Document:

Exhibit 10.50

 

LOAN AGREEMENT

 

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

 

RECITALS :

 

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

 

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

 

ARTICLE I.

 

Definitions

 

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

 

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

 

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

 

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

 

1

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Collateral”
has the meaning specified in Section 5.1.

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

5

 

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

 

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

 

6

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

“Guarantors”
means SPACEHAB and Holdings.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Notes”
means Note-A and Note-B.

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

ARTICLE II.

 

Revolving Line of Credit

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

ARTICLE III.

 

Term Loan

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

ARTICLE IV.

 

Payments

 

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

 

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

 

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

 

18

 

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

 

ARTICLE V.

 

Collateral

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

ARTICLE VI.

 

Conditions Precedent

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

(j)                                     Notes.  The Notes executed by Borrower.

 

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

 

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

 

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

 

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

 

(o)                                 Mortgage.  The Mortgage executed by Holdings.

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

ARTICLE VII.

 

Representations and Warranties

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

ARTICLE VIII.

 

Affirmative Covenants

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

ARTICLE IX.

 

Negative Covenants

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

ARTICLE X.

 

Financial Covenants

 

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

 

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

 

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

 

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

 

35

 

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

 

ARTICLE XI.

 

Default

 

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

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE XII.

 

Miscellaneous

 

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

 

39

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

	
  If to Borrower:

  	
  Astrotech Space Operations, Inc.

  
	
   

  	
  12130 Highway 3, Building 1

  
	
   

  	
  Webster, Texas 77598-1504

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Telephone No.: 713-558-5126

  
	
   

  	
  Facsimile No.: 713-558-5960

  
	
   

  	
   

  
	
  If to SPACEHAB:

  	
  SPACEHAB, Incorporated

  
	
   

  	
  12130 Highway 3, Building 1

  
	
   

  	
  Webster, Texas 77598-1504

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Telephone No.: 713-558-5126

  
	
   

  	
  Facsimile No.: 713-558-5960

  
	
   

  	
   

  
	
  If to Holdings:

  	
  Astrotech Florida Holdings, Inc.

  
	
   

  	
  12130 Highway 3, Building 1

  
	
   

  	
  Webster, Texas 77598-1504

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Telephone No.: 713-558-5126

  
	
   

  	
  Facsimile No.: 713-558-5960

  
	
   

  	
   

  
	
  If to Lender:

  	
  Green Bank, N.A.

  
	
   

  	
  109 North Post Oak, Suite 100

  
	
   

  	
  Houston, Texas 77024

  
	
   

  	
  Attention: Denise Doughtie

  
	
   

  	
  Telephone No.: 713-316-3680

  

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

((REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK.))

 

45

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  ASTROTECH SPACE OPERATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Brian K.
  Harrington

  
	
   

  	
   

  	
  Brian K.
  Harrington

  
	
   

  	
   

  	
  Senior Vice
  President and Chief Financial 

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  GREEN BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Randy R.
  Gartz

  
	
   

  	
   

  	
  Randy R.
  Gartz

  
	
   

  	
   

  	
  Executive
  Vice President

  

 

Signature Page
to Loan Agreement

 

 

LIST OF
EXHIBITS

 

	
   

  	
  Exhibits

  	
   

  	
  Documents

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A

  	
   

  	
  Note-A

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B

  	
   

  	
  Note-B

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C

  	
   

  	
  Mortgage

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D

  	
   

  	
  Assignment of Rents

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E

  	
   

  	
  Security Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F

  	
   

  	
  Pledge Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  G

  	
   

  	
  Guaranty Agreement - SPACEHAB

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  H

  	
   

  	
  Guaranty Agreement - Holdings

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  I

  	
   

  	
  Advance Request Form

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  J

  	
   

  	
  Borrowing Base Certificate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  K

  	
   

  	
  No Default CertificateGELTECH SOLUTIONS, INC

Exhibit 10.2

GELTECH SOLUTIONS, INC.

1460 Park Lane South, Suite 1

Jupiter, FL 33458

March 17, 2008

GelTech Solutions, Inc.

1460 Park Lane South, Suite 1

Jupiter, FL 33458

Attention: Mr. Michael Cordani

Dear Michael:

This acknowledges that GelTech Solutions, Inc. (“GelTech” or the “Company”) has agreed to modify the Employment Agreement dated September 15, 2006, by and between you (the “Executive”) and GelTech (the “Agreement”) to reflect the following: 

§

Base Salary, under Section 4(a) of the Agreement, is increased from $91,000 to $125,000 per year;

§

monthly automobile allowances are terminated;

§

the Executive is granted 200,000 Non-Qualified Stock Options exercisable at $0.667 per share over a 10-year period; and 

§

the definition of “Good Reason” under Section 6(c) of the Agreement is deleted and replaced by the following:

The term Good Reason shall mean (i) the Executive, with or without change in title or formal corporate action, no longer exercises substantially all of the duties and responsibilities and shall no longer possess substantially all of the authority set forth in Section 3; (ii) the Company materially breaches this Agreement; or (iii) any “Change in Control” (as defined below) of the Company. The Executive shall have a period of 30 days following the occurrence of an event constituting Good Reason under clauses (i) and (ii) above and the later of: 180 days or December 31, 2008 following an event constituting Good Reason under clause (iii) above in which to exercise his right to terminate for Good Reason, or the Executive shall be deemed to have waived that particular Good Reason.  

A “Change in Control” shall mean any of the following: 

(1)

the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other corporate reorganization are owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other corporate reorganization; 

(2) 

any entity or person not now an executive officer or director of the Company becomes either individually or as part of a group (required to file a Schedule 13D or 13G with the Securities and Exchange Commission) the beneficial owner of 30% or more of the Company’s common stock; for this purpose, the terms “person” and “beneficial ownership” shall have the meanings provided in Section 13(d) of the Securities  Exchange Act of 1934 or related rules promulgated by the Securities and Exchange Commission;

(3)

a sale of all or substantially all of the assets of the Company;  

(4)

individuals who, as of the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided, however, that any individual becoming a director subsequent to the date of this Agreement whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company (as such term is used in Rule 14a-11 of Regulation 14A, or any successor section, promulgated under the Exchange Act); or

(5)

the Board, in its sole and absolute discretion, determines that there is a Change in Control of the Company.

Please sign a copy of this letter agreement and return it to me.  In all other respects, the Agreement is ratified and confirmed.

			
	 
	 
	Very truly yours,

	 
	 
	 

	 
	 
	Joseph Ingarra

	 
	 
	President

	 
	 
	 

	 
	 
	 

	cc:

Michael D. Harris, Esq. (Via Email)

	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	AGREED AND ACCEPTED:

	 
	 

	 
	 
	 

	 
	 
	 

	Michael Cordani

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