable, without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, notice of intent to demand, protest or other formalities
of any kind, all of which are hereby expressly waived by Borrower, (b) terminate
the Commitment without notice to Borrower, (c) foreclose or otherwise enforce
any Lien granted to Lender to secure payment and performance of the Obligations
and (d) exercise any and all rights and remedies afforded by the laws of the
State of Texas or any other jurisdiction by any of the Loan Documents, by equity
or otherwise; provided, however, that upon the occurrence of an Event of Default
under Section 11.1(d) or Section 11.1(e), the Commitment shall automatically
terminate, and the outstanding principal of and accrued and unpaid interest on
the Notes and the other Obligations shall become immediately due and payable
without notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to demand, protest or other
formalities of any kind, all of which are hereby expressly waived by Borrower.

 

Section 11.3.                             Performance by Lender.  If Borrower
shall fail to perform any covenant, duty or agreement contained in any of the
Loan Documents, Lender may perform or attempt to perform such covenant, duty or
agreement on behalf of Borrower.  In such event, Borrower shall, at the request
of Lender, promptly pay any amount expended by Lender in such performance or
attempted performance to Lender, together with interest thereon at the Default
Rate from the date of such expenditure until paid.  Notwithstanding the
foregoing, it is expressly agreed that Lender shall not have any liability or
responsibility for the performance of any obligation of Borrower under this
Agreement or any other Loan Document.

 

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Section 11.4.                             Application of Liquidation Proceeds. 
All monies received by Lender from the exercise of remedies under this Agreement
or the Loan Documents securing or relating to the Notes or the Rate Management
Transaction Obligations shall, unless otherwise required by applicable law, be
applied as follows:

 

(a)                                  First, to the payment of all expenses
incurred by Lender in connection with the exercise of such rights and remedies,
including, without limitation, all costs and expenses of collection, attorneys’
fees, court costs and foreclosure expenses.

 

(b)                                 Second, to the payment of interest then
accrued on the Notes.

 

(c)                                  Third, to the payment pro rata of the
principal balance then owing on the Notes and all payments under Rate Management
Transaction Obligations.

 

(d)                                 Fourth, to the payment of any other
Obligations.

 

(e)                                  Finally, any remaining surplus, to Borrower
or to whomsoever shall be lawfully entitled thereto.

 

The provisions of this Section 11.4 shall govern and control over any
conflicting provisions in this Agreement or any Loan Document.

 

ARTICLE XII.

 

Miscellaneous

 

Section 12.1.                             Expenses of Lender.  Borrower hereby
agrees to pay Lender on demand (a) all reasonable out-of-pocket costs and
expenses incurred by Lender in connection with the preparation, negotiation and
execution of this Agreement and the other Loan Documents and any and all
amendments, modifications, renewals, extensions and supplements thereof and
thereto, including, without limitation, the reasonable fees and expenses of
Lender’s legal counsel, (b) all reasonable costs and expenses incurred by Lender
in connection with the enforcement of this Agreement or any other Loan Document,
including, without limitation, the reasonable fees and expenses of Lender’s
legal counsel and (c) all other reasonable costs and expenses incurred by Lender
in connection with this Agreement or any other Loan Document, including, without
limitation, all costs,

 

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expenses, taxes, assessments, filing fees and other charges levied by any
governmental authority or otherwise payable in respect of this Agreement or any
other Loan Document or in obtaining any insurance policy, audit or appraisal in
respect of the Collateral.

 

SECTION 12.2.           INDEMNIFICATION.  BORROWER HEREBY INDEMNIFIES LENDER AND
EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS
AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) (COLLECTIVELY, “CLAIMS”) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION
OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL
OR CLEANUP OF ANY HAZARDOUS SUBSTANCE LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY
OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY SUBSIDIARY, (E) ANY ACT OR
OMISSION OF LENDER BASED UPON ANY FAX OR ELECTRONIC TRANSMISSION OR (F) ANY
MATTER RELATED TO ANY LETTER OF CREDIT, INCLUDING, WITH RESPECT TO ALL OF THE
ABOVE, ANY CLAIM WHICH ARISES AS A RESULT OF THE NEGLIGENCE OF LENDER; PROVIDED,
HOWEVER, THAT BORROWER’S INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 12.2
SHALL NOT APPLY TO THE EXTENT THAT THE CLAIMS ARISE AS A RESULT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PERSON.

 

Section 12.3.                             Limitation of Liability.  Neither
Lender nor any Affiliate, officer, director, employee, attorney or agent of
Lender shall have any liability with respect to, and Borrower hereby waives,
releases and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, exemplary, punitive or consequential damages suffered or
incurred by Borrower in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.

 

Section 12.4.                             No Waiver; Cumulative Remedies.  No
failure on the part of Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude any
other or further exercise thereof or the exercise

 

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of any other right, power or privilege.  The rights and remedies provided for in
this Agreement and the other Loan Documents are cumulative and not exclusive of
any rights and remedies provided by law.

 

Section 12.5.                             Successors and Assigns.  This
Agreement is binding upon and shall inure to the benefit of Lender and Borrower
and their respective successors and assigns, except that Borrower may not assign
or transfer any of its rights or obligations under this Agreement without prior
written consent of Lender.

 

Section 12.6.                             Survival.  All representations and
warranties made in this Agreement or any other Loan Document or in any document,
statement or certificate furnished in connection with this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents, and no investigation by Lender or any closing shall affect the
representations and warranties or the right of Lender to rely upon them. 
Without prejudice to the survival of any other obligation of Borrower hereunder,
the obligations of Borrower under Sections 12.1 and 12.2 shall survive repayment
of the Notes and termination of the Commitment.

 

Section 12.7.                             Amendment.  The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto.

 

Section 12.8.                             Maximum Interest Rate.  No provision
of this Agreement or of any other Loan Documents shall require the payment or
the collection of interest in excess of the Maximum Rate.  If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any other Loan Documents or otherwise in connection with this
loan transaction, the provisions of this Section shall govern and prevail and
neither Borrower nor the sureties, guarantors, successors or assigns of Borrower
shall be obligated to pay the excess amount of such interest or any other excess
sum paid for the use, forbearance or detention of sums loaned pursuant hereto. 
In the event Lender ever receives, collects or applies as interest any such sum,
such amount which would be in excess of the maximum amount permitted by
applicable law shall be applied as a payment and reduction of the principal of
the indebtedness evidenced by the Notes; and, if the principal of the Notes have
been paid in full, any remaining excess shall forthwith be paid to Borrower.  In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, Borrower and Lender shall, to the extent permitted by applicable law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof and
(c) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the

 

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entire contemplated term of the indebtedness evidenced by the Notes so that
interest for the entire term does not exceed the Maximum Rate.

 

Section 12.9.                             Notices.  (a) All notices and other
communications provided for in this Agreement and the other Loan Documents shall
be in writing and may (subject to paragraph (b) below) be telecopied (faxed),
mailed by certified mail return receipt requested, or delivered by hand or
overnight courier service to the intended recipient at the addresses specified
below or at such other address as shall be designated by any party listed below
in a notice to the other parties listed below given in accordance with this
Section.

 

If to Borrower:

Astrotech Space Operations, Inc.

 

12130 Highway 3, Building 1

 

Webster, Texas 77598-1504

 

Attention: Chief Financial Officer

 

Telephone No.: 713-558-5126

 

Facsimile No.: 713-558-5960

 

 

If to SPACEHAB:

SPACEHAB, Incorporated

 

12130 Highway 3, Building 1

 

Webster, Texas 77598-1504

 

Attention: Chief Financial Officer

 

Telephone No.: 713-558-5126

 

Facsimile No.: 713-558-5960

 

 

If to Holdings:

Astrotech Florida Holdings, Inc.

 

12130 Highway 3, Building 1

 

Webster, Texas 77598-1504

 

Attention: Chief Financial Officer

 

Telephone No.: 713-558-5126

 

Facsimile No.: 713-558-5960

 

 

If to Lender:

Green Bank, N.A.

 

109 North Post Oak, Suite 100

 

Houston, Texas 77024

 

Attention: Denise Doughtie

 

Telephone No.: 713-316-3680

 

Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy (fax), subject to
confirmation of receipt, when delivered if by hand or overnight courier service
or, in the case of a mailed notice, when duly deposited in the mails, in each
case given

 

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or addressed as aforesaid; provided, however, that notices to Lender pursuant to
Article II shall not be effective until received by Lender.

 

(b)                                 Lender or Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.  Unless
Lender otherwise prescribes, notices and other communications sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgment
from the intended recipient (such as by the “return receipt requested” function,
as available, return e-mail or other written acknowledgment), provided, that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next Business Day for the recipient.

 

Section 12.10.                       Applicable Law; Venue; Service of Process.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas and the applicable laws of the United States of America. 
This Agreement has been entered into in Harris County, Texas and it shall be
performable for all purposes in Harris County, Texas.  Any action or proceeding
against Borrower under or in connection with any of the Loan Documents may be
brought in any state or federal court in Harris County, Texas, and Borrower
hereby irrevocably submits to the nonexclusive jurisdiction of such courts and
waives any objection it may now or hereafter have as to the venue of any such
action or proceeding brought in any such court or that any such court is an
inconvenient forum.  Borrower agrees that service of process upon it may be made
by certified or registered mail, return receipt requested, at its office
specified in this Agreement.  Nothing herein or in any of the other Loan
Documents shall affect the right of Lender to serve process in any other manner
permitted by law or shall limit the right of Lender to bring any action or
proceeding against Borrower or with respect to any of its property in courts in
other jurisdictions.  Any action or proceeding by Borrower against Lender shall
be brought only in a court located in Harris County, Texas.

 

Section 12.11.                       Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

 

Section 12.12.                       Severability.  Any provision of this
Agreement held by a court of competent jurisdiction to be invalid or
unenforceable shall not impair or invalidate the remainder of this Agreement and
the effect thereof shall be confined to the provision held to be invalid or
illegal.

 

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Section 12.13.                       Headings.  The headings, captions and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.

 

Section 12.14.                       Non-Application of Chapter 346 of Texas
Finance Code.  The provisions of Chapter 346 of the Texas Finance Code are
specifically declared by the parties hereto not to be applicable to this
Agreement or any of the other Loan Documents or to the transactions contemplated
hereby.

 

Section 12.15.                       Consent to Participations.  Lender shall
have the right at any time and from time to time to sell or transfer one or more
participation interests in the Notes and the indebtedness evidenced thereby to
one or more purchasers (“Purchasers”), whether related or unrelated to Lender. 
Lender may provide to any one or more Purchasers or potential Purchasers any
information, financial statements, data or knowledge Lender may have about
Borrower or about any other matter relating to the Obligations, and Borrower
waives any rights to privacy it may have with respect to such matters.  Borrower
further waives any and all notices of sale of participation interests and
notices of repurchases of participation interests.  Borrower agrees that the
owners of any participation interests will be considered as the absolute owners
of their interests in the Obligations and will have all the rights granted under
the participation agreements or other agreements governing the sale of their
participation interests.  Borrower waives all rights of offset or counterclaim
that it may now or later have against Lender or against any Purchaser and agrees
that either Lender or any Purchaser may enforce Borrower’s obligations under the
Loan Documents irrespective of the failure or insolvency of any owner of any
interest in the Obligations.  Borrower further agrees that any Purchaser may
enforce its interests irrespective of any claims or defenses that Borrower may
have against Lender.  Lender and Purchaser(s) acknowledge that such information
may include material non-public information and shall not act on or disclose any
such information contrary to the rules and regulations of the Securities and
Exchange Commission.  Lender may, but shall have no obligation to, provide
notice to Borrower that Lender has sold or transferred participation interests
in the Notes.

 

Section 12.16.                       USA Patriot Act.  Lender hereby notifies
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies Borrower, which
information includes the name and address of Borrower and other information that
will allow Lender to identify Borrower in accordance with the Act.

 

Section 12.17.                       Waiver of Trial By Jury.  BORROWER AND
LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND

 

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UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN BORROWER AND
LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS LOAN AGREEMENT OR THE OTHER
LOAN DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE
FINANCING EVIDENCED BY THIS AGREEMENT AND THE LOAN DOCUMENTS.

 

Section 12.18.                  ENTIRE AGREEMENT.  THIS AGREEMENT, THE NOTES AND
THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO.  THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

((REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.))

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

 

BORROWER:

 

 

 

ASTROTECH SPACE OPERATIONS, INC.

 

 

 

 

 

By: 

/s/ Brian K. Harrington

 

 

Brian K. Harrington

 

 

Senior Vice President and Chief Financial
Officer

 

 

 

 

 

LENDER:

 

 

 

GREEN BANK, N.A.

 

 

 

 

 

 

 

By: 

/s/ Randy R. Gartz

 

 

Randy R. Gartz

 

 

Executive Vice President

 

Signature Page to Loan Agreement

 

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LIST OF EXHIBITS

 

 

Exhibits

 

Documents

 

 

 

 

 

A

 

Note-A

 

 

 

 

 

B

 

Note-B

 

 

 

 

 

C

 

Mortgage

 

 

 

 

 

D

 

Assignment of Rents

 

 

 

 

 

E

 

Security Agreement

 

 

 

 

 

F

 

Pledge Agreement

 

 

 

 

 

G

 

Guaranty Agreement - SPACEHAB

 

 

 

 

 

H

 

Guaranty Agreement - Holdings

 

 

 

 

 

I

 

Advance Request Form

 

 

 

 

 

J

 

Borrowing Base Certificate

 

 

 

 

 

K

 

No Default Certificate

 

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