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                                                                  Exhibit 10.111

                 THIRD AMENDMENT AND ASSIGNMENT OF INDUSTRIAL
                 --------------------------------------------
                       REAL ESTATE LEASE, AND CONSENT TO
                       ---------------------------------
                  ASSIGNMENT OF INDUSTRIAL REAL ESTATE LEASE
                  ------------------------------------------

          This Third Amendment and Assignment of Industrial Real Estate Lease,
and Consent to Assignment of Industrial Real Estate Lease (this "Agreement") is
made effective as of the the earlier of execution of the Agreement by all
parties or July 24, 2000 by and between AMERICAN NATIONAL INSURANCE COMPANY, a
Texas insurance corporation ("Landlord"), PALL CORPORATION, a New York
corporation ("Assignor") and SPACEHAB, INC., a Washington corporation
("Assignee").

          WHEREAS, Landlord, as Landlord, and Assignor, as Tenant, entered into
that certain Industrial Real Estate Lease dated March 15, 1998, which was
amended pursuant to that First Amendment to Industrial Real Estate Lease dated
August 31, 1998 and which was further amended pursuant to that Second Amendment
to Industrial Real Estate Lease and Consent to Sublease dated December 14, 1999
(collectively, the "Lease") with respect to the property located at 12130 State
Highway 3, Houston, Harris County, Texas as described in Exhibits "A" and "B" of
the Lease (the "Property");

          WHEREAS, Assignor hereby assigns all of its interest and rights as
Tenant pursuant to the Lease to Assignee (all rights of Assignor as Tenant
thereby inuring to Assignee's benefit) and Assignee hereby assumes and agrees to
perform all of the covenants and obligations of Assignor described in the Lease
as same may be modified as provided herein;

          WHEREAS, such assignment requires the consent of Landlord pursuant to
the Lease;

          WHEREAS, Landlord hereby approves the assignment of Assignor's
interest in the Lease to Assignee with a sublease back to Assignor of a portion
of Assignee's interest in the Lease;

          WHEREAS, the parties agree that all provisions of Section 9 of the
Lease are hereby consented to or waived;

          WHEREAS, Landlord and Assignee desire to amend the Lease as provided
herein; and

          WHEREAS, Assignor hereby approves the amendment of the Lease by
Landlord and Assignee to the Lease; provided, however, that it is agreed by the
parties hereto that Assignor's obligations pursuant to the Lease shall be
limited to those obligations contained within the Lease immediately prior to
this Agreement.

          NOW, THEREFORE, in consideration of $10.00 paid to Landlord, and the
following mutual covenants and agreements, the parties hereto agree as follows:

          (1)  The terms and conditions of this Agreement shall be effective the
earlier of execution of the Agreement by all parties or July 24, 2000.
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          (2)  Terms defined in the Lease and delineated herein by initial
capital letters shall have the same meaning ascribed thereto in the Lease,
except to the extent that the meaning of such term is specifically modified by
the provisions hereof. In addition, other terms not defined in the Lease but
defined herein will, when delineated with initial capital letters, have the
meanings ascribed thereto in this Agreement. Terms and phrases, which are not
delineated by initial capital letters, shall have the meanings commonly ascribed
thereto.

          (3)  Assignor and Assignee agree to the following:

               (a)  Commencing the earlier of execution of the Agreement by all
               parties or July 24, 2000 ("Assignment Commencement Date")
               Assignee shall lease" approximately 14,000 square feet out of
               Building 2 as indicated on Exhibit "A-1" attached hereto and
               approximately 3,600 square feet out of Building 1 as indicated on
               Exhibit "A-2" attached hereto ("Phase I Property").

               (b)  Commencing October 1, 2000, Assignee shall lease the total
               Property.

               (c)  Assignor shall provide Assignee with three (3) keys to the
               Phase I Property and total Property on the dates indicated in
               subparagraphs (3)(a) and 3(b) above. Assignee shall have access
               to the Phase I Property and the Property twenty-four (24) hours
               per day, seven (7) days per week.

               (d)  Assignor shall remove its personal property and equipment
               not purchased by Assignee from the Phase I Property and Property
               and deliver same to Assignee on the above dates in "AS-IS",
               broom-clean condition, and Assignee shall accept the Partial
               Property and Property in "AS-IS", broom-clean condition. After
               delivery to Assignee, Assignor shall not be responsible for the
               removal upon expiration of the Lease, of any alterations,
               additions or improvements installed by Assignor or on Assignor's
               behalf at the Commencement of the Lease. Assignee acknowledges
               that neither Assignor nor any agent of Assignor has made any
               representation as to the condition of the Property or the
               suitability of the property for Assignee's intended use. Assignee
               has made its own inspection of and inquiry regarding the
               condition of the Property and is not relying on any
               representations of Assignor or any broker with respect thereto.

               (e)  Notwithstanding the above, it is understood and agreed that
               Assignor will provide Assignee with immediate access for
               estimating and planning purposes to that portion of Building I as
               described in Exhibit A-3 ("Build-out Space"). Assignee may begin
               construction of Assignee's improvements to the Build-out Space no

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               later than September 1, 2000 or earlier by arrangement with
               Assignor. Should the Assignor fail to provide Assignee with
               access to the Build-out Space for construction purposes by
               September 1, 2000 or the Phase I Property described in Exhibits
               "A-1" and "A-2" by the earlier of execution of the Agreement by
               all parties or July 24, 2000 or should Assignor fail to vacate
               the total Property by September 30, 2000, Assignee's obligation
               for Base Rent and Other Charges Payable by Tenant shall be
               delayed one (1) day for every day of delay for that portion of
               the Property that was not delivered to Assignee within the
               outlined time periods. If Assignor fails to vacate the total
               Property by November 30, 2000, Assignee shall have the right to
               terminate this Agreement.

               (f)  For the period beginning on the Assignment Commencement Date
               and continuing through September 31, 2000, Assignee shall pay to
               Assignor the Base Rent as calculated as follows and a pro rata
               portion of Other Charges Payable by Tenant for the Phase I
               Property as provided in the Lease:

               Building 1 -    3,600 s.f. x $0.39/s.f./mo   =    $1,404.00/mo
               Building 2 -   14,000 s.f. x $0.30/s.f/mo    =     4,200.00/mo
                                                                 ------------
                                                                 $5,604.00/mo

               On the first day of each month, Assignee shall pay to Assignor
               the Base Rent, in advance, without offset or deduction or prior
               demand, except as otherwise set forth herein.  The Base Rent
               shall be payable at Assignor's address or at such other place as
               Assignor may designate in writing.

               (g)  Beginning October 1, 2000 and continuing through the
               Expiration Date, Assignee shall pay directly to Landlord the Rent
               and Other Charges as provided in the Lease.

               (h)  Commencing October 1, 2000 through January 31, 2001 Assignor
               shall sublease from Assignee approximately 4,000 square feet out
               of Building 1 as indicated on Exhibit "A-4" attached hereto.
               Assignor shall pay to Assignee Rent as follows together with a
               pro rata portion of Other Charges Payable by Tenant and execute
               the Sublease attached as Exhibit B-1:

               Building 1 -   4,000 s.f. x $0.39/s.f./mo    =      $1,560.00/mo

               (i)  Except as set forth herein, Assignee agrees to (i) lease the
               Property beginning on the Assignment Commencement Date and ending
               on the Expiration Date; (ii) pay the Rent and a pro rata portion
               of Other Charges Payable by Tenant as provided in (3)(d)

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               and (3)(e) above; (iii) obey all laws, rules and regulations, and
               terms of the Lease; (iv) indemnify, defend, and hold Assignor
               harmless from any loss, attorney's fees, court and other costs,
               or claims arising out of the use of the Property or resulting
               from Assignee's failure to comply with the Lease; (v) maintain
               Liability Insurance in the types and amounts stated in the Lease
               with Assignor named as an additional insured; and (vi) deliver
               certificates of insurance to Assignor and Landlord before the
               Assignment Commencement Date and thereafter when requested.

               (j)  Assignee agrees not to (i) use the Property for any purpose
               other than the Permitted Assignment Use defined in subparagraph
               (3)(k) of this Agreement; (ii) create a nuisance; (iii) permit
               any waste; (iv) use the Property in any way that is hazardous,
               would increase insurance premiums, or would void insurance on the
               Property; (v) alter the Property in any way without Landlord's
               and Assignor's prior written consent, which consent shall not be
               unreasonably withheld, delayed or conditioned; (vi) allow a lien
               to be placed on the Property; or (vii) assign or sublease except
               as set forth herein any portion of the Property without
               Landlord's and Assignor's prior written consent, which consent
               shall not be unreasonably withheld, delayed or conditioned.

               (k)  The Property shall be occupied by SPACEHAB, INC. or its
               affiliates and shall be used for office, engineering, analysis,
               fabrication and/or manufacturing ("Permitted Assignment Use").

               (l)  Notwithstanding anything to the contrary contained herein,
               Assignor shall not (i) take any action inconsistent with the
               terms of the Lease; (ii) do or permit to be done by its agents,
               contractors, employees, invitees, visitors or licensees, anything
               prohibited by Assignor as Tenant under the Lease, or which would
               constitute, with or without the giving of notice or the passage
               of time or both, a default under the Lease or would cause the
               Lease to be amended in a manner that would materially and
               adversely affect any of Assignee's rights or obligations
               hereunder, or which would cause the Lease to be cancelled,
               terminated or forfeited. Assignor shall indemnify, defend and
               hold harmless Assignee from and against all claims, liabilities,
               losses and damages of any kind that Assignee may incur by reason
               of, resulting from or arising out of, any breach of the foregoing
               covenant.

               (m)  Assignee shall not be required to pay a security deposit.

               (n)  Assignee shall indemnify, protect, defend and hold Assignor,
               its agents and employees, if any, and the Property, harmless from
               and against any and all loss of rents and/or

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               damages, liabilities, judgments, costs, claims, liens, expenses,
               penalties, permits and attorney's and consultants fees
               ("Environmental Damages") arising out of or involving any
               Hazardous Substance or underground storage tank introduced onto
               the Property after the Assignment Commencement Date, other than
               by Assignor or its agents pursuant to Section 5.03 of the Lease
               or by Landlord or its agents pursuant to Sections 5.02 and 6.02
               of the Lease, and prior to the Expiration Date. Assignee's
               obligations under this paragraph shall include, but not be
               limited to, the effects of any contamination or injury to person,
               property or the environment created by Assignee and the cost of
               the investigation (including consultant's and attorney's fees and
               testing), removal, remediation, restoration and/or abatement
               thereof, or of any contamination therein involved, and shall
               survive the Expiration Date of the Lease. No termination,
               cancellation or release agreement entered into by Assignee and
               Assignor and/or Landlord shall release Assignee from its
               obligations under this Agreement with respect to Hazardous
               Substances unless specifically agreed to by Assignor in writing
               at the time of such agreement.

               (o)  Assignor shall indemnify, protect, defend and hold Assignee,
               its agents and employees, if any, and the Property, harmless from
               and against any and all loss of rents and/or damages,
               liabilities, judgments, costs, claims, liens, expenses,
               penalties, permits and attorney's and consultants fees
               ("Environmental Damages") arising out of or involving any
               Hazardous Substance or underground storage tank introduced onto
               the Property by Assignor after March 15, 1998 and until the
               Assignment Commencement Date, other than by Landlord or its
               agents pursuant to Sections 5.02 and 6.02 of the Lease.
               Assignor's obligations under this paragraph shall include, but
               not be limited to, the effects of any contamination or injury to
               person, property or the environment created by Assignor and the
               cost of the investigation (including consultant's and attorney's
               fees and testing), removal, remediation, restoration and/or
               abatement thereof, or of any contamination therein involved, and
               shall survive the Expiration Date of the Lease. No termination,
               cancellation or release agreement entered into by Assignee and
               Assignor and/or Landlord shall release Assignor from its
               obligations under this Agreement with respect to Hazardous
               Substances unless specifically agreed to by Assignee in writing
               at the time of such agreement.

               (p)  In addition to Paragraph (3)(n) above, Assignee shall
               INDEMNIFY, DEFEND and HOLD HARMLESS Assignor from and against all
               claims caused by any of the following ("Assignee Liability"): (i)
               Assignee's use or occupancy of the Property; (ii)

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               the conduct of Assignee's business or anything else done or
               permitted by Assignee to be done in or about the Property; (iii)
               any breach or default in the performance of Assignee's
               obligations under this Agreement; (iv) any misrepresentation or
               breach of warranty by Assignee under this Agreement; or (v) other
               acts, omissions or strict liability of Assignee. Assignee shall
               reimburse Assignor for any attorney's fees or costs incurred by
               Assignor in connection with any such Assignee Liability. As a
               material part of the consideration to Assignor, Assignee assumes
               all risk of damage to the Property or injury to persons
               (including death) in or about the Property at the instance of or
               request of or attendant to the business or pleasure of Assignee,
               and Assignee hereby WAIVES all such claims in respect thereof
               against the Assignor.

               (q)  In addition to Paragraph (3)(o) above, Assignor shall
               INDEMNIFY, DEFEND and HOLD HARMLESS Assignee from and against all
               claims caused by any of the following ("Assignor Liability"): (i)
               Assignor's use or occupancy of the Property; (ii) the conduct of
               Assignor's business or anything else done or permitted by
               Assignor to be done in or about the Property; (iii) any breach or
               default in the performance of Assignor's obligations under this
               Agreement; (iv) any misrepresentation or breach of warranty by
               Assignor under this Agreement; or (v) other acts, omissions or
               strict liability of Assignor. Assignor shall reimburse Assignee
               for any attorney's fees or costs incurred by Assignee in
               connection with any such Assignor Liability. As a material part
               of the consideration to Assignee, Assignor assumes all risk of
               damage to the Property or injury to persons (including death) in
               or about the Property at the instance of or request of or
               attendant to the business or pleasure of Assignor, and Assignor
               hereby WAIVES all such claims in respect thereof against the
               Assignee.

               (r)  As between Assignor and Assignee, ASSIGNOR SHALL NOT BE
               LIABLE FOR ANY DAMAGE OR INJURY TO THE PERSON, BUSINESS (OR ANY
               LOSS OF INCOME THEREFROM), GOODS, WARES, MERCHANDISE OR OTHER
               PROPERTY OF ASSIGNEE, ASSIGNEE'S EMPLOYEES, INVITEES, CUSTOMERS,
               OR ANY OTHER PERSON IN OR ABOUT THE PROPERTY, INCLUDING, WITHOUT
               LIMITATION, SUCH DAMAGE OR INJURY CAUSED BY OR RESULTING FROM:
               (I) FIRE, STEAM, ELECTRICITY, WATER, GAS OR RAIN; (II) THE
               BREAKAGE, LEAKAGE, OBSTRUCTION OR OTHER DEFECTS OF PIPES,
               SPRINKLERS, WIRES, APPLIANCES, PLUMBING, AIR CONDITIONING OR
               LIGHTING FIXTURES OR ANY OTHER CAUSE; (III) CONDITIONS ARISING IN
               OR ABOUT THE PROPERTY OR FROM OTHER SOURCES OR

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               PLACES; OR (IV) ANY ACT OR OMISSION OF ANY THIRD PARTY,
               INCLUDING, WITHOUT LIMITATION, CRIMINAL ACTS.

               (s)  As between Assignor and Assignee, DURING ANY PERIOD OF TIME
               IN WHICH ASSIGNOR IS OCCUPYING ANY PART OF THE PROPERTY, ASSIGNEE
               SHALL NOT BE LIABLE FOR ANY DAMAGE OR INJURY TO THE PERSON,
               BUSINESS (OR ANY LOSS OF INCOME THEREFROM), GOODS, WARES,
               MERCHANDISE OR OTHER PROPERTY OF ASSIGNOR, ASSIGNOR'S EMPLOYEES,
               INVITEES, CUSTOMERS, OR ANY OTHER PERSON IN OR ABOUT THE
               PROPERTY, INCLUDING, WITHOUT LIMITATION, SUCH DAMAGE OR INJURY
               CAUSED BY OR RESULTING FROM: (I) FIRE, STEAM, ELECTRICITY, WATER,
               GAS OR RAIN; (II) THE BREAKAGE, LEAKAGE, OBSTRUCTION OR OTHER
               DEFECTS OF PIPES, SPRINKLERS, WIRES, APPLIANCES, PLUMBING, AIR
               CONDITIONING OR LIGHTING FIXTURES OR ANY OTHER CAUSE; (III)
               CONDITIONS ARISING IN OR ABOUT THE PROPERTY OR FROM OTHER SOURCES
               OR PLACES; OR (IV) ANY ACT OR OMISSION OF ANY THIRD PARTY,
               INCLUDING, WITHOUT LIMITATION, CRIMINAL ACTS.

               (t)  Simultaneously with the execution of this Agreement,
               Assignor and Assignee have executed the Mutual Non-Disclosure
               Agreement attached hereto as Exhibit "C". Assignee agrees that
               during any period in which Assignor and Assignee are jointly
               occupying the Property, a condition to any individual entering
               the Property shall be that individual's signing, before entry, a
               confidentiality and nondisclosure agreement in the form attached
               as Exhibit "D" to the Lease.

               (u)  Assignee leases the Property subject to a Sublease dated
               November 5, 1999 by and between Assignor and Performance Diesel,
               Inc. This sublease may not be amended or modified without
               Assignor's prior written consent, which consent shall not be
               unreasonably withheld, delayed or conditioned.

               (v)  Defaults by Assignee and Remedies by Assignor are the same
               as those described for Tenant and Landlord in Article Ten of the
               Lease.

               (w)  Upon default by Assignee, Assignor has all the rights of
               Landlord under the Lease as to Assignee.

                                       7
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               (x)  If either Assignor or Assignee retains an attorney to
               enforce the provisions of this Agreement, the party prevailing in
               litigation is entitled to recover reasonable attorney's fees,
               court and other costs.

          (4)  By the execution of this Agreement, Landlord hereby approves and
consents to the assignment of the Lease by Assignor to Assignee. Landlord agrees
to notify Assignor in the event of any monetary or non-monetary event of default
by Assignee and to give Assignor a reasonable amount of time to cure said
default. It is recognized and agreed by all parties hereto that Paragraph (10)
of this Agreement is an amendment to the Lease and failure to pay the full,
increased amount of Base Rent described therein shall be an event of default
pursuant to the Lease. Accordingly, in the event Assignee fails to pay such
full, increased amount, Assignor would be required to timely pay such full,
increased amount in order to cure such default; however, anything to the
contrary in this Agreement and the Lease notwithstanding, it is agreed by the
parties that in the event of a monetary default by Assignee, as long as the Base
Rent and Other Charges Payable by Tenant ("Assignor's Rent") prior to the
increase described in Paragraph (10) of this Agreement are current, Assignor,
for a period of no more than six (6) months from the date of such default shall
be permitted to utilize the provisions described in the three ensuing sentences
hereto and Landlord may pursue its remedies against Assignee. Landlord shall not
unreasonably interfere with Assignor's attempts to mitigate Assignor's
obligations provided in Paragraph (11) of this Agreement. In the event of a
monetary default by Assignee, Landlord shall not unreasonably deny Assignor's
requests to permit Assignor and Assignor's agents and representatives to have
access to the Property in order to market the Property for lease to a
replacement assignee or sublessee ("Transferee") for the Property. Should
Assignor identify a Transferee pursuant to Article Nine of the Lease, Landlord
shall not require payment of the increase in the Base Rent provided in Paragraph
(10) of this Agreement for the period of time (to be agreed to by Landlord and
Assignor but in no event more than six [6] months) from Assignee's monetary
default until the commencement of payment of Base Rent by Transferee, as a
condition for Landlord's approval of the Transferee; provided, however, that
nothing in the preceding language shall preclude Landlord from pursuing and
obtaining such amounts from Assignee. Notwithstanding any other provision of
this Agreement, the Lease or otherwise, in no event shall Assignor be personally
liable with respect to that portion of the Base Rent and Other Charges Payable
which exceed the amount of Assignor's Rent prior to the increase thereof
described in Paragraph (10) of this Agreement.

          (5)   By the execution of this Agreement, Assignee assumes and agrees
to pay all sums required to be paid by Tenant pursuant to the Lease from and
after the date hereof, and to perform all of the covenants and obligations of
Assignor as Tenant pursuant to the Lease from and after the date hereof.

          (6)  Landlord and Assignee agree to amend the Lease as follows:

               (a)  Landlord's Access.  Section 5.06 as it relates to Assignee
                    -----------------
               is hereby amended as follows:

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               "Any tour or showing of the Property by Landlord or its agents
               must be accompanied by Assignee's escort.  Any tours of the
               Property by prospective tenants shall be only during the last six
               (6) months of the Term.  Landlord may show the Property to
               potential purchasers thereof at any time with prior notice and
               accompanied by Assignee's escort."

               (b)  Alterations, Additions and Improvements.  Section 6.05 as it
                    ---------------------------------------
               relates to Assignee is hereby amended as follows:

               "Landlord shall advise Assignee, at the time of Landlord's
               approval of Assignee's alterations, additions or improvements, of
               any requirement by Landlord as to the removal of any such
               alteration, addition or improvement upon termination of the
               Lease."

               (c)  Condition Upon Termination.  Section 6.06 is hereby amended
                    --------------------------
               as follows:

               "Assignor shall not be responsible for the removal of any
               alterations, additions and improvements installed by Assignor or
               on Assignor's behalf upon expiration of the Lease."

               (d)  Right of First Refusal to Purchase the Property.  Exhibit
                    -----------------------------------------------
               "C" to the Lease is hereby amended to include a bona fide written
               offer to purchase the Optional Land A and/or B only. It is agreed
               that the definition of "Optional Expansion Land" means the
               Optional Land A & B as shown on Exhibit "B-2" of this Agreement.
               Assignor agrees that so long as Assignee is not in default under
               the terms of the Lease, Assignor has no rights with respect to
               such Right of First Refusal which shall hereafter run in favor of
               Assignee. However, should Assignee be in default which default
               remains uncured and Assignor exercises any of its rights or
               remedies, Assignor shall notify Landlord of such exercise and the
               Right of First Refusal shall cease to run in favor of Assignee
               and after said notice shall run in favor of Assignor.

               (e)  Notices.  Section 13.06 is hereby deleted in its entirety
                    -------
               and replaced with the following:

               "All notices required or permitted under this Lease shall be in
               writing and shall be personally delivered or sent by certified
               mail, return receipt requested, postage prepaid.  Notices to
               Tenant/Assignor shall be delivered to the address specified in
               Section 1.03 above, with copies to:

                                       9
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                    Mary Ann Bartlett, Secretary
                    Pall Corporation
                    2200 Northern Boulevard
                    East Hills, New York  11548

               Notices to Landlord shall be delivered to the address specified
               in Section 1.02 above, with copies of such notices to:

                    James M. Itin
                    Greer, Herz, & Adams
                    One Moody Plaza, 18th Floor
                    Galveston, Texas  77550

               Notices to Assignee shall be delivered to the following address:

                    SPACEHAB, INC.
                    555 Forge River Road, Suite 150
                    Webster, TX  77598
                    Attn:  Scott Hanson, Vice President of Finance and
                           Administration

               Upon the Assignment Commencement Date, the Property shall be
               Assignee's address for notice purposes.

               All notices shall be effective upon delivery.  Either party may
               change its notice address upon written notice to the other
               parties."

          (7)  Landlord hereby authorizes Assignee and its contractors to
perform the work (plans to be approved by Landlord and Assignor in their
reasonable judgment) to widen the overhead door on the south side of Building 2
to 20 feet. It is understood and agreed that the work will be performed by
mutually acceptable contractors. The work will be done in such a manner as to
maintain the integrity of the structure. In addition, Assignee shall have the
right to construct additional parking in the location described on Exhibit B-3.

          (8)  Landlord and Assignor represent to Assignee that as of the
effective date or this Agreement, Landlord and Assignor are not aware of any
event which, but for the passage of time or the giving of notice, or both, would
constitute a default under the Lease by Landlord or Assignor as Tenant.

          (9)  Landlord hereby confirms the following to Assignee:

               (a)  There are no documents pertaining to the Property other than
               the March 15, 1998 Industrial Real Estate Lease, the August 31,
               1998 First Amendment to Industrial Real Estate Lease and the
               December 14, 1999 Second Amendment to Industrial Real Estate
               Lease (collectively, the "Lease"). The Lease represents the
               entire

                                       10
<PAGE>

               agreement with respect to the Property between Landlord and
               Assignor as Tenant.

               (b)  Landlord has not assigned its interest in the Lease.

               (c)  Base Rent and Other Charges Payable by Tenant are current.

         (10)  Subject to the conditions described below, Landlord shall provide
Assignee with an amount up to $380,000 to be utilized by Assignee for
improvements to the Property ("Improvement Allowance"). The Improvement
Allowance shall be funded by Landlord to Assignee, from time to time, only in
the event that each and every of the following conditions are met:

               (a)  Assignee must submit the plans and details as well as a
               budget (collectively, the "Budget") with respect to such
               expenditures to Landlord and obtain Landlord's written consent
               for such Budget, such consent not to be unreasonably withheld,
               conditioned or delayed.

               (b)  Assignee must have funded expenditures for work included in
               the approved Budget in an amount equal to the total amount
               described in the Budget less $380,000.00, and provide
               satisfactory evidence of such expenditures to Landlord. (In the
               event the total expenditures in the Budget are equal to or less
               than $380,000, Assignee shall not be required to make any non-
               reimbursable payments for work described in the Budget, and this
               Section 10(b) shall be of no force or effect whatsoever.)

               (c)  Assignee must present Landlord with a copy of a paid receipt
               showing such expenditure has been made.

               (d)  The expenditures may include the work described in Section 7
               above.

               (e)  The expenditure must be for work made on or to the Property
               to either improve the Property or to customize the Property for
               Assignee's use thereof, including, but not limited to, telephone
               and data cabling equipment.

               (f)  Landlord shall not be obligated to reimburse Assignee for
               more than $380,000.00 cumulatively. And

               (g)  Assignee is not then in default pursuant to any other terms
               of the Lease.

          Beginning December 1, 2000, the Base Rent shall be increased by an
amount equal to $380,000.00 amortized over the remaining term of the Lease at a
rate of

                                       11
<PAGE>

ten percent (10%) per annum, regardless of whether Landlord has then funded the
full amount of the Improvement Allowance (i.e. $380,000.00).

          Notwithstanding any provision in this Agreement, in the event the
payment of the Improvement Allowance by Landlord and the payment of the
increased Base Rent by Assignee is deemed to be a loan, it is expressly provided
that in no case or event should the aggregate amounts, which by applicable law
are deemed to be interest with respect to such arrangement ever exceed the
"Maximum Nonusurious Rate" (as defined below).  In this connection, it is
expressly stipulated and agreed that it is the intention of the parties hereto
to contract in strict compliance with applicable usury laws of the State of
Texas and/or the United States from time to time in effect.  Nothing in the
above-described arrangement shall ever be construed to create a contract to pay,
as consideration for the use, forbearance or detention of money, interest at a
rate in excess of the Maximum Nonusurious Rate.  If under any circumstances the
aggregate amounts which are deemed to be interest hereunder, would produce an
interest rate greater than the Maximum Nonusurious Rate, the Assignee and
Assignor stipulate that the amounts will be deemed to have been paid, charged or
contracted for as a result of an error on the part of the party obligated for
the payment the deemed interest and the Landlord and upon discovery of the error
or upon notice thereof from the party making such payment, Landlord shall, at
its option, refund the amount of such excess payment or credit the excess
payment against any other amount due under the Lease.  In addition, all sums
paid or agreed to be paid to the Landlord for the use, forbearance or detention
of monies shall be, to the extent permitted by applicable law, amortized,
prorated, allocated and spread through the full stated term to the Lease so that
the amount of interest on account of the indebtedness evidenced hereby does not
exceed the maximum permitted by law.  At all times, if any, as Title Four of the
Texas Finance Code shall establish the maximum nonusurious rate, the "Maximum
Nonusurious Rate" shall be the highest permitted rate based upon the "weekly
ceiling" (as defined in Title Four of the Texas Finance Code) from time to time
in effect.

          (11)  By the execution of this Agreement, Assignor hereby approves and
consents to the amendment of the Lease by Landlord and Assignee, provided
however that it is agreed by the parties hereto that except as they are
specifically amended by this Agreement, Assignor's obligations as Tenant
pursuant to the Lease shall be limited to those obligations (including future
obligations) of Assignor as Tenant contained within the Lease immediately prior
to this Agreement and Landlord agrees to look solely to Assignee for the
performance of any obligations stated herein that expand Tenant's obligations
beyond that of Tenant contained within the Lease immediately prior to this
Agreement.

          (12)  This Agreement shall not affect the continuing obligations of
the Assignor in connection with the Lease, and the parties agree that execution
of this Agreement shall not release Assignor from any of its obligations
thereunder.

          (13)  The parties hereto agree that Landlord's approval of the
assignment to Assignor does not and shall not be a waiver of Landlord's rights
to consent to any future transfer and enforce any provisions of the Lease
prohibiting the sublease or

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<PAGE>

assignment thereof, and that said provisions remain in full force and effect.
With Landlord's and Assignor's prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned, Assignee shall have the right to
make any modifications to the Building and/or Land that are necessary to conduct
its business.

          (14)  Nothing herein contained shall in any way impair the Lease, nor,
except as specifically stated herein and agreed to by all parties hereto, alter,
waive, annul, vary, nor affect any provision, condition or covenant therein, it
being the intent of the parties that the Lease shall continue in full force and
effect.

          (15)  The parties hereby agree that any subsequent amendment,
modification or variance to the Lease between Landlord and Assignee that affects
Assignor must be approved by Assignor, which approval shall not be unreasonably
withheld, delayed or conditioned.

          (16)  It is agreed by the parties that Assignee's occupation of the
Property as amended by this Agreement will occur in phases and that Assignor
will continue to occupy some or all portions of the Property from and after the
date hereof. Assignor's and Assignee's occupation of the Property as agreed to
herein, has been agreed to by and between Assignor and Assignee, without
Landlord's intervention. Assignor's and/or Assignee's inability to occupy the
Property due to either party's failure to vacate the Property in accordance with
Assignor's and Assignee's agreement relating to same or due to Assignor's or
Assignee's breach of any of the obligations described in Section 3 herein to the
other party, shall not relieve Assignor and Assignee from their obligations with
respect to Landlord and both Assignor (subject to Paragraph 6 hereof) and
Assignee shall remain fully obligated for all terms, obligations and conditions
of Tenant pursuant to the Lease, including, without limitation, timely payment
of the Rent stated in the Lease.

          (17)  Except as expressly amended by the provisions hereof, the terms
and provisions contained in the Lease shall continue to govern the rights and
obligations of the parties, and all provisions and covenants in the Lease shall
remain in full force and effect as stated therein, except to the extent
specifically modified by the provisions of this Agreement.

          (18)  This Agreement may be simultaneously executed in several
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts together shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such counterpart.

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<PAGE>

          IN WITNESS WHEREOF, Landlord, Assignor and Assignee have executed this
Agreement in multiple counterparts to be effective on the date first written
above.

LANDLORD:                                  AMERICAN NATIONAL INSURANCE COMPANY,
                                           a Texas insurance corporation

                                           By:__________________________________
                                           Name:________________________________
                                           Its:_________________________________


ASSIGNOR:                                  PALL CORPORATION,
                                           a New York corporation

                                           By:__________________________________
                                           Name:________________________________
                                           Its:_________________________________


ASSIGNEE:                                  SPACEHAB, INC,
                                           a Washington corporation

                                           By:__________________________________
                                           Name:________________________________
                                           Its:_________________________________

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