**Exhibit 10.50**

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated asof February 6, 2008 (this “Agreement”), is between ASTROTECH SPACEOPERATIONS, INC., a Delaware corporation (“Borrower”), and GREEN BANK, N.A., anational banking association (“Lender”).

 

RECITALS :

 

Borrower has requested thatLender extend credit to Borrower in the form of a revolving line of credit inthe amount of $2,000,000.00 and a term loan in the amount of$4,000,000.00.  Lender is willing to makesuch extensions of credit to Borrower upon the terms and conditions hereinafterset forth.

 

NOW THEREFORE, in considerationof the premises and the mutual covenants herein contained, the parties heretoagree as follows:

 

ARTICLE I.

 

Definitions

 

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

 

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

 

“AdvanceRequest 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 orindirectly, controls or is controlled by or is under common control with suchPerson, including, (a) any Person which beneficially owns or holds tenpercent (10%) or more of any class of voting stock of such Person or tenpercent (10%) or more of the equity interest in such Person, (b) anyPerson of which such Person beneficially owns or holds ten percent (10%) ormore of any class of voting shares or in which such Person beneficially owns orholds ten percent (10%) or more of the equity interests in such Person, and (c) anyofficer or director of such Person.

 

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

 

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

 

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

 

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

 

“BusinessDay” means any day on which commercial banks are not authorized or requiredto close in Houston, Texas.

 

“CapitalExpenditures” means for Borrower and its Subsidiaries, all expenditures forassets which, in accordance with GAAP, are required to be capitalized and soshown on the consolidated balance sheet of Borrower and its Subsidiaries.

 

“CapitalizedLease Obligations” means, for Borrower and its Subsidiaries, on aconsolidated basis, the obligations of Borrower and its Subsidiaries to payrent or other amounts under a lease of (or other agreement conveying the rightto use) real and/or personal property, which obligations, in accordance withGAAP, are required to be classified and accounted for as a capital lease on abalance sheet of any such Person.

 

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

 

“Collateral”has the meaning specified in Section 5.1.

 

“CollateralAccount” means a deposit account number 3300921015 styled “Green Bank forthe benefit of Astrotech Space Operations, Inc.” maintained by Borrower atLender, which has been pledged to Lender pursuant to this Agreement and theSecurity Agreement.

 

“Commitment”means the obligation of Lender to make Advances hereunder in an aggregateprincipal 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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“CurrentLong Term Lease Payments” means for Borrower and its Subsidiaries, on aconsolidated basis, the amount due and payable during the next succeedingtwelve month period on operating leases and capital leases of Borrower and its Subsidiarieswhich have a final expiration date more than twelve months from the date ofcalculation.

 

“CurrentMaturities of Long Term Debt” means for Borrower and its Subsidiaries, on aconsolidated basis, the principal amount due and payable during the nextsucceeding twelve month period on Debt of Borrower and its Subsidiaries forborrowed money which has a final maturity more than twelve months from the dateof calculation.

 

“Debt”means for any Person (a) all indebtedness, whether or not represented bybonds, debentures, notes, securities or other evidences of indebtedness, forthe repayment of money borrowed, including, with respect to Borrower, theindebtedness evidenced by the Notes and all other indebtedness of Borrower toLender, (b) Rate Management Transaction Obligations, (c) allindebtedness representing deferred payment of the purchase price of property orassets, (d) all indebtedness under any lease which, in conformity withGAAP, is required to be capitalized for balance sheet purposes, (e) allindebtedness under guaranties, endorsements, assumptions or other contingentobligations, in respect of, or to purchase or otherwise acquire, indebtednessof others, (f) all indebtedness secured by a Lien existing on propertyowned, subject to such Lien, whether or not the indebtedness secured therebyshall have been assumed by the owner thereof, and (g) any obligation toredeem or repurchase any of such Person’s capital stock, partnership ormembership interests or other ownership interests as applicable.

 

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

 

“DefaultRate” means the lesser of (a) the sum of the stated rate to be borneby 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 capitalstock, (b) any redemption, purchase, retirement or other acquisition byBorrower of any of its capital stock, including any purchase of treasury stockor other treasury obligations, or (c) the establishment of any fund forany such distribution, dividend, payment or acquisition.

 

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“EBITDA”means for Borrower and its Subsidiaries, on a consolidated basis for anyperiod, the sum of (a) Net Income for such period, plus (b) withoutduplication and to the extent deducted in determining such Net Income (i) InterestExpense for such period, plus (ii) Income Tax Expense for such period,plus (iii) depreciation and amortization for such period, plus (iv) non-cashcharges for such period.

 

“EligibleAccounts” means the aggregate of all accounts receivable owned by Borrowerthat are acceptable to Lender in its sole discretion and satisfy the followingconditions: (a) are due and payable within thirty (30) days; (b) havebeen outstanding less than ninety-one (91) days past the original date ofinvoice; (c) have arisen in the ordinary course of business from servicesperformed by Borrower to or for the account debtor or the sale by Borrower ofgoods in which Borrower had sole ownership where such goods have been shippedor delivered to the account debtor; (d) represent complete bona fidetransactions which require no further act under any circumstances on the partof Borrower to make such accounts receivable payable by the account debtor; (e) thegoods the sale of which gave rise to such accounts receivable were shipped ordelivered to the account debtor on an absolute sale basis and not onconsignment, a sale or return basis, a guaranteed sale basis, a bill and holdbasis, or on the basis of any similar understanding; (f) are evidenced byan invoice; (g) do not constitute pre-billings or other unearned income; (h) donot arise in connection with contracts which are bonded or insured; (i) thegoods the sale of which gave rise to such accounts receivable were not, at thetime of sale thereof, subject to any Lien, except the security interest infavor of Lender created by the Loan Documents; (j) are not subject to anyprovisions prohibiting assignment or requiring notice of or consent to suchassignment; (k) are subject to a perfected, first priority securityinterest in favor of Lender and are not subject to any other Lien; (l) arenot subject to setoff, counterclaim, defense, allowance, dispute or adjustmentother than normal discounts for prompt payment, and the goods of sale whichgave rise to such accounts receivable have not been returned, rejected,repossessed, lost or damaged; (m) the account debtor is not insolvent orthe subject of any bankruptcy or insolvency proceeding and has not made anassignment for the benefit of creditors, suspended normal business operations,dissolved, liquidated, terminated its existence, ceased to pay its debts asthey become due, or suffered a receiver or trustee to be appointed for any ofits assets or affairs; (n) are not evidenced by chattel paper or anyinstrument of any kind; (o) are owed by a Person or Persons that arecitizens of or organized under the laws of the United States or any State andare not owed by any Person organized under the laws of a jurisdiction locatedoutside of the United States of America (“Foreign Persons”), provided, thataccounts receivable owed by 

 

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

 

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

 

“EnvironmentalLaws” 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 othergovernmental unit, relating in any way to the environment, preservation orreclamation of natural resources, the management, release or threatened releaseof Hazardous Substance or to health and safety matters.

 

“EnvironmentalReport” means that certain “Phase I” environmental assessment of the RealProperties, in form and substance satisfactory to Lender, prepared by PhaseEngineering, Inc., dated as of January 11, 2008, satisfactory toLender and addressed to Lender or accompanied by reliance letters addressed toLender.

 

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

 

“Event ofDefault” has the meaning specified in Section 11.1.

 

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

 

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“Guarantors”means SPACEHAB and Holdings.

 

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

 

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

 

“GuarantyAgreements” means the Guaranty Agreement BSPACEHAB and Guaranty Agreement B Holdings.

 

“HazardousSubstance” means any substance, product, waste, pollutant, material,chemical, contaminant, constituent or other material which is or becomeslisted, regulated or addressed under any Environmental Law.

 

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

 

“Income TaxExpense” means for Borrower and its Subsidiaries, on a consolidated basisfor any period, all state and federal income taxes paid or due to be paidduring such period.

 

“InterestExpense” means for Borrower and its Subsidiaries, on a consolidated basis,for any period, the sum of all interest expense paid or required by its termsto 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 otherencumbrance of any kind or nature whatsoever (including, without limitation,any conditional sale or title retention agreement), whether arising bycontract, operation of law or otherwise.

 

“LoanDocuments” means this Agreement and all promissory notes, securityagreements, deeds of trust, assignments, letters of credit, guaranties, andother instruments, documents and agreements executed and delivered pursuant toor in connection with this Agreement, as such instruments, documents andagreements may be amended, modified, renewed, extended or supplemented.

 

“MaterialAdverse 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 anyObligated Party and its Subsidiaries, taken as a whole, (b) the ability ofBorrower to pay the Obligations or the ability of Borrower or any ObligatedParty to perform its respective obligations under this Agreement or any of theother Loan Documents or (c) the validity or enforceability of thisAgreement or any of the other Loan Documents, or the rights or remedies ofLender hereunder or thereunder.

 

“MaturityDate-Term Loan” means February 6, 2011.

 

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“MaximumRate” means the maximum rate of nonusurious interest permitted from day today by applicable law, including Chapter 303 of the Texas Finance Code (the “Code”)(and as the same may be incorporated by reference in other Texasstatutes).  To the extent that Chapter303 of the Code is relevant to Lender for the purposes of determining theMaximum Rate, Lender may elect to determine such applicable legal rate pursuantto the “weekly ceiling,” from time to time in effect, as referred to anddefined in Chapter 303 of the Code; subject, however, to the limitations onsuch applicable ceiling referred to and defined in the Code, and furthersubject to any right Lender may have subsequently, under applicable law, tochange the method of determining the Maximum Rate.

 

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

 

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

 

“No DefaultCertificate” means a certificate in the form of Exhibit “K”, fullycompleted and executed by Borrower.

 

“Non-FinancedCapital Expenditures” means for Borrower and its Subsidiaries, on aconsolidated basis, for any period, Capital Expenditures incurred during suchperiod in connection with which none of Borrower or any Subsidiary incurredDebt (and including the equity portion of Capital Expenditures in connectionwith 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.

 

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

 

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guarantees or secures paymentand performance of the Obligations or any part thereof.

 

“Obligations”means (a) all obligations, indebtedness and liabilities of Borrower toLender under this Agreement and the other Loan Documents, (b) the RateManagement Transaction Obligations, and (c) all interest accruing thereonand all reasonable attorneys’ fees and other expenses incurred in theenforcement or collection thereof.

 

“OrganizationalDocuments” means, for any Person, (a) the articles of incorporationand bylaws of such Person if such Person is a corporation, (b) thearticles of organization and regulations of such Person if such Person is alimited liability company, (c) the limited partnership agreement of suchPerson if such Person is a limited partnership, or (d) the documents underwhich such Person was created and is governed if such person is not acorporation, limited liability company or limited partnership.

 

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

 

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

 

“Prime Rate”means,on any day, the prime rate as published in The Wall Street Journal onthat day under the section “Money Rates”, and being defined therein as “thebase rate on corporate loans at large U.S. money center commercial banks.”  If such section of The Wall Street Journalreflects more than one rate as being the “prime rate”, then the highest rateshall be the Prime Rate.  On days when TheWall Street Journal is not published, the Prime Rate shall be the “primerate” stated in the most recently published edition of The Wall StreetJournal.  In the event The WallStreet Journal ceases to be published altogether, or ceases to publish the “primerate”, then Lender or its successors or assigns shall establish and use a newPrime Rate, in the exercise of its sole discretion, without any notice toBorrower 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 saidpublished “prime rate” shall fluctuate. The Prime Rate is a reference rate and does not necessarily representLender’s best or lowest rate or a favored rate, and Lender disclaims anystatement, representation or warranty to the contrary.

 

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“RateManagement Transaction” means any transaction (including an agreement withrespect thereto) now existing or hereafter entered into between Borrower andLender which is a rate swap, basis swap, forward rate transaction, commodityswap, commodity option, equity or equity index swap, equity or equity indexoption, bond option, interest rate option, foreign exchange transaction, captransaction, floor transaction, collar transaction, forward transaction,currency swap transaction, cross-currency rate swap transaction, currencyoption or any other similar transaction (including any option with respect toany of these transactions) or any combination thereof, whether linked to one ormore interest rates, foreign currencies, commodity prices, equity prices orother financial measures.

 

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

 

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

 

“RealProperty” means the real property and interests in real property describedin the Mortgage and all improvements and fixtures thereon and all appurtenancesthereto.

 

“RestrictedCash” means net advances received from the National Reconnaissance Officeunder a construction contract at Vandenberg Air Force Base, net ofdisbursements.

 

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

 

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

 

“SubordinatedDebt” means Debt of Borrower to any other Person, the payment of which hasbeen subordinated to the payment of the Obligations in a manner reasonablysatisfactory 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 orcontrol, directly or indirectly, fifty percent (50%) or more of (a) thecombined voting power of all classes having general voting power under ordinarycircumstances to elect a majority of the directors, managers or equivalent bodyof such Person, if it is a corporation, (b) the capital interest orprofits interest of such Person, if it is a partnership, limited liabilitycompany, joint venture or similar entity, or (c) the beneficial interestof such Person, if it is a trust, association or other unincorporatedassociation or organization.

 

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

 

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

 

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

 

“TotalLiabilities” means, as of any date, all amounts which, in accordance withGAAP, would be classified as liabilities on a consolidated balance sheet ofBorrower and its Subsidiaries.

 

“UnmaturedEvent of Default” means the occurrence of an event or the existence of acondition 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.                                   OtherDefinitional Provisions.  Alldefinitions contained in this Agreement are equally applicable to the singularand plural forms of the terms defined. The words “hereof”, “herein” and “hereunder” and words of similar importreferring to this Agreement refer to this Agreement as a whole and not to anyparticular provision of this Agreement. Unless otherwise specified, all Article and Section referencespertain to this Agreement.  Allaccounting terms not specifically defined herein shall be construed inaccordance with GAAP.  Terms used hereinthat are defined in the Uniform Commercial Code as adopted by the State ofTexas, unless otherwise defined herein, shall have the meanings specified inthe Uniform Commercial Code as adopted by the State of Texas.  In the event that, at any time, Borrower hasno Subsidiaries, all references to the Subsidiaries of Borrower and theconsolidation of certain financial information shall be deemed to beinapplicable 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 thisAgreement, Lender agrees to make one or more Advances to Borrower from time totime from the date hereof to and including the Termination Date in an aggregateprincipal amount at any time outstanding up to but not exceeding theCommitment; provided that the aggregate amount of all Advances at any timeoutstanding shall not exceed the lesser of (a) the Commitment or (b) theBorrowing Base.  Lender shall have noobligation to make any Advance if an Event of Default or an Unmatured Event ofDefault has occurred and is continuing. Subject to the foregoing limitations, and the other terms and provisionsof this Agreement, Borrower may borrow, repay and reborrow hereunder.

 

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

 

Section 2.3.                                   Repaymentof Advances.  Borrower shall repaythe unpaid principal amount of all Advances on the Termination Date.

 

Section 2.4.                                   Interest.  The unpaid principal amount of the Advancesshall bear interest prior to maturity at a varying rate per annum equal fromday to day to the lesser of (a) the Maximum Rate or (b) the sum ofthe 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 shallbecome effective, without notice to Borrower, on the effective date of eachchange 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) precedingshall exceed the Maximum Rate, thereby causing the interest on the Advances tobe limited to the Maximum Rate, then any subsequent reduction in the Prime Rateshall not reduce the rate of interest on the Advances below the Maximum Rateuntil the aggregate amount of interest actually accrued on the Advances equalsthe amount of interest which would have accrued on the Advances if the interestrate specified in clause (b) preceding had at all times been ineffect.  Accrued and unpaid interest onthe Advances shall be payable on the same day of each month as the day of themonth on which this Agreement is dated. If an Event of Default has occurred and is continuing, all principal ofthe Advances shall bear interest at the Default Rate.

 

Section 2.5.                                   Requestsfor Advances.  Borrower shall giveLender notice of each requested Advance by delivery to Lender of an AdvanceRequest Form executed by an Authorized Representative, properly completedand containing the information required therein.  Prior to making any Advance, Lender may requirethat Borrower deliver a Borrowing Base Certificate dated a recent dateacceptable to Lender evidencing that the amount of the outstanding Advancesplus the requested Advance is less than the lesser of (a) the Commitmentor (b) the Borrowing Base.  Assumingthat each Advance Request Form is in proper form, if Lender receives anAdvance Request Form prior to 12:00 p.m. on any Business Day, Lenderwill make the requested Advance on the same Business Day, and if Lenderreceives an Advance Request Form after 12:00 p.m., Lender will makethe requested Advance on the next Business Day. Advance Request Forms may be delivered by fax or e-mail.

 

Section 2.6.                                   Useof Proceeds.  The proceeds ofAdvances shall be used for general corporate purposes and to make advances toAffiliates.

 

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

 

Section 2.8.                                   UnusedCommitment Fee; Reduction or Termination of Commitment.  Borrower agrees to pay to Lender a commitmentfee on the average daily unused portion of the Commitment, from and includingthe Closing Date to and including the Termination Date, at the rate of one-halfpercent (0.50%) per annum based on a 360 day year and the actual number of dayselapsed, payable monthly, in arrears and on the Termination Date.  Borrower shall have the right at any time to irrevocablyterminate the Commitment; provided that prior to such termination, Borrowershall pay all the outstanding Advances and pay a termination fee in an amountequal to one percent (1%) of the Commitment.

 

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Section 2.9.                                   FacilityFee.  Borrower agrees to pay toLender a facility fee in the amount of 1% of the Commitment on the ClosingDate.  Such facility fee shall be fullyearned when paid.

 

ARTICLE III.

 

Term Loan

 

Section 3.1.                                   TermLoan.  Subject to the terms andconditions of this Agreement, Lender agrees to make the Term Loan to Borrowerin the principal amount of $4,000,000.00.

 

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

 

Section 3.3.                                   Interest.  The Term Loan shall bear interest prior tomaturity at a varying rate per annum equal from day to day to the lesser of (a) theMaximum Rate or (b) the Prime Rate in effect from day to day plus one andthree-fourths percent (1.75%), and each change in the rate of interest chargedon the Term Loan shall become effective, without notice to Borrower on theeffective date of each change in the Prime Rate or the Maximum Rate, as thecase may be; provided, however, if at any time the rate of interest specifiedin clause (b) preceding shall exceed the Maximum Rate, thereby causing theinterest on the Term Loan to be limited to the Maximum Rate, then anysubsequent reduction in the Prime Rate shall not reduce the rate of interest onthe Term Loan below the Maximum Rate until the amount of interest actuallyaccrued on the Term Loan equals the aggregate amount of interest which wouldhave accrued on the Term Loan if the interest rate specified in clause (b) precedinghad at all times been in effect.  If anEvent of Default has occurred and is continuing, all principal of the Term Loanshall bear interest at the Default Rate.

 

Section 3.4.                                   Repaymentof Principal and Interest.  Theprincipal of and interest on the Term Loan shall be due and payable by Borroweras follows:

 

(a)                                  Monthlyinstallments of accrued and unpaid interest shall be due and payable monthly onthe same day of each month as the day of the month on which this Agreement isdated; and

 

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

 

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

 

Section 3.5.                                   Useof Proceeds.  The proceeds of theTerm Loan shall be used for general corporate purposes and to make advances toAffiliates.

 

Section 3.6.                                   OriginationFee.  Borrower agrees to pay toLender an origination fee in the amount of $40,000.00 on the Closing Date.  Such origination fee shall be fully earnedwhen paid.

 

ARTICLE IV.

 

Payments

 

Section 4.1.                                   Methodof Payment.  All payments ofprincipal, interest and other amounts to be made by Borrower under thisAgreement, the Notes or any other Loan Documents shall be made to Lender at itsdesignated office, without setoff, deduction or counterclaim in immediatelyavailable funds.  Whenever any paymentunder this Agreement, the Notes or any other Loan Document shall be stated to bedue on a day that is not a Business Day, such payment may be made on the nextBusiness Day, and interest shall continue to accrue during such extension.

 

Section 4.2.                                   VoluntaryPrepayment.  Borrower may prepay theNotes in whole at any time or from time to time in part with accrued interestto the date of prepayment on the amount so prepaid; provided, however, that (a) anyprepayments of principal of Note-B shall be accompanied by a prepayment penaltyof one percent (1%) of the amount prepaid if such prepayment is made on orbefore February 6, 2010, and (b) any prepayments of principal ofNote-B shall be applied to the principal installments due on Note-B in inverseorder of their maturities.

 

Section 4.3.                                   Computationof Interest.  Interest on theindebtedness evidenced by the Notes shall be computed on the basis of a year of360 days and the actual number of days elapsed (including the first day butexcluding the last 

 

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day) unless such calculationwould result in a usurious rate, in which case interest shall be calculated onthe 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 andperformance of the Obligations, Borrower shall execute and deliver or cause tobe executed and delivered the documents described below covering the propertyand collateral described therein and in this Section 5.1 (which, togetherwith any other property and collateral which may now or hereafter secure theObligations or any part thereof, is sometimes herein called the “Collateral”):

 

(a)                                  Borrowershall grant to Lender a first priority security interest in all of itsaccounts, accounts receivable, inventory, equipment, machinery, fixtures,chattel paper, documents, instruments, deposit accounts (including theCollateral Account), investment property, letter of credit rights, generalintangibles and all its other personal property, whether now owned or hereafteracquired, and all products and proceeds thereof, pursuant to the SecurityAgreement.

 

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

 

(c)                                  SPACEHABshall grant to Lender a first priority Lien on the stock of Borrower pursuantto the Pledge Agreement.

 

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

 

Section 5.2.                                   AbsoluteAssignment of Rents.  Holdings shallgrant 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 theAssignment of Rents (it being understood that Holdings shall only be permittedunder a limited license to collect such Rents until the occurrence of an Eventof 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 insuch a manner as Lender may determine, at any time and without notice toBorrower, any and all deposits (general or special, time or demand, provisionalor final) or other sums at any time credited by or owing from Lender toBorrower 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, instrumentsand other property of Borrower now or hereafter held by Lender.  In addition to Lender’s right of setoff andas further security for the Obligations, Borrower hereby grants to Lender asecurity interest in all deposits (general or special, time or demand,provisional or final) and other accounts of Borrower now or hereafter ondeposit with or held by Lender and all other sums at any time credited by orowing from Lender to Borrower.  Therights and remedies of Lender hereunder are in addition to other rights andremedies (including, without limitation, to the rights of setoff) which Lendermay have.

 

Section 5.4.                                   GuarantyAgreements.  Guarantors shallunconditionally and irrevocably guarantee payment and performance of theObligations as provided in the Guaranty Agreements by execution and delivery ofthe Guaranty Agreements, respectively.

 

ARTICLE VI.

 

Conditions Precedent

 

Section 6.1.                                   InitialExtension of Credit.  The obligationof Lender to make the initial Advance or fund the Term Loan is subject to thecondition precedent that prior thereto Lender shall have received all of thedocuments set forth below in form and substance satisfactory to Lender.

 

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(a)                                  Certificate- Borrower.  A certificate of theSecretary or another officer of Borrower acceptable to Lender certifying (i) resolutionsof the board of directors of Borrower which authorize the execution, deliveryand performance by Borrower of this Agreement and the other Loan Documents towhich Borrower is or is to be a party and (ii) the names of the officersof Borrower authorized to sign this Agreement and each of the other LoanDocuments to which Borrower is or is to be a party together with specimensignatures of such officers.

 

(b)                                 OrganizationalDocuments - Borrower.  The articlesof incorporation and the bylaws of Borrower certified by the Secretary oranother officer of Borrower acceptable to Lender.

 

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

 

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

 

(e)                                  OrganizationalDocuments - Holdings.  The articlesof incorporation and the bylaws of Holdings certified by the Secretary oranother officer of Holdings acceptable to Lender.

 

(f)                                    GovernmentalCertificates - Holdings.  Certificatesissued by the appropriate government officials of the state of incorporation ofHoldings as to the existence and good standing of Holdings.

 

(g)                                 Certificate- SPACEHAB.  A certificate of theSecretary or another officer of SPACEHAB acceptable to Lender certifying (i) resolutionsof the board of directors of SPACEHAB which authorize the execution, deliveryand 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 partyand (ii) the names of the officers of SPACEHAB authorized to sign thePledge Agreement, the Guaranty Agreement - SPACEHAB and

 

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each of theother Loan Documents to which SPACEHAB is or is to be party together withspecimen signatures of such officers.

 

(h)                                 OrganizationalDocuments - SPACEHAB.  The articlesof incorporation and the bylaws of SPACEHAB certified by the Secretary oranother officer of SPACEHAB acceptable to Lender.

 

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

 

(j)                                     Notes.  The Notes executed by Borrower.

 

(k)                                  SecurityAgreement.  The Security Agreementexecuted by Borrower.

 

(l)                                     PledgeAgreement.  The Pledge Agreementexecuted by SPACEHAB.

 

(m)                               FinancingStatements.  Uniform Commercial Codefinancing statements showing Borrower, SPACEHAB and Holdings as debtor.

 

(n)                                 GuarantyAgreements.  The Guaranty Agreementsexecuted by Guarantors, respectively.

 

(o)                                 Mortgage.  The Mortgage executed by Holdings.

 

(p)                                 Assignmentof Rents.  The Assignment of Rentsexecuted by Holdings.

 

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

 

(r)                                    RequiredDeposit.  Evidence that Borrower hasdeposited $568,550.40 into the Collateral Account.

 

(s)                                  Appraisal.  A MAI appraisal or appraisals obtained or tobe obtained by Lender from a qualified appraiser satisfactory to Lenderprepared in accordance with the requirements for appraisal standards fornational banks or as otherwise required by applicable law or Lender’s thencurrent appraisal requirements, which appraisal shall reflect an “as is” fairmarket value of the Project acceptable to Lender.

 

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(t)                                    MortgageeTitle Insurance Policy.  A paidmortgagee policy of title insurance in the amount of $6,000,000.00 insuringthat the Mortgage BHoldings creates in favor of Lender a first priority lien on the RealProperty.  The mortgagee policy of titleinsurance shall have been issued at Borrower’s expense by a title insurancecompany acceptable to Lender, shall show a state of title and exceptionsthereto, if any, acceptable to Lender and shall contain such endorsements asmay be required by Lender.

 

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

 

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

 

(w)                               EnvironmentalReport.  An environmental reportaddressed to Lender certifying that the Real Properties and Borrower’s andHoldings=,as applicable, operations thereon comply with all Environmental Laws, that theReal Properties are free of Hazardous Substances, and that the Real Propertiesand any structures thereon are free of any conditions that present indoor andoutdoor air hazards.

 

(x)                                   InsurancePolicies.  Copies of all insurancepolicies required by Section 8.5, together with loss payable endorsementsin favor of Lender with respect to all insurance policies covering Collateral.

 

(y)                                 UCCSearch.  A Uniform Commercial Codesearch showing all financing statements and other documents or instruments onfile against (a) Borrower in Brevard County, Florida, and the office ofthe Secretary of State of Delaware, (b) Holdings in Brevard County,Florida, and the office of the Secretary of State of Florida, and (c) SPACEHABin the office of the Secretary of State of Washington.

 

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

 

(aa)                            AdditionalDocumentation.  Such additionalapprovals or documents as Lender may reasonably request.

 

Section 6.2.                                   PostClosing Deliveries.  Borrower willdeliver to Lender within sixty (60) days after the Closing Date evidence thatBorrower has submitted an application requesting a waiver/variance letter fromthe city of Titusville, Florida, waiving the encroachment of a buildingcontained on the Real Property which was built within a building set backline.  Borrower=sfailure to deliver a waiver/variance letter from the city of Titusville,Florida will not constitute an Event of Default.

 

Section 6.3.                                   AllExtensions of Credit.  The obligationof Lender to make any Advance (including the initial Advance) is subject toreceipt by Lender of the items required by Section 2.5, and suchadditional approvals or documents as Lender may reasonably request.

 

ARTICLE VII.

 

Representations and Warranties

 

To induceLender to enter into this Agreement, Borrower represents and warrants to Lenderthat:

 

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

 

Section 7.2.                                   FinancialStatements.  Borrower has deliveredto Lender audited consolidated financial statements of Borrower and itsSubsidiaries as at and for the fiscal year ended June 30, 2007, andunaudited consolidated financial statements of Borrower and its Subsidiariesfor the three (3) month period ended September 30, 2007.  Such financial statements are true andcorrect, have been prepared in accordance with GAAP, and fairly and accuratelypresent, on a consolidated basis, the financial condition of Borrower and itsSubsidiaries as of the respective dates indicated therein and the results ofoperations for the respective periods 

 

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

 

Section 7.3.                                   RequisiteAction; No Breach.  The execution,delivery and performance by Borrower of this Agreement and the other LoanDocuments to which Borrower is or may become a party have been duly authorizedby all requisite action on the part of Borrower and do not and will not violateor conflict with the Organizational Documents of Borrower or any law, rule orregulation or any order, writ, injunction or decree of any court, governmentalauthority or arbitrator, and do not and will not conflict with, result in abreach of, or constitute a default under, or result in the imposition of anyLien (except as permitted by this Agreement) upon any of the revenues or assetsof Borrower or any Subsidiary pursuant to the provisions of any indenture,mortgage, deed of trust, security agreement, franchise, permit, license orother instrument or agreement by which Borrower or any Subsidiary or any oftheir respective properties is bound, except to the extent such conflict,violation or breach could not reasonably be expected to result in a MaterialAdverse Effect.

 

Section 7.4.                                   Operationof Business.  Borrower, eachGuarantor and each Subsidiary possess all licenses, permits, franchises,patents, copyrights, trademarks and trade names, or rights thereto, to conducttheir respective businesses substantially as now conducted and as presentlyproposed to be conducted.

 

Section 7.5.                                   Litigationand Judgments.  There is no action,suit, investigation or proceeding before or by any court, governmentalauthority or arbitrator pending, or to the knowledge of Borrower, threatenedagainst or affecting Borrower, any Guarantor or any Subsidiary, that could, ifadversely determined, have a Material Adverse Effect.  There are no outstanding judgments againstBorrower, any Guarantor or any Subsidiary.

 

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

 

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Section 7.7.                                   Enforceability.  This Agreement constitutes, and the otherLoan Documents to which Borrower is a party, when delivered, shall constitutethe legal, valid and binding obligations of Borrower, enforceable againstBorrower in accordance with their respective terms, except as enforceabilitythereof may be limited by bankruptcy, insolvency or other laws of generalapplication relating to the enforcement of creditor’s rights and by equitableprinciples (where the enforcement is sought by proceedings in equity or atlaw).

 

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

 

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

 

Section 7.10.                             Useof Proceeds; Margin Securities.  Noneof Borrower, any Guarantor or any Subsidiary is engaged principally, or as oneof its important activities, in the business of extending credit for thepurpose of purchasing or carrying margin stock (within the meaning ofRegulations 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 Agreementwill be used to purchase or carry any such margin stock or to extend credit toothers for the purpose of purchasing or carrying margin stock.

 

Section 7.11.                             ERISA.  Borrower, each Guarantor and each Subsidiaryhave complied with all applicable minimum funding requirements and all otherapplicable and material requirements of ERISA, and there are no existingconditions that would give rise to liability thereunder.  No Reportable Event (as defined in Section 4043of ERISA) has occurred in connection with any employee benefit plan that mightconstitute grounds for the termination thereof by the Pension Benefit GuarantyCorporation or for the appointment by the appropriate United States DistrictCourt of a trustee to administer such plan.

 

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

 

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

 

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

 

Section 7.14.                             Subsidiaries.  Borrower has no Subsidiaries other thanHoldings.  Borrower owns one hundredpercent (100%) of the outstanding stock of Holdings.

 

Section 7.15.                             Compliancewith Laws.  None of Borrower, anyGuarantor or any Subsidiary is in violation in any material respect of any law,rule, regulation, order or decree of any court, governmental authority orarbitrator, the violation of which is reasonably likely to result in a MaterialAdverse Effect.

 

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

 

Section 7.17.                             EnvironmentalMatters.  Borrower, each Guarantorand each Subsidiary, and their respective properties, are in compliance withall applicable Environmental Laws and neither Borrower, any Guarantor nor anySubsidiary is subject to any liability or obligation for remedial actionthereunder.  There is no pending or, toBorrower=sknowledge, threatened investigation or inquiry by any governmental authority ofBorrower, any Guarantor or any Subsidiary or any of their respective propertiespertaining to any Hazardous Substance. Except in the ordinary course of business and in compliance with allEnvironmental Laws, there are no Hazardous Substances located on or under anyof the properties of Borrower, any Guarantor or any Subsidiary.  Except in the ordinary course of business andin compliance with all Environmental Laws, neither Borrower, any Guarantor norany Subsidiary has caused or permitted any Hazardous Substance to be disposedof on or under or released from any of its properties.  Borrower, each Guarantor and each Subsidiaryhave obtained all permits, licenses and authorizations which are required underand 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 theirSubsidiaries’ assets, on an individual and a consolidated basis, exceed theirliabilities, and Borrower will not be rendered insolvent by the execution andperformance of this Agreement and the Loan Documents.

 

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

 

ARTICLE VIII.

 

Affirmative Covenants

 

Borrowercovenants and agrees that, as long as the Obligations or any part thereof areoutstanding or Lender has any Commitment hereunder, Borrower will perform andobserve the covenants set forth below, unless Lender shall otherwise consent inwriting.

 

Section 8.1.                                   ReportingRequirements.  Borrower will deliverto Lender:

 

(a)                                  QuarterlyFinancial Statements - Borrower.  Assoon as available, and in any event within forty-five (45) days after the endof each quarter of each fiscal year of Borrower, a copy of the financialstatements of Borrower and its Subsidiaries as of the end of such fiscalquarter and for the portion of the fiscal year then ended, containing, on aconsolidated basis, balance sheets, statements of income, statements ofstockholders’ equity and cash flows in each case setting forth in comparativeform the figures for the corresponding period of the preceding fiscal year, allin reasonable detail and certified by an officer of Borrower acceptable toLender to have been prepared in accordance with GAAP and to fairly andaccurately present the financial condition and results of operations ofBorrower and its Subsidiaries, on a consolidated basis, at the date and for theperiods indicated therein.

 

(b)                                 AnnualFinancial Statements - SPACEHAB.  Assoon as available, and in any event within ninety (90) days after the end ofeach fiscal year of SPACEHAB, beginning with the fiscal year ending June 30,2008, a copy of the annual audited financial statements of SPACEHAB and itsSubsidiaries for such fiscal year on SEC form 10-K, prepared in accordance withGAAP, and audited and certified without qualification by independent certifiedpublic accountants of recognized standing acceptable to Lender.

 

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(c)                                  QuarterlyFinancial Statements - SPACEHAB.  Assoon as available, and in any event within forty-five (45) days after the endof each quarter of each fiscal year of SPACEHAB, a copy of the financialstatements of SPACEHAB and its Subsidiaries as of the end of such fiscalquarter 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 preparedin accordance with GAAP and to fairly and accurately present the financial conditionand results of operations of SPACEHAB and its Subsidiaries, on a consolidatedbasis, at the date and for the periods indicated therein.

 

(d)                                 NoDefault Certificate.  (i) Assoon as available, and in any event within forty-five (45) days after the end ofeach fiscal quarter, a No Default Certificate as of the last day of suchquarter, and (ii) together with the financial statements deliveredpursuant to Section 8.1(a), a No Default Certificate as of the last day ofthe fiscal year covered by such financial statements, in each case executed byan officer of Borrower acceptable to Lender and containing detailedcalculations of the covenants contained in Article X.

 

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

 

(f)                                    MonthlyAccounts Receivable Reports.  As soonas available, and in any event within fifteen (15) days after the end of eachmonth, aged accounts receivable reports for Borrower as of the last day of suchmonth certified by an officer of Borrower acceptable to Lender.

 

(g)                                 MonthlyAccounts Payable Reports.  As soon asavailable, and in any event within fifteen (15) days after the end of eachmonth, aged accounts payable reports for Borrower as of the last day of suchmonth certified by an officer of Borrower acceptable to Lender.

 

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

 

(i)                                     TaxReturns.  Within fifteen (15) daysfollowing the filing thereof, copies of each federal income tax return filed byBorrower and Guarantor.

 

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

 

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

 

(l)                                     Noticeof Default.  As soon as possible andin any event within five (5) days after Borrower=sactual knowledge of the occurrence of each Event of Default and Unmatured Eventof Default, a written notice setting forth the details of such Event of Defaultor Unmatured Event of Default and the action which Borrower has taken andproposes to take with respect thereto.

 

(m)                               Noticeof Material Adverse Effect.  As soonas possible, and in any event within five (5) days after Borrower becomesaware thereof, notice of the occurrence of any event or the existence of anycondition which could reasonably be expected to have a Material Adverse Effect.

 

(n)                                 GeneralInformation.  Promptly, such otherinformation concerning Borrower, any Guarantor or any Subsidiary as Lender mayfrom time to time reasonably request.

 

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

 

Section 8.3.                                   Maintenanceof Properties.  Borrower willmaintain, and will cause each Guarantor and each Subsidiary to maintain, itsassets and properties in good condition and repair, normal wear and tearexcepted.

 

Section 8.4.                                   Taxesand Claims.  Borrower will pay ordischarge, and will cause each Guarantor and each Subsidiary to pay ordischarge, at or before maturity or before becoming delinquent (a) alltaxes, levies, assessments and governmental charges imposed on it or its incomeor 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 berequired to pay or discharge any claim, tax, levy, assessment or governmentalcharge with respect to which no Lien has been filed of record, which is beingcontested in good faith by appropriate proceedings diligently pursued and forwhich adequate reserves have been established.

 

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

 

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

 

Section 8.7.                                   KeepingBooks and Records.  Borrower willmaintain, and will cause each Guarantor and each Subsidiary to maintain, properbooks of record and account in which full, true and correct entries inconformity with GAAP shall be made of all dealings and transactions in relationto its business and activities.

 

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

 

Section 8.9.                                   Compliancewith Agreements.  Borrower willcomply, and will cause each Guarantor and each Subsidiary to comply, in allmaterial respects with all agreements, contracts and instruments binding on itor affecting its properties or 

 

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

 

Section 8.10.                             FurtherAssurances.  Borrower will executeand deliver, and will cause each Guarantor and each Subsidiary to execute anddeliver, such further instruments as may be reasonably requested by Lender tocarry out the provisions and purposes of this Agreement and the other LoanDocuments and to preserve and perfect the Liens of Lender in the Collateral.

 

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

 

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

 

Section 8.13.                             BankingRelationship.  Borrower will, andwill cause each Subsidiary to, establish and maintain its primary bankingdepository and disbursement relationship with Lender.

 

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

 

Section 8.15.                             ExecutiveContinuity.  Within four (4) BusinessDays 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 orHoldings.  If the Chief Financial Officerof 

 

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Borrower, SPACEHAB or Holdingsceases to hold such position, Borrower will, and will cause SPACEHAB andHoldings to, within four (4) Business Days of such occurrence, provideLender with a plan to replace the then outgoing Chief Financial Officer ofBorrower, SPACEHAB or Holdings, as applicable, with a Person of equal or higherqualification for such position within thirty (30) Business Days.

 

ARTICLE IX.

 

Negative Covenants

 

Borrowercovenants and agrees that, as long as the Obligations or any part thereof areoutstanding or Lender has any Commitment hereunder, Borrower will perform andobserve the covenants set forth below, unless Lender shall otherwise consent inwriting.

 

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

 

Section 9.2.                                   Limitationon 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 orrevenues, whether now owned or hereafter acquired, except (a) Liens infavor of Lender, (b) Permitted Encumbrances, if any, as defined in theMortgage, (c) Liens for taxes, assessments or other governmental chargeswhich are not delinquent or which are being contested in good faith, for whichadequate reserves have been established and with respect to which no Lien hasbeen filed of record, and (d) Liens of mechanics, materialmen,warehousemen, carriers or other similar statutory Liens securing obligationsthat 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 anySubsidiary to, (a) become a party to a merger, consolidation, partnershipor joint venture or purchase or otherwise acquire all or a substantial part ofthe assets of any Person or any shares or other evidence of beneficialownership of any Person, (b) dissolve or liquidate, (c) amend itsOrganizational Documents, (d) sell, lease, assign, transfer or otherwisedispose of substantially all of its assets, except dispositions of inventory inthe ordinary course of business, (e) create any new Subsidiary or (f) enterinto any agreement to do any of the foregoing.

 

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Section 9.4.                                   RestrictedPayments.  Borrower will not declareor pay any Distribution, except Borrower may pay Distributions to Guarantor if (a) noEvent of Default or Unmatured Event of Default exists, and (b) no Event ofDefault or Unmatured Event of Default would arise as a result of making suchDistribution.

 

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

 

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

 

Section 9.7.                                   Compliancewith Environmental Laws.  Borrowerwill 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 forthe handling, processing, storage, transportation or disposal of any HazardousSubstance, except in the ordinary course of business and in compliance with allEnvironmental Laws, (b) generate any Hazardous Substance, (c) conductany activity which is likely to cause a release or threatened release of anyHazardous Substance, or (d) otherwise conduct any activity or use any oftheir respective properties or assets in any manner that is likely to violateany Environmental Law.

 

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

 

Section 9.9.                                   Changeof Business.  Borrower will not enterinto, or permit any Subsidiary to enter into, any type of business which ismaterially different from the business in which Borrower or such Subsidiary ispresently engaged.

 

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Section 9.10.                             TransactionsWith Affiliates.  Borrower will notenter into, or permit to exist, and will not permit any Subsidiary to enterinto or permit to exist, any transaction, arrangement or contract (includingany lease or other rental agreement) with any of its Affiliates which is onterms which are less favorable than are obtainable from any Person who is notan Affiliate of Borrower or such Subsidiary.

 

Section 9.11.                             Compliancewith Government Regulations. Borrower will not, and will not permit any Guarantor or any Subsidiaryto, (a) be or become subject at any time to any law, regulation or list ofany governmental agency (including, without limitation, the U.S. Officer ofForeign Asset Control list) that prohibits or limits Lender from making anyadvance or extension of credit to Borrower or from otherwise conductingbusiness with Borrower, or (b) fail to provide documentary and otherevidence of Borrower’s identity as may be requested by Lender at any time toenable Lender to verify Borrower’s identity or to comply with any applicablelaw or regulation, including, without limitation Section 326 of the USAPatriot Act of 2001, 31 U.S.C. Section 5318.

 

ARTICLE X.

 

Financial Covenants

 

Borrowercovenants and agrees that, as long as the Obligations or any part thereof areoutstanding or Lender has any Commitment hereunder, Borrower will perform andobserve the financial covenants set forth below, unless Lender shall otherwiseconsent in writing.

 

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

 

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

 

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

 

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

 

ARTICLE XI.

 

Default

 

Section 11.1.                             Eventsof Default.  Each of the followingshall be deemed an “Event of Default”:

 

(a)                                  Borrowershall fail to pay (i) principal of the Obligations when due, or (ii) anyportion (other than principal) of the Obligations within five (5) days ofthe date when due.

 

(b)                                 Anyrepresentation or warranty made or deemed made by Borrower or any ObligatedParty (or any of their respective officers) in any Loan Document or in anycertificate, report, notice or financial statement furnished at any time inconnection with this Agreement shall be false, misleading or erroneous in anymaterial respect when made or deemed to have been made.

 

(c)                                  Borroweror any Obligated Party shall fail to perform, observe or comply with anycovenant, agreement or term contained in this Agreement or any other LoanDocument.

 

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

 

(e)                                  Aninvoluntary proceeding shall be commenced against Borrower, any Subsidiary orany Obligated Party seeking liquidation, reorganization or other relief withrespect to it or its debts under any 

 

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bankruptcy,insolvency or other similar law now or hereafter in effect or seeking theappointment of a trustee, receiver, liquidator, custodian or other similarofficial for it or a substantial part of its property, and such involuntaryproceeding 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 periodof sixty (60) days after the commencement thereof any attachment, sequestrationor 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 dischargepromptly any judgment or judgments against it for the payment of money in anaggregate amount in excess of $25,000.00.

 

(h)                                 Borroweror any Subsidiary shall fail to pay when due any principal of or interest onany Debt (other than the Obligations), or the maturity of any such Debt shallhave been accelerated, or any such Debt shall have been required to be prepaidprior to the stated maturity thereof, or any event shall have occurred thatpermits (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 suchholder or holders to accelerate the maturity thereof or require any suchprepayment.

 

(i)                                     AnyObligated Party shall fail to pay when due any principal of or interest on anyDebt (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 havebeen accelerated, or any such Debt shall have been required to be prepaid priorto 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) anyholder or holders of such Debt or any Person acting on behalf of such holder orholders to accelerate the maturity thereof or require any such prepayment.

 

(j)                                     AnEvent of Default, event of default, Default or default (however thereindefined) shall occur in any document evidencing Debt of Borrower, anySubsidiary or any Obligated Party to Lender or its Affiliates.

 

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(k)                                  ThisAgreement or any other Loan Document shall cease to be in full force and effector shall be declared null and void or the validity or enforceability thereofshall be contested or challenged by Borrower, any Subsidiary, any ObligatedParty or any of their respective owners, or Borrower or any Obligated Partyshall deny that it has any further liability or obligation under any of theLoan Documents, or any Lien or security interest created by the Loan Documentsshall for any reason cease to be a valid, first priority perfected securityinterest in and Lien upon any of the Collateral purported to be coveredthereby.

 

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

 

Section 11.2.                             RemediesUpon Default.  If any Event ofDefault shall occur, Lender may do any one or more of the following: (a) declarethe outstanding principal of and accrued and unpaid interest on the Notes andthe Obligations or any part thereof to be immediately due and payable, and thesame shall thereupon become immediately due and payable, without notice,demand, presentment, notice of dishonor, notice of acceleration, notice ofintent to accelerate, notice of intent to demand, protest or other formalitiesof any kind, all of which are hereby expressly waived by Borrower, (b) terminatethe Commitment without notice to Borrower, (c) foreclose or otherwiseenforce any Lien granted to Lender to secure payment and performance of theObligations and (d) exercise any and all rights and remedies afforded bythe laws of the State of Texas or any other jurisdiction by any of the LoanDocuments, by equity or otherwise; provided, however, that upon the occurrenceof an Event of Default under Section 11.1(d) or Section 11.1(e),the Commitment shall automatically terminate, and the outstanding principal ofand accrued and unpaid interest on the Notes and the other Obligations shallbecome immediately due and payable without notice, demand, presentment, noticeof dishonor, notice of acceleration, notice of intent to accelerate, notice ofintent to demand, protest or other formalities of any kind, all of which arehereby expressly waived by Borrower.

 

Section 11.3.                             Performanceby Lender.  If Borrower shall fail toperform any covenant, duty or agreement contained in any of the Loan Documents,Lender may perform or attempt to perform such covenant, duty or agreement onbehalf of Borrower.  In such event,Borrower shall, at the request of Lender, promptly pay any amount expended byLender in such performance or attempted performance to Lender, together withinterest thereon at the Default Rate from the date of such expenditure untilpaid.  Notwithstanding the foregoing, itis expressly agreed that Lender shall not have any liability or responsibilityfor the performance of any obligation of Borrower under this Agreement or anyother Loan Document.

 

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Section 11.4.                             Applicationof Liquidation Proceeds.  All moniesreceived by Lender from the exercise of remedies under this Agreement or theLoan Documents securing or relating to the Notes or the Rate ManagementTransaction Obligations shall, unless otherwise required by applicable law, beapplied as follows:

 

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

 

(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 andall 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 entitledthereto.

 

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

 

ARTICLE XII.

 

Miscellaneous

 

Section 12.1.                             Expensesof Lender.  Borrower hereby agrees topay Lender on demand (a) all reasonable out-of-pocket costs and expensesincurred by Lender in connection with the preparation, negotiation andexecution of this Agreement and the other Loan Documents and any and allamendments, modifications, renewals, extensions and supplements thereof andthereto, including, without limitation, the reasonable fees and expenses ofLender’s legal counsel, (b) all reasonable costs and expenses incurred byLender in connection with the enforcement of this Agreement or any other LoanDocument, including, without limitation, the reasonable fees and expenses ofLender’s legal counsel and (c) all other reasonable costs and expensesincurred by Lender in connection with this Agreement or any other LoanDocument, including, without limitation, all costs, 

 

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

 

**SECTION 12.2.****           INDEMNIFICATION.  BORROWER HEREBY INDEMNIFIES LENDER AND EACHAFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,ATTORNEYS AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALLLOSSES, 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 ARISEFROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THETRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BYBORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT OR OTHER AGREEMENT CONTAINEDIN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENEDRELEASE, DISPOSAL, REMOVAL OR CLEANUP OF ANY HAZARDOUS SUBSTANCE LOCATED ON,ABOUT, WITHIN OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANYSUBSIDIARY, (E) ANY ACT OR OMISSION OF LENDER BASED UPON ANY FAX ORELECTRONIC TRANSMISSION OR (F) ANY MATTER RELATED TO ANY LETTER OF CREDIT,INCLUDING, WITH RESPECT TO ALL OF THE ABOVE, ANY CLAIM WHICH ARISES AS ARESULT OF THE NEGLIGENCE OF LENDER; PROVIDED, HOWEVER, THAT BORROWER’SINDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 12.2 SHALL NOT APPLY TO THEEXTENT THAT THE CLAIMS ARISE AS A RESULT OF THE GROSS NEGLIGENCE OR WILLFULMISCONDUCT OF ANY INDEMNIFIED PERSON.**

 

Section 12.3.                             Limitationof Liability.  Neither Lender nor anyAffiliate, officer, director, employee, attorney or agent of Lender shall haveany liability with respect to, and Borrower hereby waives, releases and agreesnot to sue any of them upon, any claim for any special, indirect, incidental,exemplary, punitive or consequential damages suffered or incurred by Borrowerin connection with, arising out of, or in any way related to, this Agreement orany of the other Loan Documents, or any of the transactions contemplated bythis Agreement or any of the other Loan Documents.

 

Section 12.4.                             NoWaiver; Cumulative Remedies.  Nofailure on the part of Lender to exercise and no delay in exercising, and nocourse of dealing with respect to, any right, power or privilege under thisAgreement shall operate as a waiver thereof, nor shall any single or partialexercise of any right, power or privilege under this Agreement preclude anyother or further exercise thereof or the exercise 

 

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of any other right, power orprivilege.  The rights and remediesprovided for in this Agreement and the other Loan Documents are cumulative andnot exclusive of any rights and remedies provided by law.

 

Section 12.5.                             Successorsand Assigns.  This Agreement isbinding upon and shall inure to the benefit of Lender and Borrower and theirrespective successors and assigns, except that Borrower may not assign ortransfer any of its rights or obligations under this Agreement without priorwritten consent of Lender.

 

Section 12.6.                             Survival.  All representations and warranties made inthis Agreement or any other Loan Document or in any document, statement orcertificate furnished in connection with this Agreement shall survive theexecution and delivery of this Agreement and the other Loan Documents, and noinvestigation by Lender or any closing shall affect the representations andwarranties or the right of Lender to rely upon them.  Without prejudice to the survival of anyother obligation of Borrower hereunder, the obligations of Borrower underSections 12.1 and 12.2 shall survive repayment of the Notes and termination ofthe Commitment.

 

Section 12.7.                             Amendment.  The provisions of this Agreement may beamended or waived only by an instrument in writing signed by the partieshereto.

 

Section 12.8.                             MaximumInterest Rate.  No provision of thisAgreement or of any other Loan Documents shall require the payment or thecollection of interest in excess of the Maximum Rate.  If any excess of interest in such respect ishereby provided for, or shall be adjudicated to be so provided, in any otherLoan Documents or otherwise in connection with this loan transaction, theprovisions of this Section shall govern and prevail and neither Borrowernor the sureties, guarantors, successors or assigns of Borrower shall beobligated to pay the excess amount of such interest or any other excess sumpaid for the use, forbearance or detention of sums loaned pursuant hereto.  In the event Lender ever receives, collectsor applies as interest any such sum, such amount which would be in excess of themaximum amount permitted by applicable law shall be applied as a payment andreduction of the principal of the indebtedness evidenced by the Notes; and, ifthe principal of the Notes have been paid in full, any remaining excess shallforthwith be paid to Borrower.  Indetermining whether or not the interest paid or payable exceeds the MaximumRate, Borrower and Lender shall, to the extent permitted by applicable law, (a) characterizeany non-principal payment as an expense, fee or premium rather than asinterest, (b) exclude voluntary prepayments and the effects thereof and (c) amortize,prorate, allocate and spread in equal or unequal parts the total amount ofinterest throughout the 

 

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entire contemplated term of theindebtedness evidenced by the Notes so that interest for the entire term doesnot exceed the Maximum Rate.

 

Section 12.9.                             Notices.  (a) All notices and other communicationsprovided for in this Agreement and the other Loan Documents shall be in writingand may (subject to paragraph (b) below) be telecopied (faxed), mailed bycertified mail return receipt requested, or delivered by hand or overnightcourier service to the intended recipient at the addresses specified below orat such other address as shall be designated by any party listed below in anotice 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 thisAgreement, all such communications shall be deemed to have been duly given whentransmitted by telecopy (fax), subject to confirmation of receipt, whendelivered if by hand or overnight courier service or, in the case of a mailednotice, 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 notbe effective until received by Lender.

 

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

 

Section 12.10.                       ApplicableLaw; Venue; Service of Process. This Agreement shall be governed by andconstrued in accordance with the laws of the State of Texas and the applicablelaws of the United States of America. This Agreement has been entered into in Harris County, Texas and itshall be performable for all purposes in Harris County, Texas.  Any action or proceeding against Borrowerunder or in connection with any of the Loan Documents may be brought in anystate or federal court in Harris County, Texas, and Borrower hereby irrevocablysubmits to the nonexclusive jurisdiction of such courts and waives anyobjection it may now or hereafter have as to the venue of any such action orproceeding brought in any such court or that any such court is an inconvenientforum.  Borrower agrees that service ofprocess upon it may be made by certified or registered mail, return receiptrequested, at its office specified in this Agreement.  Nothing herein or in any of the other LoanDocuments shall affect the right of Lender to serve process in any other mannerpermitted by law or shall limit the right of Lender to bring any action orproceeding against Borrower or with respect to any of its property in courts inother jurisdictions.  Any action orproceeding by Borrower against Lender shall be brought only in a court locatedin Harris County, Texas.

 

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

 

Section 12.12.                       Severability.  Any provision of this Agreement held by acourt of competent jurisdiction to be invalid or unenforceable shall not impairor invalidate the remainder of this Agreement and the effect thereof shall beconfined to the provision held to be invalid or illegal.

 

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Section 12.13.                       Headings.  The headings, captions and arrangements usedin this Agreement are for convenience only and shall not affect theinterpretation of this Agreement.

 

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

 

Section 12.15.                       Consentto Participations.  Lender shall havethe right at any time and from time to time to sell or transfer one or moreparticipation interests in the Notes and the indebtedness evidenced thereby toone or more purchasers (“Purchasers”), whether related or unrelated toLender.  Lender may provide to any one ormore Purchasers or potential Purchasers any information, financial statements,data or knowledge Lender may have about Borrower or about any other matterrelating to the Obligations, and Borrower waives any rights to privacy it mayhave with respect to such matters. Borrower further waives any and all notices of sale of participationinterests and notices of repurchases of participation interests.  Borrower agrees that the owners of any participationinterests will be considered as the absolute owners of their interests in theObligations and will have all the rights granted under the participationagreements or other agreements governing the sale of their participationinterests.  Borrower waives all rights ofoffset or counterclaim that it may now or later have against Lender or againstany Purchaser and agrees that either Lender or any Purchaser may enforceBorrower’s obligations under the Loan Documents irrespective of the failure orinsolvency of any owner of any interest in the Obligations.  Borrower further agrees that any Purchasermay enforce its interests irrespective of any claims or defenses that Borrowermay have against Lender.  Lender andPurchaser(s) acknowledge that such information may include materialnon-public information and shall not act on or disclose any such informationcontrary to the rules and regulations of the Securities and ExchangeCommission.  Lender may, but shall haveno obligation to, provide notice to Borrower that Lender has sold ortransferred participation interests in the Notes.

 

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

 

Section 12.17.                       Waiverof Trial By Jury.  BORROWER ANDLENDER (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLYAND 

 

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UNCONDITIONALLY WAIVE ANY RIGHTTO 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 WAYRELATED TO THIS LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS. THIS PROVISION IS AMATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING EVIDENCED BY THISAGREEMENT AND THE LOAN DOCUMENTS.

 

**Section 12.18.****                  ENTIREAGREEMENT.  THIS AGREEMENT, THE NOTESAND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIREAGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOFAND THEREOF AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THESUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BYEVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONSOF THE PARTIES HERETO.  THERE ARE NO ORALAGREEMENTS AMONG THE PARTIES HERETO.**

 

*((REMAINDER OF PAGE INTENTIONALLY LEFTBLANK.))*

 

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IN WITNESSWHEREOF, the parties hereto have duly executed this Agreement as of the day andyear 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 Pageto Loan Agreement

 

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LIST OFEXHIBITS

 
| ** ** | **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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