Document:

Loan Agreement

  
 SPACEHAB, INCORPORATED

  
 LOAN AGREEMENT 
  
 Dated as of February 11, 2005 
  
 $5,000,000.00 
  
 FIRST AMERICAN BANK 
  

  
 Table of Contents

  

							
	 	  	 	  	 	  	Page

	I	  	Definitions	  	1
	 	  	1.1	  	 Definitions
	  	1
			
	II	  	Advances	  	1
	 	  	2.1	  	 Advances
	  	1
	 	  	2.2	  	 The Revolving Credit Note
	  	1
	 	  	2.3	  	 Repayment of Advances
	  	2
	 	  	2.4	  	 Interest
	  	2
	 	  	2.5	  	 Borrowing Procedure
	  	2
	 	  	2.6	  	 Use of Proceeds
	  	2
	 	  	2.7	  	 Unused Facility Fee
	  	2
			
	III	  	Payments	  	3
	 	  	3.1	  	 Method of Payment
	  	3
	 	  	3.2	  	 Voluntary Prepayment
	  	3
	 	  	3.3	  	 Mandatory Prepayment
	  	3
	 	  	3.4	  	 Computation of Interest
	  	3
	 	  	3.5	  	 Capital Adequacy
	  	3
			
	IV	  	Security	  	4
	 	  	4.1	  	 Collateral
	  	4
	 	  	4.2	  	 Setoff
	  	4
			
	V	  	Conditions Precedent	  	5
	 	  	5.1	  	 Initial Extension of Credit
	  	5
	 	  	5.2	  	 All Extensions of Credit
	  	6
			
	VI	  	Representations and Warranties	  	7
	 	  	6.1	  	 Corporate Existence
	  	7
	 	  	6.2	  	 Financial Statements
	  	7
	 	  	6.3	  	 Action; No Breach
	  	7
	 	  	6.4	  	 Operation of Business
	  	7
	 	  	6.5	  	 Litigation and Judgments
	  	8
	 	  	6.6	  	 Rights in Properties; Liens
	  	8
	 	  	6.7	  	 Enforceability
	  	8
	 	  	6.8	  	 Approvals
	  	8
	 	  	6.9	  	 Debt
	  	8
	 	  	6.10	  	 Taxes
	  	8
	 	  	6.11	  	 Use of Proceeds; Margin Securities
	  	8
	 	  	6.12	  	 ERISA
	  	9
	 	  	6.13	  	 Disclosure
	  	9
	 	  	6.14	  	 Subsidiaries
	  	9
	 	  	6.15	  	 Agreements
	  	9
	 	  	6.16	  	 Compliance with Laws
	  	9

  

 i 

 Table of Contents 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	6.17	  	 Inventory
	  	9
	 	  	6.18	  	 Investment Company Act
	  	9
	 	  	6.19	  	 Public Utility Holding Company Act
	  	10
	 	  	6.20	  	 Environmental Matters
	  	10
			
	VII	  	Affirmative Covenants	  	11
	 	  	7.1	  	 Reporting Requirements
	  	11
	 	  	7.2	  	 Maintenance of Existence; Conduct of Business
	  	13
	 	  	7.3	  	 Maintenance of Properties
	  	13
	 	  	7.4	  	 Taxes and Claims
	  	13
	 	  	7.5	  	 Insurance
	  	13
	 	  	7.6	  	 Audit and Inspection Rights
	  	13
	 	  	7.7	  	 Keeping Books and Records
	  	14
	 	  	7.8	  	 Compliance with Laws
	  	14
	 	  	7.9	  	 Compliance with Agreements
	  	14
	 	  	7.10	  	 Further Assurances
	  	14
	 	  	7.11	  	 ERISA
	  	14
	 	  	7.12	  	 Subordinated Indenture
	  	14
	 	  	7.13	  	 UCC-3 Termination Statements
	  	14
			
	VIII	  	Negative Covenants	  	14
	 	  	8.1	  	 Debt
	  	14
	 	  	8.2	  	 Limitation on Liens
	  	15
	 	  	8.3	  	 Mergers, Etc
	  	15
	 	  	8.4	  	 Restricted Payments
	  	16
	 	  	8.5	  	 Loans and Investments
	  	16
	 	  	8.6	  	 Intentionally Deleted.
	  	16
	 	  	8.7	  	 Transactions With Affiliates
	  	16
	 	  	8.8	  	 Disposition of Assets
	  	16
	 	  	8.9	  	 Sale and Leaseback
	  	17
	 	  	8.10	  	 Prepayment of Debt
	  	17
	 	  	8.11	  	 Nature of Business
	  	17
	 	  	8.12	  	 Environmental Protection
	  	17
	 	  	8.13	  	 Accounting
	  	17
			
	IX	  	Financial Covenants	  	17
			
	X	  	Default	  	17
	 	  	10.1	  	 Events of Default
	  	17
	 	  	10.2	  	 Remedies Upon Default
	  	19
	 	  	10.3	  	 Performance by the Lender
	  	20
			
	XI	  	Miscellaneous	  	20
	 	  	11.1	  	 Expenses
	  	20

  

 ii 

 Table of Contents 
 (continued) 
  

							
	 	  	 	  	 	  	Page

	 	  	11.2	  	 INDEMNIFICATION
	  	20
	 	  	11.3	  	 Limitation of Liability
	  	21
	 	  	11.4	  	 No Duty
	  	21
	 	  	11.5	  	 Lender Not Fiduciary
	  	21
	 	  	11.6	  	 Equitable Relief
	  	21
	 	  	11.7	  	 No Waiver; Cumulative Remedies
	  	22
	 	  	11.8	  	 Successors and Assigns
	  	22
	 	  	11.9	  	 Survival
	  	22
	 	  	11.10	  	 ENTIRE AGREEMENT; AMENDMENT; WAIVERS
	  	22
	 	  	11.11	  	 Maximum Interest Rate
	  	22
	 	  	11.12	  	 Notices
	  	23
	 	  	11.13	  	 Governing Law; Venue; Service of Process
	  	23
	 	  	11.14	  	 Counterparts
	  	23
	 	  	11.15	  	 Severability
	  	23
	 	  	11.16	  	 Headings
	  	23
	 	  	11.17	  	 Non-Application of Chapter 346 of Texas Finance Code
	  	23
	 	  	11.18	  	 Participations
	  	24
	 	  	11.19	  	 Construction
	  	24
	 	  	11.20	  	 Independence of Covenants
	  	24
	 	  	11.21	  	 WAIVER OF JURY TRIAL
	  	24

  

 iii 

  
 LOAN AGREEMENT

  
 THIS LOAN AGREEMENT (the “Agreement”),
dated as of February 11, 2005, is between SPACEHAB, INCORPORATED, a Washington corporation (the “Borrower”), and FIRST AMERICAN BANK, SSB, a statement savings bank organized under the laws of the State of Texas (the
“Lender”). 
  
 R E C I
T A L S: 
  
 The Borrower has
requested the Lender to extend credit to the Borrower in the form described in this Agreement the Lender is willing to make such extensions of credit to the 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: 
  
 I

  
 Definitions 
  
 1.1 Definitions. As used in this Agreement, the capitalized terms
shall have the meanings given such terms in Annex I (and as defined in any other Annex) to this Agreement, except as may be defined above. In the event of any conflict between a particular definition in Annex I and any other Annex, the definitions
set forth in Annex I shall control unless the definition outside Annex I specifically states that it is intended to control over the equivalent Annex I definition. Any Annex page containing the words “NOT APPLICABLE” shall constitute the
agreement of the Lender and the Borrower that the subject matter of such Annex is inapplicable and of no effect with respect to this Agreement. 
  
 II 
  
 Advances 
  
 2.1 Advances. Subject to the terms and conditions of this Agreement, the Lender agrees to make one or more revolving credit Advances to the 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 amount of the Commitment, provided that the aggregate amount of all revolving credit Advances at any time outstanding shall not exceed the lesser of (a) the amount
of the Commitment or (b) the Borrowing Base. Subject to the foregoing limitations, and the other terms and provisions of this Agreement, the Borrower may borrow, repay, and reborrow hereunder. The Lender shall be under no obligation to make an
Advance hereunder any time Default exists. 
  
 2.2 The
Revolving Credit Note. The obligation of the Borrower to repay the revolving credit Advances and interest thereon shall be evidenced by the Revolving Credit Note executed by the Borrower, payable to the order of the Lender, in the principal
amount of the Commitment as originally in effect, and dated the date hereof. 
  

 2.3 Repayment of Advances. The Borrower shall repay the unpaid principal amount of all revolving
credit Advances on the Termination Date. 
  
 2.4 Interest.
The unpaid principal amount of the revolving credit 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 Applicable Rate. If at any time the rate of
interest specified in clause (b) above shall exceed the Maximum Rate, thereby causing the interest accruing on the Advances to be limited to the Maximum Rate, then any subsequent reduction in the Applicable Rate shall not reduce the rate of interest
on the Advances below the Maximum Rate until the aggregate amount of interest accrued on the revolving credit Advances equals the aggregate amount of interest which would have accrued on the revolving credit Advances if the interest rate specified
in clause (b) above had at all times been in effect. Accrued and unpaid interest on the revolving credit Advances shall be payable on each Payment Date and on the Termination Date. Notwithstanding the foregoing, any outstanding principal of any
Advance and (to the fullest extent permitted by law) any other amount payable by the Borrower under this Agreement or any other Loan Document that is not paid in full when due (whether at stated maturity, by acceleration, or otherwise) shall bear
interest at the Default Rate for the period from and including the due date thereof to but excluding the date the same is paid in full. Additionally, upon the occurrence of an Event of Default (and from the date of such occurrence) all outstanding
and unpaid principal amounts of all of the Obligations shall, to the extent permitted by law, bear interest at the Default Rate until such time as the Lender shall waive in writing the application of the Default Rate to such Event of Default
situation. Interest payable at the Default Rate shall be payable from time to time on demand. 
  
 2.5 Borrowing Procedure. The Borrower shall give the Lender notice of each such Advance by means of an Advance Request Form containing the information required therein and delivered (by hand or by mechanically
confirmed facsimile) to the Lender no later than 1:00 p.m. (Texas time) on the day on which the Advance is desired to be funded. The Lender at its option may accept telephonic requests for Advances, provided that such acceptance shall not constitute
a waiver of the Lender’s right to require delivery of an Advance Request Form in connection with subsequent revolving credit Advances. Any telephonic request for a revolving credit Advance by the Borrower shall be promptly confirmed by
submission of a properly completed Advance Request Form to the Lender. Subject to the terms and conditions of this Agreement, each Advance shall be made available to the Borrower by depositing the same, in immediately available funds, in an account
of the Borrower maintained with the Lender at the Principal Office designated by the Borrower. 
  
 2.6 Use of Proceeds. The proceeds of revolving credit Advances shall be used by the Borrower for working capital and/or capital expenditures incurred in the ordinary course of business. 
  
 2.7 Unused Facility Fee. The Borrower agrees to pay to the Lender an
unused facility fee on the daily average unused amount of the Commitment for the period from and including the date of this Agreement to and including the Termination Date, at the rate of one half of one percent (.50%) per annum based on a 360-day
year and the actual number of days elapsed. For the purpose of calculating the commitment fee hereunder, the Commitment shall be deemed utilized by the amount of all outstanding revolving credit Advances. Accrued commitment fees 

  

 2 

 
shall be payable in arrears on each consecutive Quarterly Payment Date and on the Termination Date. In the event that the Borrower maintains, on average,
collected balances of $5,000,000 or more for each period the unused commitment fee is charged, the fee shall be reduced from one half of one percent (.50%) per annum to one quarter of one percent (.25%) per annum. The Borrower acknowledges that it
is not required to maintain any deposits as compensating balances with the Lender or as a condition precedent to the credit being made available hereunder. 
  
 III 
  
 Payments 
  
 3.1 Method of Payment. All payments of principal, interest, and other amounts to be made by the Borrower under this Agreement and the other Loan Documents shall be made to the Lender at the Principal Office in Dollars and immediately
available funds, without setoff, deduction, or counterclaim, not later than 11:00 A.M., Texas time, on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the
next succeeding Business Day). The Borrower shall, at the time of making each such payment, specify to the Lender the sums payable by the Borrower under this Agreement and the other Loan Documents to which such payment is to be applied (and in the
event the Borrower fails to so specify, or if an Event of Default has occurred and is continuing, the Lender may apply such payment to the Obligations in the order set forth in Section 3.2 of the Revolving Credit Note or in such order and manner as
it may elect in its sole discretion). Whenever any payment under this Agreement or any other Loan Document shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the payment of interest and commitment fee, as the case may be. 
  
 3.2 Voluntary Prepayment. The Borrower may prepay the Advances in whole at any time or from time to time in part without premium or penalty but
with accrued interest to the date of prepayment on the amount so prepaid, provided that each partial prepayment shall be in the principal amount of $10,000.00 or an integral multiple thereof. 
  
 3.3 Mandatory Prepayment. If at any time the outstanding principal
amount of the Advances exceeds the Borrowing Base, the Borrower shall, within five (5) days, prepay the outstanding Advances by the amount of the excess. 
  
 3.4 Computation of Interest. Interest on the Advances and all other amounts payable by the Borrower hereunder 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 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. 
  
 3.5 Capital Adequacy. If
after the date hereof, the Lender shall have determined that the adoption or implementation of any applicable law, rule, or regulation regarding capital adequacy (including, without limitation, any law, rule, or regulation implementing the Basle
Accord), or any change therein, or any change in the interpretation or administration thereof by any central bank or other Governmental Authority charged with the interpretation or 

  

 3 

 
administration thereof, or compliance by the Lender (or its parent) with any guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any such central bank or other Governmental Authority (including, without limitation, any guideline or other requirement implementing the Basle Accord), has or would have the effect of reducing the rate of return on the
Lender’s (or its parent’s) capital as a consequence of its obligations hereunder or the transactions contemplated hereby to a level below that which the Lender (or its parent) could have achieved but for such adoption, implementation,
change, or compliance (taking into consideration the Lender’s policies with respect to capital adequacy) by an amount deemed by the Lender to be material, then from time to time, within ten (10) Business Days after demand by the Lender, the
Borrower shall pay to the Lender (or its parent) such additional amount or amounts as will compensate the Lender for such reduction. A certificate of the Lender claiming compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive, provided that the determination thereof is made on a reasonable basis. In determining such amount or amounts, the Lender may use any reasonable averaging and attribution methods. 
  
 IV 
  
 Security 
  
 4.1 Collateral. To secure full and complete payment and performance of the Obligations, the Borrower shall execute and deliver or cause to be
executed and delivered the documents described below covering the property and collateral described in this Section 4.1 (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) The Borrower, Astrotech Space Operations, Inc. and SPACEHAB Government Services, Incorporated shall each grant to the Lender a first priority security interest in all of their accounts and all general intangibles related thereto,
whether now owned or hereafter acquired, and all products and proceeds thereof, pursuant to the Security Agreement. 
  
 (b) The Borrower, Astrotech Space Operations, Inc. and SPACEHAB Government Services, Incorporated shall each execute and cause to be
executed such further documents and instruments, including without limitation, lien and security interest releases and terminations, and Uniform Commercial Code financing statements, as the Lender, in its sole discretion, deems necessary or
desirable to create, evidence, preserve, and perfect its liens and security interests in the Collateral. 
  
 4.2 Setoff. If an Event of Default shall have occurred and be continuing, the Lender shall have the right to set off and apply against the
Obligations in such manner as the Lender may determine, at any time and without notice to the 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 the Lender to
the Borrower whether or not the Obligations are then due. As further security for the Obligations, the Borrower hereby grants to the Lender a security interest in all money, instruments, and other property of the Borrower now or hereafter held by
the Lender, including, without limitation, property held in safekeeping. In addition to the Lender’s right of setoff and as 

  

 4 

 
further security for the Obligations, the Borrower hereby grants to the Lender a security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of the Borrower now or hereafter on deposit with or held by the Lender and all other sums at any time credited by or owing from the Lender to the Borrower. The rights and remedies of the Lender hereunder are
in addition to other rights and remedies (including, without limitation, other rights of setoff) which the Lender may have. 
  
 V 
  
 Conditions Precedent 
  
 5.1 Initial Extension of Credit. The obligation of the Lender to make the initial Advance is subject to the condition precedent that the Lender shall have received on or before the day of such Advance all of
the following, each dated (unless otherwise indicated) the date hereof, in form and substance satisfactory to the Lender: 
  
 (a) Resolutions. Resolutions of the Board of Directors of the Borrower and each of the Applicable Subsidiaries certified by the
Secretary or an Assistant Secretary of the Borrower and each of the Applicable Subsidiaries which authorize the execution, delivery, and performance by the Borrower and each of the Applicable Subsidiaries of this Agreement and the other Loan
Documents to which the Borrower and each of the Applicable Subsidiaries is or is to be a party; 
  
 (b) Incumbency Certificate. A certificate of incumbency certified by the Secretary or an Assistant Secretary of the Borrower and
each of the Applicable Subsidiaries certifying the names of the officers of the Borrower and each of the Applicable Subsidiaries authorized to sign this Agreement and each of the other Loan Documents to which the Borrower and each of the Applicable
Subsidiaries is or is to be a party (including the certificates contemplated herein) together with specimen signatures of such officers; 
  
 (c) Articles of Incorporation. The articles of incorporation of the Borrower and each of the Applicable Subsidiaries certified by
the Secretary of the Borrower and each of the Applicable Subsidiaries and as of a date acceptable to the Lender; 
  
 (d) Bylaws. The bylaws of the Borrower and each of the Applicable Subsidiaries certified by the Secretary or an Assistant Secretary
of the Borrower and each of the Applicable Subsidiaries; 
  
 (e) Governmental Certificates. Certificates of the appropriate government officials of the state of incorporation of the Borrower and each of the Applicable Subsidiaries as to the existence and good standing of
the Borrower and each of the Applicable Subsidiaries, each dated within ten (10) days prior to the date of the initial Advance; 
  
 (f) Note. The Revolving Credit Note executed by the Borrower; 
  

 5 

 (g) Security Agreement. A Security Agreement executed by the Borrower and each of
the Applicable Subsidiaries; 
  
 (h)
Intentionally Deleted. 
  
 (i)
Insurance Policies. Copies of the insurance certificates relating to the insurance required by Section 7.5; 
  
 (j) UCC Search. The results of a Uniform Commercial Code search showing all financing statements and other documents or instruments
on file against the Borrower and Applicable Subsidiaries in the office of the Secretary of State of Texas, such search to be as of a date acceptable to the Lender; 
  
 (k) Attorneys’ Fees and Expenses. Evidence that the costs and expenses (including reasonable
attorneys’ fees) referred to in Section 11.1, to the extent incurred, shall have been paid in full by the Borrower. 
  
 (l) Lock Box Agreement. Executed agreements establishing Lock Box arrangements with Lender for collection of accounts receivable
payments. 
  
 5.2 All Extensions of Credit. The obligation
of the Lender to make any Advance (including the initial Advance) is subject to the following additional conditions precedent: 
  
 (a) Request for Advance. The Lender shall have received in accordance with this Agreement, as the case may be, an Advance Request
Form dated the date of such Advance and executed by an authorized officer of the Borrower; 
  
 (b) No Default. No Default shall have occurred and be continuing, or would result from such Advance; 
  
 (c) Representations and Warranties. All of the
representations and warranties contained in Article VI hereof and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance with the same force and effect as if such representations and
warranties had been made on and as of such date; provided, however, judgments taken against the Borrower or any of its Subsidiaries after the date hereof which are individually in an amount under $25,000.00 or are discharged or stayed within the
period provided in Section 10.1(g) hereof shall not constitute a breach of the representation and warranty contained in Section 6.5 hereof; and 
  
 (d) Additional Documentation. The Lender shall have received such additional approvals, opinions, or documents as the Lender or its
legal counsel may reasonably request. 
  

 6 

  
 VI 
  
 Representations and Warranties 
  
 To induce the Lender to enter into this Agreement, the Borrower represents
and warrants to the Lender that: 
  
 6.1 Corporate
Existence. The Borrower and each Subsidiary (a) is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation; (b) has all requisite corporate power and authority to own its
assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to so qualify would have
a Material Adverse Effect. The Borrower and each Subsidiary have the corporate 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. 

 
 6.2 Financial Statements. The Borrower has delivered to the Lender
audited consolidated financial statements and/or projections of the Borrower and its Subsidiaries. Such financial statements are true and correct in all material respects, and such projections represent the Borrower’s fair estimate of future
results, and have been prepared in accordance with GAAP, and fairly and accurately present, on a consolidated basis, the financial condition of the Borrower and its Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither the Borrower nor any of its Subsidiaries has any material (a) contingent liabilities; (b) liabilities for taxes; (c) unusual forward or long-term commitments; or (d) unrealized or
anticipated losses from any unfavorable commitments except as referred to or reflected in such financial statements. There has been no Material Adverse Effect to the business and/or condition (financial or otherwise), operations, prospects, or
properties of the Borrower and its Subsidiaries, taken as a whole, since the effective date of the most recent financial statements referred to in this Section. 
  
 6.3 Action; No Breach. The execution, delivery, and performance by the Borrower of this Agreement and the other Loan
Documents to which the Borrower or Subsidiary are or may become a party and compliance with the terms and provisions hereof and thereof have been duly authorized by all requisite corporate action on the part of the Borrower or Subsidiary and do not
and will not (a) violate or conflict with, or result in a breach of, or require any consent under (i) the articles of incorporation or bylaws of the Borrower or any of the Subsidiaries, (ii) any applicable law, rule, or regulation or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, or (iii) any agreement or instrument to which the Borrower or any of the Subsidiaries is a party or by which any of them or any of their property is bound or subject, or (b)
constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien (except as provided in Article IV) upon any of the revenues or assets of the Borrower or any Subsidiary. 
  
 6.4 Operation of Business. The Borrower and each of its Subsidiaries
possess all licenses, permits, franchises, patents, copyrights, trademarks, and tradenames, or rights thereto, necessary to conduct their respective businesses substantially as now conducted and as presently proposed to be conducted, and the
Borrower and each of its Subsidiaries are not in violation of 

  

 7 

 
any valid rights of others with respect to any of the foregoing where such violation would reasonably be expected to have a Material Adverse Effect.

  
 6.5 Litigation and Judgments. Except as disclosed on
Schedule 6.5 hereto, there is no action, suit, investigation, or proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary, that
would, if adversely determined, reasonably be expected to have a Material Adverse Effect. As of the date hereof, there are no outstanding judgments against the Borrower or any Subsidiary. 
  
 6.6 Rights in Properties; Liens. The Borrower and each Subsidiary have good and indefeasible 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 6.2, except for such defect in title as could not
reasonably be expected to have a Material Adverse Effect, and none of the properties, assets, or leasehold interests of the Borrower or any Subsidiary is subject to any Lien, except as permitted by Section 8.2. 
  
 6.7 Enforceability. This Agreement constitutes, and the other Loan
Documents to which the Borrower or any Subsidiary is a party, when delivered, shall constitute legal, valid, and binding obligations of the Borrower and/or Subsidiary, enforceable against the Borrower and/or Subsidiary in accordance with their
respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditors’ rights. 
  
 6.8 Approvals. No authorization, approval, or consent of, and no filing or registration with, any Governmental Authority or third party is or will
be necessary for the execution, delivery, or performance by the Borrower of this Agreement and the other Loan Documents to which the Borrower or Subsidiary is or may become a party or the validity or enforceability thereof. 
  
 6.9 Debt. As of the date hereof, the Borrower and its Subsidiaries
have no Debt, except as disclosed on Schedule 6.9 hereto. 
  
 6.10
Taxes. The Borrower and each Subsidiary have filed all tax returns (federal, state, and local) required to be filed, including all income, franchise, employment, property, and sales tax returns, and have paid all of their respective
liabilities for taxes, assessments, governmental charges, and other levies that are due and payable. The Borrower knows of no pending investigation of the Borrower or any Subsidiary by any taxing authority or of any pending but unassessed tax
liability of the Borrower or any Subsidiary that would, if assessed, have a Material Adverse Effect. 
  
 6.11 Use of Proceeds; Margin Securities. Neither the Borrower nor 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 G, T, U, or X of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be
used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock. 
  

 8 

 6.12 ERISA. The Borrower and each Subsidiary are in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and is continuing with respect to any Plan. No notice of intent to terminate a Plan has been filed, nor has any Plan been terminated. No
circumstances exist which constitute grounds entitling the PBGC to institute proceedings to terminate, or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such proceedings. Neither the Borrower nor any ERISA Affiliate has
completely or partially withdrawn from a Multiemployer Plan. The Borrower and each ERISA Affiliate have met their minimum funding requirements under ERISA with respect to all of their Plans, and the present value of all vested benefits under each
Plan do not exceed the fair market value of all Plan assets allocable to such benefits, as determined on the most recent valuation date of the Plan and in accordance with ERISA. Neither the Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC under ERISA. 
  
 6.13 Disclosure. No statement,
information, report, representation, or warranty made by the Borrower in this Agreement or in any other Loan Document or furnished to the Lender in connection with this Agreement or any of the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to the Borrower which has a Material Adverse Effect, or which might in the future reasonably
be expected to have a Material Adverse Effect. 
  
 6.14
Subsidiaries. As of the date hereof, the Borrower has no Subsidiaries other than those listed on Schedule 6.14, which sets forth the jurisdiction of incorporation of each Subsidiary and the percentage of the Borrower’s ownership of the
outstanding voting stock of each Subsidiary. All of the outstanding capital stock of each Subsidiary has been validly issued, is fully paid, and is nonassessable. 
  
 6.15 Agreements. Neither the Borrower nor any Subsidiary is a party to any indenture, loan, or credit agreement, or
to any lease or other agreement or instrument, or subject to any charter or corporate restriction which could have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument material to its business to which it is a party. 
  
 6.16 Compliance with Laws. Neither the Borrower nor any Subsidiary is in violation in any material respect of any law, rule, regulation, order, or
decree of any Governmental Authority or arbitrator. 
  
 6.17
Inventory. All inventory of the Borrower has been and will hereafter be produced in compliance with all applicable laws, rules, regulations, and governmental standards, including, without limitation, the minimum wage and overtime provisions
of the Fair Labor Standards Act, as amended (29 U.S.C. §§ 201-219), and the regulations promulgated thereunder. 
  
 6.18 Investment Company Act. Neither the Borrower nor any Subsidiary is an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. 
  

 9 

 6.19 Public Utility Holding Company Act. Neither the Borrower nor any Subsidiary is a
“holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company
Act of 1935, as amended. 
  
 6.20 Environmental Matters.
Except as disclosed on Schedule 6.20 hereto: 
  
 (a) The Borrower, each Subsidiary, and all of their respective properties, assets, and operations are in compliance in all material respects with all Environmental Laws. The Borrower is not aware of, nor has the Borrower received notice of,
any past, present, or future conditions, events, activities, practices, or incidents which may interfere with or prevent the compliance or continued compliance of the Borrower and the Subsidiaries in all material respects with all Environmental
Laws; 
  
 (b) The Borrower and each Subsidiary
have obtained all permits, licenses, and authorizations that are required under applicable Environmental Laws, and all such permits are in good standing and the Borrower and its Subsidiaries are in compliance in all material respects with all of the
terms and conditions of such permits; 
  
 (c)
Other than as may be used in the ordinary course of the Borrower’s business and in compliance in all material respects with all applicable Environmental Laws, no Hazardous Materials exist on, about, or within or have been used, generated,
stored, transported, disposed of on, or Released from any of the properties or assets of the Borrower or any Subsidiary; 
  
 (d) Neither the Borrower nor any of its Subsidiaries nor any of their respective currently or previously owned or leased properties or
operations is subject to any outstanding or threatened order from or agreement with any Governmental Authority or other Person or subject to any judicial or docketed administrative proceeding with respect to (i) failure to comply with Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities arising from a Release or threatened Release which could reasonably be expected to have a Material Adverse Effect; 
  
 (e) There are no conditions or circumstances associated with the currently or previously owned or leased
properties or operations of the Borrower or any of its Subsidiaries that could reasonably be expected to give rise to any material Environmental Liabilities; 
  

(f) Neither the Borrower nor any of its Subsidiaries is a treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., regulations thereunder or any comparable provision of state law. The Borrower and its Subsidiaries are in compliance in all material respects with all applicable financial
responsibility requirements of all Environmental Laws; 
  
 (g) Neither the Borrower nor any of its Subsidiaries has filed or failed to file any notice required under applicable Environmental Law reporting a Release except where doing so could not reasonably be expected to have a Material Adverse
Effect; and 
  

 10 

 (h) No Lien arising under any Environmental Law has attached to any property or revenues
of the Borrower or its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 
  
 VII 
  
 Affirmative Covenants 
  
 The Borrower covenants
and agrees that, as long as the Obligations or any part thereof are outstanding or the Lender has any Commitment hereunder, the Borrower will perform and observe the following positive covenants, unless the Lender shall otherwise consent in writing:

  
 7.1 Reporting Requirements. The Borrower will furnish
to the Lender: 
  
 (a) Annual Financial
Statements. As soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Borrower, beginning with the fiscal year ending June 30, 2004, a copy of the annual audit report of the Borrower and the
Subsidiaries for such fiscal year containing, on a consolidated basis, balance sheets and statements of income, retained earnings, and cash flow as at the end of such fiscal year and for the 12-month period then ended, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in reasonable detail and audited and certified by independent certified public accountants of recognized standing acceptable to the Lender, to the effect that such report has been
prepared in accordance with GAAP; 
  
 (b)
Quarterly Financial Statements. As soon as available, and in any event within forty-five (45) days after the end of each fiscal quarter of the fiscal year of the Borrower, a copy of an unaudited financial report of the Borrower and the
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 and statements of income, retained earnings, and cash flow, in each case setting forth in
comparative form the figures for the corresponding period of the preceding fiscal year, all in reasonable detail certified by an acceptable officer of the Borrower to have been prepared in accordance with GAAP and to fairly and accurately present
(subject to year-end audit adjustments and the absence of footnotes) the financial condition and results of operations of the Borrower and the Subsidiaries, on a consolidated and consolidating basis, at the date and for the periods indicated
therein; 
  
 (c) Certificate of No
Default. Concurrently with the delivery of each of the financial statements referred to in subsections 7.1(a) and 7.1(b), a certificate of an acceptable officer of the Borrower (i) stating that to the best of such officer’s knowledge, no
Default has occurred and is continuing, or if a Default has occurred and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto, and (ii) showing in reasonable detail the calculations
demonstrating compliance with Article IX; 
  

 11 

 (d) Management Letters. Promptly upon receipt thereof, a copy of any management
letter or written report submitted to the Borrower or any Subsidiary by independent certified public accountants with respect to the business, condition (financial or otherwise), operations, prospects, or properties of the Borrower or any
Subsidiary; 
  
 (e) Notice of Litigation.
Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority or arbitrator affecting the Borrower or any Subsidiary which, if determined adversely to the Borrower or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect; 
  
 (f) Notice of Default. As soon as possible and in any event within five (5) days after the occurrence of each Default, a written notice setting forth the details of such Default and the action that the Borrower
has taken and proposes to take with respect thereto; 
  
 (g) ERISA Reports. Promptly after the filing or receipt thereof, copies of all reports, including annual reports, and notices which the Borrower or any Subsidiary files with or receives from the PBGC or the U.S. Department of Labor
under ERISA; and as soon as possible and in any event within five (5) days after the Borrower or any Subsidiary knows or has reason to know that any Reportable Event or Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
the Borrower or any Subsidiary has instituted or will institute proceedings under Title IV of ERISA to terminate any Plan, a certificate of an acceptable officer of the Borrower setting forth the details as to such Reportable Event or Prohibited
Transaction or Plan termination and the action that the Borrower proposes to take with respect thereto; 
  
 (h) Reports to Other Creditors. Promptly after the furnishing thereof, copies of any statement or report furnished to any other
party pursuant to the terms of any indenture, loan, or credit or similar agreement and not otherwise required to be furnished to the Lender pursuant to any other clause of this Section; 
  
 (i) Notice of Material Adverse Change. As soon as possible and in any event within five (5) days
after the occurrence thereof, written notice of any matter that could reasonably be expected to have a Material Adverse Effect; 
  
 (j) Borrowing Base Report. As soon as available, and in any event within fifteen (15) days after the end of each calendar month in
which amounts were outstanding under the Revolving Credit Note, a Borrowing Base Report, in a form acceptable to the Lender, certified by an acceptable officer of the Borrower; 
  
 (k) Proxy Statements, Etc. As soon as available, one copy of each financial statement, report, notice
or proxy statement sent by the Borrower or any Subsidiary to its stockholders generally and one copy of each regular, periodic or special report, registration statement, or prospectus filed by the Borrower or any Subsidiary with any securities
exchange or the Securities and Exchange Commission or any successor agency; 
  
 (l) Tax Returns. The Borrower shall provide to the Lender a copy of its annual income tax return within thirty (30) days of the date filed with the Internal 

  

 12 

 
Revenue Service but in no event later than one hundred twenty (120) days after the end of each fiscal year (provided, however, if Borrower shall have duly
filed for an extension of the filing deadline for such tax return, and promptly furnished evidence thereof to Lender, then such tax return shall be delivered to Lender on or before two hundred fifty-five (255) days after the end of such fiscal
year); and 
  
 (m) General Information.
Promptly, such other information concerning the Borrower or any Subsidiary as the Lender may from time to time reasonably request. 
  
 7.2 Maintenance of Existence; Conduct of Business. The Borrower will preserve and maintain, and will cause each Subsidiary to preserve and
maintain, its 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. The Borrower will conduct, and will cause each Subsidiary
to conduct, its business in an orderly and efficient manner in accordance with good business practices. 
  
 7.3 Maintenance of Properties. The Borrower will maintain, keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve, all of
its material properties (tangible and intangible) necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted. 
  
 7.4 Taxes and Claims. The Borrower will pay or discharge, and will cause each Subsidiary to pay or discharge, at or
before maturity or before becoming delinquent, except when failure to do so is not reasonably likely to have a Material Adverse Effect, (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 any of its property; provided, however, that neither the Borrower nor any Subsidiary shall be required to pay or discharge any
tax, levy, assessment, or governmental charge which is being contested in good faith by appropriate proceedings diligently pursued, and for which adequate reserves have been established. 
  
 7.5 Insurance. The Borrower will maintain, and will cause each of the Subsidiaries to maintain, insurance with
financially sound and reputable insurance companies in such amounts and covering such risks as is usually carried by businesses engaged in similar businesses and owning similar properties in the same general areas in which the Borrower and the
Subsidiaries operate, provided that in any event the Borrower will maintain and cause each Subsidiary to maintain workmen’s compensation insurance, property insurance, comprehensive general liability insurance, products liability insurance, and
business interruption insurance reasonably satisfactory to the Lender. 
  
 7.6 Audit and Inspection Rights. At any reasonable time and from time to time, the Borrower will permit the Lender to conduct an audit of the Collateral and any other matters affecting the credit facility provided for in this
Agreement, and will permit, and will cause each Subsidiary to permit, representatives of the Lender to examine, copy, and make extracts from its books and records, to visit and inspect its properties, and to discuss its business, operations, and
financial condition with its officers, employees, and independent certified public accountants. 
  

 13 

 7.7 Keeping Books and Records. The Borrower will maintain, and will cause 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. 
  
 7.8 Compliance with Laws. The Borrower will comply, and will cause
each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations, orders, and decrees of any Governmental Authority or arbitrator. 
  
 7.9 Compliance with Agreements. The Borrower will comply, and will cause each Subsidiary to comply, in all material
respects with all agreements, contracts, and instruments binding on it or affecting its properties or business. 
  
 7.10 Further Assurances. The Borrower will, and will cause each Subsidiary to, execute and deliver such further agreements and instruments and take
such further action as may be reasonably requested by the Lender to carry out the provisions and purposes of this Agreement and the other Loan Documents and to create, preserve, and perfect the Liens of the Lender in the Collateral. 
  
 7.11 ERISA. The Borrower will comply, and will cause 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. 
  
 7.12 Subordinated Indenture. The Borrower has provided the Lender with a true and correct copy of its outstanding
subordinated debenture, that certain Indenture dated as of October 15, 1997, to First Union National Bank, Trustee. The Borrower has also provided to the Lender a sample copy of the form of each Security issued thereunder. The Borrower will not
voluntarily redeem any of the Securities issued under the Indenture without the prior written approval of the Lender. 
  
 7.13 UCC-3 Termination Statements. Within 45 days of the date hereof, the Borrower shall cause to be terminated, and to be delivered to the Lender
and its counsel evidence of termination of, the following financing statements: those in favor of Alenia Spazo Spa filed of record in Washington and Florida against the Borrower, and those filed of record in favor of Bank of America in Washington,
Bank of America in Colorado against the Borrower, and that of Bank of America filed in Colorado against Johnson Engineering Corp. 
  
 VIII 
  
 Negative Covenants 
  
 The Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding or the Lender has any Commitment hereunder, the Borrower will perform and observe the following negative
covenants, unless the Lender shall otherwise consent in writing: 
  
 8.1 Debt. The 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 the Lender; 
  

 14 

 (b) Existing Debt described on Schedule 6.9 hereto (or any refinance thereof);

  
 (c) Existing or Future Debt arising in
connection with the Borrower’s acquisition of vehicles, inventory, or equipment acquired in the ordinary course of the Borrower’s business; and 
  
 (d) Debt incurred in connection with the Borrower’s ongoing operations, so long as, after giving effect to the existence of such
Debt, no Default results. 
  
 8.2 Limitation on Liens. The
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 disclosed on Schedule 8.2 hereto;

  
 (b) Liens in favor of the Lender; 

 
 (c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of the Borrower or the Subsidiaries to use
such assets in their respective businesses, and none of which is violated in any material respect by existing or proposed structures or land use; 
  
 (d) Liens for taxes, assessments, or other governmental charges which are not delinquent or which are being contested in good faith and
for which adequate reserves have been established; 
  
 (e) Liens of mechanics, materialmen, warehousemen, carriers, or other similar statutory Liens securing obligations that are not overdue for a period of more than thirty (30) days and for which adequate reserves have been established and
which are incurred in the ordinary course of business; 
  
 (f) Liens resulting from good faith deposits to secure payments of workmen’s compensation or other social security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, or contracts
(other than for payment of Debt), or leases made in the ordinary course of business; and 
  
 (g) Liens securing Debt arising pursuant to Section 8.1(c). 
  
 8.3 Mergers, Etc. The Borrower will not, and will not permit any Subsidiary to, become a party to a merger or
consolidation, or purchase or otherwise acquire all or any part of the assets of any Person or any shares or other evidence of beneficial ownership of any Person, or wind-up, dissolve, or liquidate. 
  

 15 

 8.4 Restricted Payments. The Borrower will not declare or pay any dividends or make any other
payment or distribution (in cash, property, or obligations) on account of its capital stock, or redeem, purchase, retire, or otherwise acquire any of its capital stock, or permit any of its Subsidiaries to purchase or otherwise acquire any capital
stock of the Borrower or another Subsidiary, or set apart any money for a sinking or other analogous fund for any dividend or other distribution on its capital stock or for any redemption, purchase, retirement, or other acquisition of any of its
capital stock. 
  
 8.5 Loans and Investments. The Borrower
will not make, and will not permit any Subsidiary to make, any advance, loan, extension of credit, or capital contribution to or investment in, or purchase, or permit 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 or any agency thereof with maturities of one year or less from the date of acquisition; 
  

(b) fully insured certificates of deposit with maturities of one year or less from the date of acquisition issued by any commercial
bank operating in the United States of America having capital and surplus in excess of $50,000,000.00; 
  
 (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; 
  
 (d) money market accounts or mutual funds investing primarily in items described in clauses (a) through (c) above; 
  
 (e) loans, investments, and advances in or to the Borrower or any Subsidiary; 
  
 (f) promissory notes or other investments received as a
result of the authorized compromise or extension of payment on any accounts receivable; and 
  
 (g) investments each fiscal year of up to 20% of the Consolidated Tangible Net Worth of the Borrower as of June 30, 2004. 
  
 8.6 Intentionally Deleted. 
  
 8.7 Transactions With Affiliates. The Borrower will not enter into,
and will not permit any Subsidiary to enter into, any transaction, including, without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate of the Borrower or such Subsidiary, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would be obtained in a comparable
arm’s-length transaction with a Person not an Affiliate of the Borrower or such Subsidiary. 
  
 8.8 Disposition of Assets. The Borrower will not sell, lease, assign, transfer, or otherwise dispose of any of its assets, or permit any Subsidiary
to do so with any of its assets, 

  

 16 

 
except (a) dispositions of inventory in the ordinary course of business, (b) dispositions of used and worn-out equipment and other assets, and (c)
dispositions permitted by Section 8.9. 
  
 8.9 Sale and
Leaseback. Except as listed on Schedule 8.9 hereto, the Borrower will not enter into, and will not permit any Subsidiary to enter into, any arrangement with any Person pursuant to which it leases from such Person real or personal property that
has been or is to be sold or transferred, directly or indirectly, by it to such Person. 
  
 8.10 Prepayment of Debt. Other than prepayment of Debt with the proceeds of a refinancing of such Debt, the Borrower will not prepay, and will not permit any Subsidiary to prepay, any Debt, except the
Obligations. 
  
 8.11 Nature of Business. The Borrower will
not, and will not permit any Subsidiary to, engage in any business other than the businesses in which they are engaged as of the date hereof and business that is directly related to the outer space industry. 
  
 8.12 Environmental Protection. Except in the ordinary course, and in
material compliance with applicable Environmental Laws, the Borrower will not, and will not permit any of its Subsidiaries 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 Material, (b) generate any Hazardous Material, (c) conduct any activity that is likely to cause a Release or threatened Release of any Hazardous Material, 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 or create any Environmental Liabilities for which the Borrower or any of its Subsidiaries would be responsible. 
  
 8.13 Accounting. The Borrower will not, and will not permit any of its
Subsidiaries to, change its fiscal year or make any change (a) in accounting treatment or reporting practices, except as required by GAAP and disclosed to the Lender, or (b) in tax reporting treatment, except as required by law and disclosed to the
Lender. 
  
 IX 
  
 Financial Covenants 
  
 The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or the Lender has any Commitment hereunder, the Borrower will observe and perform the financial covenants contained in Annex II attached hereto, unless the Lender shall otherwise consent in writing. 
  
 X 
  
 Default 
  
 10.1 Events of Default. Each of the following shall be deemed an “Event of Default”: 
  
 (a) The Borrower shall fail to pay when due the Obligations
or any part thereof. 
  

 17 

 (b) Any representation or warranty made or deemed made by the 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)
The 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, and such failure shall continue for thirty (30) days after notice from the
Lender. 
  
 (d) The 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 the Borrower, any Subsidiary, or any Obligated Party seeking liquidation, reorganization, or other relief with respect to it 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 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) The Borrower, any Subsidiary or any Obligated Party
shall fail to discharge within a period of thirty (30) days after the commencement thereof any attachment, sequestration, or similar proceeding or proceedings involving an aggregate amount in excess of TWENTY-FIVE THOUSAND AND NO/100 DOLLARS
($25,000.00) against any of its assets or properties. 
  
 (g) A final judgment or judgments for the payment of money in excess of TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00) in the aggregate shall be rendered by a court or courts against the Borrower, any of its Subsidiaries, or any
Obligated Party and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof and the Borrower or the relevant
Subsidiary or Obligated Party shall not, within said period of thirty (30) days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal.

  
 (h) The Borrower, any Subsidiary, or any
Obligated Party shall fail to pay when due principal of or interest on, in an amount in excess of $25,000, any Debt (other 

  

 18 

 
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) 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 the Borrower, any Subsidiary, any
Obligated Party or any of their respective shareholders, or the 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. 
  
 (j) Any of the following events shall occur or exist with respect to the Borrower or any ERISA Affiliate:
(i) any Prohibited Transaction involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA for the termination of, or for the appointment of a trustee to administer, any Plan, or the institution by the PBGC of any such
proceedings; or (v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization, insolvency, or termination of any Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, have subjected or could in the reasonable opinion of the Lender subject the Borrower to any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed or could reasonably be expected to exceed TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00). 
  
 (k) Any Change in Control occurs. 
  
 (l) The Borrower, any of its Subsidiaries, or any Obligated Party, or any of their properties, revenues, or assets, shall become subject
to an order of forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the same shall not have been discharged within thirty (30) days from the date of entry thereof. 
  
 10.2 Remedies Upon Default. If any Event of Default shall occur and be continuing, the Lender may without notice
terminate the Commitment and declare 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 the Borrower; provided, however, that upon the occurrence of an Event of Default under
Section 10.1(d) or Section 10.1(e), the Commitment shall automatically terminate, and the Obligations shall 

  

 19 

 
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 the Borrower. If any Event of Default shall occur and be continuing, the Lender may exercise all rights and remedies available to it in law or
in equity, under the Loan Documents, or otherwise. 
  
 10.3
Performance by the Lender. If the Borrower shall fail to perform any covenant or agreement contained in any of the Loan Documents, the Lender may perform or attempt to perform such covenant or agreement on behalf of the Borrower. In such
event, the Borrower shall, at the request of the Lender, promptly pay any amount expended by the Lender in connection with such performance or attempted performance to the Lender, together with interest thereon at the Default Rate from and including
the date of such expenditure to but excluding the date such expenditure is paid in full. Notwithstanding the foregoing, it is expressly agreed that the Lender shall not have any liability or responsibility for the performance of any obligation of
the Borrower under this Agreement or any other Loan Document. 
  
 XI 
  
 Miscellaneous 
  
 11.1 Expenses. The Borrower hereby agrees to pay on demand: (a) all
costs and expenses of the Lender in connection with the preparation, negotiation, execution, and delivery 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 fees and expenses of legal counsel for the Lender, (b) all costs and expenses of the Lender in connection with any Default and the enforcement of this Agreement or any other Loan Document, including,
without limitation, the fees and expenses of legal counsel for the Lender, (c) all transfer, stamp, documentary, or other similar taxes, assessments, or charges levied by any Governmental Authority in respect of this Agreement or any of the other
Loan Documents, (d) all costs, expenses, assessments, and other charges incurred in connection with any filing, registration, recording, or perfection of any security interest or Lien contemplated by this Agreement or any other Loan Document, and
(e) all other costs and expenses incurred by the Lender in connection with this Agreement or any other Loan Document, including, without limitation, all costs, expenses, and other charges incurred in connection with obtaining any mortgagee title
insurance policy, survey, audit, or appraisal in respect of the Collateral. 
  
 11.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES) 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 THE BORROWER OF ANY REPRESENTATION, WARRANTY,  

  

 20 

 
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON (BUT NOT SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). 
  
 11.3 Limitation of Liability. Neither the Lender nor any Affiliate, officer, director, employee, attorney, or agent of the Lender shall have any
liability with respect to, and the Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by the 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. The Borrower hereby waives, releases, and agrees not to sue the Lender
or any of the Lender’s Affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim 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. 
  
 11.4 No Duty. All attorneys, accountants, appraisers, and other professional Persons and consultants retained by the Lender shall have the right to
act exclusively in the interest of the Lender and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Borrower or any of the Borrower’s shareholders or any other
Person. 
  
 11.5 Lender Not Fiduciary. The relationship
between the Borrower and the Lender is solely that of debtor and creditor, and the Lender has no fiduciary or other special relationship with the Borrower, and no term or condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and the Lender to be other than that of debtor and creditor. 
  
 11.6 Equitable Relief. The Borrower recognizes that in the event the Borrower fails to pay, perform, observe, or discharge any or all of the Obligations, any remedy at law may prove to be inadequate relief to
the Lender. The Borrower therefore agrees that the Lender, if the Lender so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. 
  

 21 

 11.7 No Waiver; Cumulative Remedies. No failure on the part of the 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 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. 
  
 11.8 Successors and Assigns. This Agreement is
binding upon and shall inure to the benefit of the Lender and the Borrower and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior
written consent of the Lender. 
  
 11.9 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 repayment of the Obligation, and no investigation by the Lender or any closing shall affect the representations and warranties or the right of the Lender to rely upon them. 
  
 11.10 ENTIRE AGREEMENT; AMENDMENT; WAIVERS. THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN DOCUMENTS REFERRED TO
HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF 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. The provisions of this Agreement and the other Loan
Documents to which the Borrower is a party may be amended or waived only by an instrument in writing signed by the parties hereto. 
  
 11.11 Maximum Interest Rate. No provision of this Agreement or any other Loan Document shall require the payment or the collection of interest in
excess of the maximum amount permitted by applicable law. If any excess of interest in such respect is hereby provided for, or shall be adjudicated to be so provided, in any Loan Document or otherwise in connection with this loan transaction, the
provisions of this Section shall govern and prevail and neither the Borrower nor the sureties, guarantors, successors, or assigns of the 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 the 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 Note; and, if the principal of the Note has been paid in full, any remaining excess shall forthwith be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and the 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 

  

 22 

 
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of
the indebtedness evidenced by the Note so that interest for the entire term does not exceed the Maximum Rate. 
  
 11.12 Notices. All notices and other communications provided for in this Agreement and the other Loan Documents to which the Borrower is a party
shall be given in writing and made by telecopy or mailed by certified mail return receipt requested, or delivered to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof; or, as to any
party at such other address as shall be designated by such party in a notice to the other party given in accordance with this Section. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given
when transmitted by telecopy, subject to mechanical confirmation of receipt, or when personally delivered or, in the case of a mailed notice, when duly deposited in the mails, in each case given or addressed as aforesaid. 
  
 11.13 Governing 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 the Borrower under or in connection with any of the Loan Documents may be brought in any state or federal court in Harris County, Texas. The Borrower hereby irrevocably (a) submits to the
nonexclusive jurisdiction of such courts, and (b) 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. The Borrower agrees that
service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified or determined in accordance with the provisions of Section 11.12. Nothing herein or in any of the other Loan Documents shall
affect the right of the Lender to serve process in any other manner permitted by law or shall limit the right of the Lender to bring any action or proceeding against the Borrower or with respect to any of its property in courts in other
jurisdictions. Any action or proceeding by the Borrower against the Lender shall be brought only in a court located in Harris County, Texas. 
  
 11.14 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. 
  
 11.15
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. 
  
 11.16 Headings. The
headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement. 
  
 11.17 Non-Application of Chapter 346 of Texas Finance Code. The provisions of Chapter 346 of the Texas Finance Code (or any other statutory
equivalent) 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. 
  

 23 

 11.18 Participations. Upon receipt of the Borrower’s approval, which approval shall not be
unreasonably withheld or delayed, the Lender shall have the right at any time and from time to time to grant participations in the Note and any other Loan Documents. Each actual or proposed participant shall be entitled to receive all information
received by the Lender regarding the Borrower and its Subsidiaries, including, without limitation, information required to be disclosed to a participant pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by the Comptroller of the
Currency (whether the actual or proposed participant is subject to the circular or not). 
  
 11.19 Construction. The Borrower and the Lender acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other
Loan Documents with its legal counsel and that this Agreement and the other Loan Documents shall be construed as if jointly drafted by the Borrower and the Lender. 
  
 11.20 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or
such condition exists. 
  
 11.21 WAIVER OF JURY TRIAL.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING
TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF. 
  

[Remainder of Page Intentionally Left Blank] 
  
 [Signature Page to Follow] 
  

 24 

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

			
	BORROWER:
	
	SPACEHAB, INCORPORATED
		
	By:	 	 /s/ Brian Harrington

	 	 	 Brian Harrington

	 	 	 Senior Vice President and Chief
 Financial Officer

	
	 Address for Notices:

	
	 12130 Highway 3, Building 1

	 Webster, Texas 77598

	 Fax No.: 713/558-5956

	 Telephone No.: 713/558-5126

	Attention: Brian Harrington

  
 Signature Page to
Loan Agreement 
  

			
	LENDER:
	
	FIRST AMERICAN BANK
		
	By:	 	 /s/ Vernon G. Facundo

	 	 	 Vernon G. Facundo

	 	 	 Assistant Vice President

	
	 Address for Notices:

	
	 First American Bank, SSB

	 2000 West Sam Houston Parkway South

	 Suite 600

	 Houston, Texas 77042

	
	 Fax No.: 713/954-2053

	 Telephone No.: 713/954-9562 ext. 102

	Attention: Dave Martin

  
 Signature Page to
Loan Agreement 
  

  
 INDEX TO EXHIBITS

  

					
	Exhibit

	  	 Description of Exhibit

	  	Section

			
	A	  	Revolving Credit Note	  	Definitions
			
	B	  	Security Agreement	  	Definitions

  
 INDEX TO SCHEDULES

  

					
	Schedule

	  	 Description of Schedule

	  	Section

			
	6.5	  	Existing Litigation	  	6.5
			
	6.9	  	Existing Debt	  	6.9 & 8.1
			
	6.14	  	List of Subsidiaries	  	6.14
			
	6.20	  	Environmental Matters	  	6.20
			
	8.2	  	Existing Liens	  	8.2
			
	8.9	  	Sale and Leaseback Transactions	  	8.8 and 8.9

  
 INDEX TO ANNEXES

  

					
	Annex

	  	 Description of Annex

	  	Section

			
	I	  	Definitions	  	1.1
			
	II	  	Financial Covenants	  	Article IX

  
 Indexes to Exhibits,
Schedules and Annexes 
  

  
 SCHEDULE 6.5 
  
 EXISTING LITIGATION 
  

	 	1.	Contract Claim. In January 2004, Borrower filed a formal proceeding with NASA seeking indemnification under Borrower’s ReALMS contract in the amount of $87.7 million for
the value of Borrower’s RDM and related equipment that was destroyed during the STS-107 Space Shuttle Columbia tragedy. NASA responded to this contract claim on October 5, 2004. NASA’s determination states that its liability is
limited under the ReALMS contract to $8.0 million. Borrower received payment of $8.2 million, which included $0.2 million of interest, from NASA in October 2004. In January 2005, Borrower filed an appeal of NASA’s decision to deny its claim for
indemnification in excess of $8.0 million with the Armed Services Board of Contract Appeals. 

  

	 	2.	Lloyd’s Complaint. In January 2004, Lloyd’s, Borrower’s insurer for the RDM, filed a complaint in the United States District Court for the Western District of
Washington seeking the return of the $17.7 million Lloyd’s had paid to Borrower under the RDM insurance policy alleging that, among other things, (i) such proceeds were paid erroneously primarily due to the fact that NASA had not paid
indemnification due to Borrower prior to the payment of the insurance proceeds, (ii) Borrower and its insurance broker misled Lloyd’s in issuing the policy, and (iii) Borrower has not cooperated with Lloyd’s in protecting Lloyd’s
right of subrogation. In February 2004, Lloyd’s withdrew its complaint from the United States District Court and filed a similar complaint in Superior Court of the State of Washington. Borrower believes that Lloyd’s complaint is without
merit and will continue to respond to the complaint accordingly. 

  

	 	3.	Tort Claim. On November 8, 2004, Borrower filed a second claim with NASA seeking damages of $79.7 million under the Federal Tort Claims Act for the loss of the RDM resulting
from NASA’s alleged negligence leading to the destruction of the Space Shuttle Columbia and the loss of the RDM. Borrower’s claim represents its loss of $87.7 million less the $8.0 million recovered from NASA. Under federal tort
claim procedures, NASA has statutory deadlines for responding to such claims. In the event that Borrower’s administrative claim is denied, Borrower would have the right to pursue the claim in Federal District Court. 

  

 Schedule 6.5 

  
 SCHEDULE 6.9 
  
 EXISTING DEBT 
  

	 	1.	Indebtedness outstanding pursuant to the Indenture referred to in Section 7.12 totaling $63,250,000. 

  

	 	2.	Indebtedness of Astrotech Florida Holdings, Inc. pursuant to that certain Credit Agreement dated as of August 30, 2001 with SouthTrust Bank, as lender (the “SouthTrust
Indebtedness”). 

  

	 	3.	Guaranty obligations of Borrower and Astrotech Space Operations, Inc., in connection with the SouthTrust Indebtedness 

  

 Schedule 6.9 

  
 SCHEDULE 6.14 
  
 LIST OF SUBSIDIARIES 
  
 Percentage of Voting Stock 
  

					
	 Name of Subsidiary

	  	Jurisdiction of Incorporation

	  	Owned by the Borrower

	 SPACEHAB Government
 Services,
Incorporated
	  	Colorado	  	 100%

	 Space Media, Inc.
	  	Delaware	  	 82%

	 Space Store, LLC
	  	Delaware	  	100% by Space Media, Inc.
	 SPACEHAB Acquisition
 Corporation
	  	Delaware	  	100%
	 Space Station Enterprise, LLC
	  	Delaware	  	100%
	 Enermedia, LLC
	  	Delaware	  	100%
	 Johnson Engineering
	  	Colorado	  	100%
	 Technologies Corporation
 Space Portal, Inc.
	  	Delaware	  	100%
	 Astrotech Florida Holdings, Inc.
	  	Florida	  	100%
	 Astrotech Space Operations, Inc.
	  	Delaware	  	 100%

  

 Schedule 6.14 

  
 SCHEDULE 6.20 
  
 ENVIRONMENTAL MATTERS 
  
 None. 
  

 Schedule 6.20 

  
 SCHEDULE 8.2 
  
 EXISTING LIENS 
  
 Real and personal property Liens securing the indebtedness under that certain Credit
Agreement dated as of August 30, 2001, between Astrotech Florida Holdings, Inc., as borrower, and SouthTrust Bank, as lender, as amended 
  

 Schedule 8.2 

  
 SCHEDULE 8.9 
  
 SALE AND LEASEBACK TRANSACTIONS 
  

	 	1.	Sale and leaseback of SPACEHAB Headquarters, consisting of a 90,987 square foot facility on 4.848 acres and approximately 3 acres of vacant land, located at 12130 Highway 3,
Webster, Texas 77598 (the “Ellington Property”). Borrower does not currently own the Ellington Property, but may exercise an option to purchase. In the event of a sale and leaseback of the Ellington Property, Borrower estimates that it
will sell the Ellington Property for $3,000,000 to $3,500,000, and lease the Ellington Property back for a 6 to 15 year term at a cost averaging $4.00 to $4.50 per square foot. 

  

	 	2.	Sale and leaseback of SPACEHAB Payload Processing Facility, consisting of an approximately 58,000 square foot building located at 620 Magellan Road, Cape Canaveral, Florida 32920
(the “Florida Facility”). In the event of a sale and leaseback of the Florida Facility, Borrower estimates that it will sell the Florida Facility for $4,700,000 to $4,900,000, and lease the Florida Facility back for a 6 to 10 year term at
a cost averaging $7.50 to $8.00 per square foot. 

  

 Schedule 8.9 

  
 ANNEX I 
 DEFINITIONS 
  
 “Advance” means an advance of funds by the Lender to the Borrower pursuant to Article II. 
  
 “Advance Request Form” means a certificate, in a form
approved by the Lender, properly completed and signed by the Borrower requesting an Advance. 
  
 “Affiliate” means, as to any Person, any other Person (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such Person;
(b) that directly or indirectly beneficially owns or holds five percent (5%) or more of any class of voting stock of such Person; or (c) that directly or indirectly beneficially owns or holds five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in question. The term “control” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise; provided, however, in no event shall the Lender be deemed an Affiliate of the Borrower or any of its Subsidiaries. 
  
 “Applicable Rate” shall mean the sum of the Prime Rate in
effect from day to day plus one percent (1.0%). 
  
 “Applicable Subsidiaries” shall mean SPACEHAB Government Services, Incorporated and Astrotech Space Operations, Inc. 
  
 “Borrowing Base” means, at any time, an amount equal to eighty percent (80%) of Eligible Accounts. 
  
 “Business Day” means any day on which commercial banks are
authorized to conduct business or are not required to close in the State of Texas. 
  
 “Capital Lease Obligations” means, as to any Person, the obligations of such Person 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 are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP. For purposes of this Agreement, the amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP. 
  
 “Change
in Control” means: 
  
 (a) any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee,
agent, or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of 35% or more of the equity securities of
Borrower entitled to vote 

  

 Annex I - 1 

 
for members of the board of directors or equivalent governing body of Borrower on a fully-diluted basis. 
  
 (b) a majority of the members of the board of directors or other equivalent
governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting
at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member
of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors); or 
  
 (c) any Person or two or more Persons acting in concert shall have acquired, by contract or otherwise, control over the equity securities of Borrower entitled to vote for members of the board of directors or equivalent governing body of
Borrower on a fully-diluted basis (and taking into account all such securities that such Person or group has the right to acquire pursuant to any option right) representing 35% or more of the combined voting power of such securities. 
  
 “Code” means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder. 
  
 “Collateral” has the meaning specified in Section 4.1. 
  
 “Commitment” means the obligation of the Lender to make revolving credit Advances pursuant to Section 2.1 in an aggregate principal amount at any time outstanding up to but not exceeding Five Million
and No/100 Dollars ($5,000,000.00), subject, however, to termination pursuant to Section 10.2. 
  
 “Consolidated Current Assets” means, at any particular time, all amounts which, in conformity with GAAP, would be included as current assets on a consolidated balance sheet of the Borrower and the
Subsidiaries. 
  
 “Consolidated Current
Liabilities” means, at any particular time, all amounts which, in conformity with GAAP, would be included as current liabilities on a consolidated balance sheet of the Borrower and the Subsidiaries. 
  
 “Consolidated Tangible Net Worth” means, at any particular
time, all amounts which, in conformity with GAAP, would be included as shareholders’ equity on a consolidated balance sheet of the Borrower and the Subsidiaries; provided, however, goodwill shall be excluded therefrom. 
  

 Annex I - 2 

 “Debt” means as to any Person at any time (without duplication): (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade
accounts payable of such Person arising in the ordinary course of business that are not past due by more than ninety (90) days, (d) all Capital Lease Obligations of such Person, (e) all Debt or other obligations of others guaranteed by such Person,
(f) all obligations secured by a Lien existing on property owned by such Person, whether or not the obligations secured thereby have been assumed by such Person or are non-recourse to the credit of such Person, (g) all reimbursement obligations of
such Person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments, and (h) all liabilities of such Person in respect of unfunded vested benefits under any Plan.

  
 “Default” means an Event of Default or the
occurrence of an event or condition which with notice or lapse of time or both would become an Event of Default. 
  
 “Default Rate” means the Maximum Rate or, if no Maximum Rate exists, the sum of the Prime Rate in effect from day to day plus ten percent
(10%). 
  
 “Dollars” and “$”
mean lawful money of the United States of America. 
  
 “EBITDA” means, with respect to any period of its determination, the consolidated net income (excluding any extraordinary gains or losses) for such period, plus the interest expense and income taxes for such period, plus
the depreciation and amortization for such period. 
  
 “Eligible Accounts” means, at any time, all accounts receivable of the Borrower, SPACEHAB Government Services, Incorporated, and Astrotech Space Operations, Inc. created in the ordinary course of business that are
acceptable to the Lender in its sole discretion and satisfy the following conditions: 
  
 (a) The account complies with all applicable laws, rules, and regulations, including, without limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z of the Board of Governors of the Federal Reserve
System; 
  
 (b) The account has not been outstanding for more than
sixty-one (61) days past the original due date of invoice; 
  
 (c)
The account was created in connection with (i) the sale of goods by the Borrower in the ordinary course of business and such sale has been consummated and such goods have been shipped and delivered and received by the account debtor, or (ii) the
performance of services by the Borrower in the ordinary course of business and such services have been completed and accepted by the account debtor; 
  
 (d) The account arises from an enforceable contract, the performance of which has been completed by the Borrower; 
  

 Annex I - 3 

 (e) The account does not arise from the sale of any good that is on a bill-and-hold, guaranteed sale,
sale-or-return, sale on approval, consignment, or any other repurchase or return basis; 
  
 (f) The Borrower has good and indefeasible title to the account and the account is not subject to any Lien except Liens in favor of the Lender; 
  
 (g) The account does not arise out of a contract with or order from, an account debtor that, by its terms, prohibits or
makes void or unenforceable the grant of a security interest by the Borrower to the Lender in and to such account; 
  
 (h) Except as permitted by Section 3.4 of the Security Agreement, the account is not subject to any setoff, counterclaim, defense, dispute, recoupment, or
adjustment other than normal discounts for prompt payment; PROVIDED, HOWEVER, (i) to the extent that the Lender has been informed of the nature of any setoff and counterclaim, (ii) such setoff and counterclaim is noted in the Borrowing Base Report
and (iii) the Lender has agreed to allow the same to be retained in the Borrowing Base, the account will constitute an Eligible Account; 
  
 (i) 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; 
  
 (j) The account is not evidenced by chattel paper or an instrument;

  
 (k) No default exists under the account by any party thereto;

  
 (l) The account debtor has not returned or refused to retain,
or otherwise notified the Borrower of any dispute concerning, or claimed nonconformity of, any of the goods from the sale of which the account arose; 
  
 (m) The account is not owed by an Affiliate of the Borrower; 
  
 (n) The account is payable in Dollars by the account debtor; 
  
 (o) The account shall be ineligible if the account debtor is domiciled in any country other than the United States of America; 
  
 (p) The account shall be ineligible if more than twenty-five percent (25%) of
the aggregate balances then outstanding on accounts owed by such account debtor and its Affiliates to the Borrower are more than ninety (90) days past due from the dates of their original invoices; 
  
 (q) The account shall be ineligible if the account debtor is the United
States of America or any department, agency, or instrumentality thereof, and the Assignment of Claims Act of 1940, as amended, shall not have been complied with; and 
  

 Annex I - 4 

 The amount of the Eligible Accounts owed by an account debtor to the Borrower shall be reduced by the amount of all
“contra accounts” and other obligations owed by the Borrower to such account debtor. 
  
 “Environmental Laws” means any and all federal, state, and local laws, regulations, and requirements pertaining to health, safety, or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Occupational Safety and Health Act, 29 U.S.C. §
651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., as such laws, regulations, and
requirements may be amended or supplemented from time to time. 
  
 “Environmental Liabilities” means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs, and expenses
(including, without limitation, all reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim
or demand, by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement with any Governmental Authority or other Person, arising
from environmental, health or safety conditions or the Release or threatened Release of a Hazardous Material into the environment, resulting from the past, present, or future operations of such Person or its Affiliates. 
  
 “ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published interpretations thereunder. 
  
 “ERISA Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Borrower or is under common control (within the meaning of Section 414(c) of the Code) with the Borrower. 
  
 “Event of Default” has the meaning specified in Section 10.1. 
  
 “Fixed Charge Coverage Ratio” means (a) the result of (i) EBITDA minus (ii) income taxes paid in cash
divided by (b) the sum of (i) current maturities of long term Debt, plus (ii) current interest expense, plus (iii) capital expenditures to the extent not financed with any debt. 
  
 “GAAP” means generally accepted accounting principles,
applied on a consistent basis, as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a “consistent basis” when the accounting principles applied in a current period are 

  

 Annex I - 5 

 
comparable in all material respects to those accounting principles applied in a preceding period. 
  
 “Governmental Authority” means any nation or government, any
state or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government. 
  
 “Hazardous Material” 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, including, without limitation, asbestos, petroleum, and polychlorinated biphenyls. 
  
 “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 from time to time. 
  
 “Lock Box Agreement” means any of the Lock Box Agreements between Borrower, SPACHAB Government Services, Incorporated, or Astrotech Space
Operations, Inc., and Lender establishing arrangements with Lender for collection of accounts receivable payments. 
  
 “Material Adverse Effect” means any act, event, condition or circumstance which could materially and adversely effect (i) the business,
operations, condition (financial or otherwise), prospects, liabilities, assets, results of operations, capitalization, liquidity or properties of Borrower, Subsidiaries or any Obligated Party, taken as a whole; (ii) the value of the Collateral; or
(iii) the ability of Borrower to pay and perform the Note or the other Obligations. 
  
 “Maximum Rate” means, at any time, the maximum rate of interest under applicable law that the Lender may charge the Borrower. The Maximum Rate shall be calculated in a manner that takes into account
any and all fees, payments, and other charges in respect of the Loan Documents that constitute interest under applicable law. Each change in any interest rate provided for herein based upon the Maximum Rate resulting from a change in the Maximum
Rate shall take effect without notice to the Borrower at the time of such change in the Maximum Rate. For purposes of determining the Maximum Rate under Texas law, the applicable rate ceiling shall be the indicated rate ceiling described in, and
computed in accordance with, Chapter 303 of the Texas Finance Code. 
  

 Annex I - 6 

 “Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA. 
  
 “Note” means, collectively, all promissory notes executed at any time by the Borrower and payable to the order of the Lender; as renewed,
extended, modified and/or increased from time to time. 
  
 “Obligated Party” means any guarantor or any other Person who is or becomes party to any agreement that guarantees or secures payment and performance of the Obligations or any part thereof. 
  
 “Obligations” means all obligations, indebtedness, and
liabilities of the Borrower to the Lender, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the
obligations, indebtedness, and liabilities of the Borrower under this Agreement, the Note, and the other Loan Documents, and all interest accruing thereon and all attorneys’ fees and other expenses incurred in the enforcement or collection
thereof. 
  
 “Payment Date” means the 11th day of
each month of each year, the first of which shall be the first such day after the date of this Agreement. 
  
 “PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA. 
  
 “Person” means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or other entity. 
  
 “Plan” means any employee benefit or other plan established or maintained by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA. 
  
 “Prime Rate” means the prime rate quoted from time to time
in the Money Rates section of The Wall Street Journal, Southwest Edition and if two (2) or more rates are quoted the highest rate quoted. Effective the day a published Wall Street Journal reflects a change in that prime rate, and
without notice to the Borrower or any other party, the Applicable Rate on the Note shall likewise change. In the event The Wall Street Journal dissolves, liquidates or otherwise ceases to publish or announce a prime rate, the then holder of
the Note shall designate a bank having its principal banking location in New York City, New York, whose base or prime rate, from and after the effective date of such designation, shall be the Prime Rate for purposes hereof. 
  
 “Principal Office” means the principal office of the Lender,
presently located at 2000 West Sam Houston Parkway South, Suite 600, Houston, Texas 77042. 
  
 “Prohibited Transaction” means any transaction set forth in Section 406 of ERISA or Section 4975 of the Code. 
  

 Annex I - 7 

 “Quarterly Payment Date” means May 11, 2005 and the same day of each August, November
and February thereafter that the Commitment is outstanding. 
  
 “Release” means, as to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, disbursement, leaching, or migration of Hazardous Materials into the indoor or outdoor environment or into or
out of property owned by such Person, including, without limitation, the movement of Hazardous Materials through or in the air, soil, surface water, ground water, or property. 
  
 “Remedial Action” means all actions required to (a) clean up, remove, treat, or otherwise address Hazardous
Materials in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of Hazardous Materials so that they do not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care. 
  
 “Reportable Event” means any of the events set forth in Section 4043 of ERISA. 
  
 “Revolving Credit Note” means the promissory note of the
Borrower payable to the order of the Lender, in substantially the form of Exhibit A hereto, and all extensions, renewals, and modifications thereof. 
  
 “RICO” means the Racketeer Influenced and Corrupt Organizations Act of 1970, as amended from time to time. 
  
 “Secured Debt Leverage Ratio” means, at any particular time,
the ratio of Debt secured by liens to Consolidated Tangible Net Worth. 
  
 “Security Agreement” means any of the Security Agreements of the Borrower, Astrotech Space Operations, Inc. and SPACEHAB Government Services, Incorporated in favor of the Lender in substantially the form of Exhibit B
hereto, as the same may be amended, supplemented, or modified. 
  
 “Subordinated Debt” means obligations of the Borrower subject to the Indenture described in Section 7.12 hereof. 
  
 “Subsidiary” means any corporation of which at least a majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of the Subsidiaries or by the Borrower and one or more of the Subsidiaries. 
  
 “Termination Date” means 11:00 A.M. Houston, Texas time one (1) year from the date hereof, or such earlier
date on which the Commitment terminates as provided in this Agreement. 
  

 Annex I - 8 

 “UCC” means the Uniform Commercial Code as in effect in the State of Texas. 

 
 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 UCC, unless otherwise defined herein, shall have the meanings specified in the UCC. 
  

 Annex I - 9 

  
 ANNEX II 

FINANCIAL COVENANTS 
  
 1. Consolidated Tangible Net Worth. 
  
 (a) Subject to paragraph (b) hereunder, the Borrower shall at all times maintain Consolidated Tangible Net Worth in an amount not less
than Fifteen Million and No/100 Dollars ($15,000,000.00) (the “Required Amount”). 
  
 (b) If on either the date of determination or the date any Advance is to be made hereunder the Consolidated Tangible Net Worth shall be
less than the Required Amount, then: (i) the Borrower shall, pursuant to documentation in form and substance reasonably satisfactory to the Lender, within three (3) business days pledge to the Lender cash or deposit accounts (the “Cash
Collateral”) in an amount equal to the lesser of (A) the revolving credit Advances at such time outstanding and (B) the difference, as most recently calculated, between Consolidated Tangible Net Worth and the Required Amount; and (ii) the
Lender shall not be required to make additional revolving credit Advances to the Borrower unless after giving effect to such additional Advances the Borrower shall be in compliance with the requirements of clause (b)(i) above. 
  
 The amount of Cash Collateral required to be pledged shall be adjusted from
time to time to reflect changes in the amount of revolving credit Advances outstanding and in the amount of Consolidated Tangible Net Worth. If on any date of determination the amount of Cash Collateral pledged as of such date is greater than the
amount required to be so pledged pursuant to the above calculations, the Lender shall release such excess amount from the pledge. 
  
 2. Secured Debt Leverage Ratio. The Borrower will at all times maintain a Secured Debt Leverage Ratio of not greater than .75 to 1.0. 

 
 3. Fixed Charge Coverage Ratio. The Borrower will at all times
maintain a Fixed Charge Coverage Ratio of not less than 1.2 to 1.0, calculated on a trailing four (4) quarterly basis. 
  

 Annex II - 1Equity Compensation Plan

 EXHIBIT 10.1 
  
 RADIAN GROUP INC. 
 EQUITY COMPENSATION PLAN 
  
 (Amended and
Restated as of February 8, 2005) 
  
 The purpose of the Equity
Compensation Plan (the “Plan”) of Radian Group Inc. (the “Company”) is to promote the interests of the Company by providing incentives to (i) designated officers and other employees of the Company or an Affiliate (as defined
herein), and (ii) non-employee members of the Board of Directors of the Company (the “Board”), to encourage them to acquire a proprietary interest, or to increase their proprietary interest, in the Company. The Company believes that the
Plan will cause participants to contribute materially to the growth of the Company, thereby benefiting the Company’s stockholders. For purposes of the Plan, the term “Affiliate” shall mean a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, the Company; and the terms “Parent Corporation” and “Subsidiary Corporation” shall have the meanings set forth in subsections (e) and (f) of Section 424 of the Internal
Revenue Code of 1986, as amended (the “Code”). 
  
 1.
Administration 
  
 The Plan shall be administered and
interpreted by a committee of the Board (the “Committee”); provided, however, that grant decisions made hereunder shall be made by at least two persons, each of whom may be (i) “outside directors” as defined under Section 162(m)
of the Internal Revenue Code, and (ii) “non-employee directors” as defined under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board may appoint a subcommittee for this purpose, in which
case references herein to the “Committee” shall mean the subcommittee as appropriate. The Committee shall have the sole authority to determine (i) who is eligible to receive Grants (as defined in Section 2 below) under the Plan, (ii) the
type, size and terms of each Grant under the Plan (subject to Section 4 below), (iii) the time when each Grant will be made and the duration of any exercise or restriction period; (iv) any restrictions on resale applicable to the shares to be issued
or transferred pursuant to the Grant; and (v) any other matters arising under the Plan. The Committee may, in its discretion or in accordance with a directive from the Board, waive any provisions of any Grant, provided such waiver is not
inconsistent with the terms of this Plan as then in effect. The Committee may, if it so desires, base any of the foregoing determinations upon the recommendations of management of the Company. A majority of the Committee shall constitute a quorum
thereof, and the actions of a majority of the Committee at a meeting at which a quorum is present, or actions unanimously approved in writing by all members of the Committee, shall be actions of the Committee. The Committee shall have full power and
authority to administer and interpret the Plan and to adopt or amend such rules, regulations, agreements and instruments as it may deem appropriate for the proper administration of the Plan. The Committee’s interpretations of the Plan and all
determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any Grants under the Plan. No person acting under this subsection shall be held
liable for any action or determination made with respect to the Plan or any Grant under the Plan, except for the willful misconduct or gross negligence of such person. 

 2. Grants 
  
 Incentives under the Plan shall consist of Incentive Stock Options (as defined in Section 5(b) below), Nonqualified Stock Options (as defined in Section
5(b) below), Restricted Stock Grants (as defined in Section 6 below), SARs (as defined in Section 7 below), Phantom Stock (as defined in Section 8 below), and Performance Share Awards (as defined in Section 9 below) (hereinafter collectively
referred to as “Grants”). All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions of any nature as the Committee deems appropriate and specifies in writing to the participant (the
“Grant Letter”), as long as they are not inconsistent with the Plan. The Committee shall approve the form and provisions of each Grant Letter. Grants under any section of the Plan need not be uniform as among the participants receiving the
same type of Grant, and Grants under two or more sections of the Plan may be combined in one Grant Letter. 
  
 3. Shares Subject to the Plan 
  
 (a) The aggregate number of shares of the Common Stock, par value $0.001 (“Common Stock”), of the Company that may be issued or transferred under the Plan is 9,400,000, subject to adjustment pursuant
to Section 3(b) below. The maximum number of shares of Common Stock for which any Grantee may be granted options (and related stock appreciation rights) under the Plan is limited to 150,000 for any calendar year, subject to adjustment pursuant to
Section 3(b) below. The shares may be authorized but unissued shares or reacquired shares. If and to the extent that options or SARs granted under the Plan terminate, expire or are canceled without having been exercised (including shares canceled as
part of an exchange of Grants), or if any shares of restricted stock or Phantom Stock or any Performance Share Awards are forfeited, the shares subject to such Grant shall again be available for subsequent Grants under the Plan. 
  
 (b) If any change is made to the Common Stock (whether by reason of
merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination of shares, or exchange of shares or any other change in capital structure made without receipt of consideration), then unless such event or change
results in the termination of all outstanding Grants under the Plan, the Committee shall preserve the value of the outstanding Grants by adjusting the maximum number and class of shares issuable under the Plan to reflect the effect of such event or
change in the Company’s capital structure, and by making appropriate adjustments to the number and class of shares, the exercise price of each outstanding Grant and otherwise, except that any fractional shares resulting from such adjustments
shall be eliminated by rounding any portion of a share equal to .500 or greater up, and any portion of a share equal to less than .500 down, in each case to the nearest whole number. 
  

 2 

 4. Eligibility for Participation 
  
 Officers and other employees of the Company or an Affiliate, and non-employee members of the Board, shall be eligible to
participate in the Plan (hereinafter referred to individually as an “Eligible Participant” and collectively as “Eligible Participants”). Only Eligible Participants who are officers or other employees of the Company or a Parent
Corporation or Subsidiary Corporation shall be eligible to receive Incentive Stock Options and Performance Share Awards. All Eligible Participants shall be eligible to receive Nonqualified Stock Options, Restricted Stock Grants, SARs and Phantom
Stock. The Committee shall select from among the Eligible Participants those who will receive Grants (the “Grantees”) and shall determine the number of shares of Common Stock subject to each Grant. The Committee may, if it so desires, base
any such selections or determinations upon the recommendations of management of the Company. Nothing contained in the Plan shall be construed to limit in any manner whatsoever the right of the Company to grant rights or options to acquire Common
Stock or awards of Common Stock otherwise than pursuant to the Plan. 
  
 5.
Stock Options 
  
 (a) Number of
Shares. The Committee, in its sole discretion, shall determine the number of shares of Common Stock that will be subject to each option. 
  
 (b) Type of Option and Option Price. 
  

(1) The Committee may grant options qualifying as incentive stock options within the meaning of Section 422 of the Code
(“Incentive Stock Options”) and other stock options (“Nonqualified Stock Options”), in accordance with the terms and conditions set forth herein, or may grant any combination of Incentive Stock Options and Nonqualified Stock
Options (hereinafter referred to collectively as “Stock Options”). The option price per share of each Stock Option shall not be less than the fair market value (as defined herein) of a share of Common Stock on the date of grant (subject to
the following sentence). If the Grantee of an Incentive Stock Option is the owner of Common Stock (as determined under section 424(d) of the Code) who possesses more than 10% of the total combined voting power of all classes of stock of the Company
or a Parent Corporation or Subsidiary Corporation, the option price per share in the case of an Incentive Stock Option shall not be less than 110% of the fair market value of a share of Common Stock on the date of grant. 
  
 (2) For all valuation purposes under the Plan, the fair
market value of a share of Common Stock shall be the closing price at which the Common Stock shall have been sold regular way on the New York Stock Exchange on the date as of which such value is being determined or, if no sales occurred on such day,
then on the next preceding day on which there were such sales, or, if at any time the Common Stock shall not be listed on the New York Stock Exchange, the fair market value as determined by the Committee on the basis of available prices for such
Common Stock or in such manner as may be authorized by applicable regulations under the Code. 
  

 3 

 (c) Exercise Period. The Committee shall determine the option exercise
period of each Stock Option. The exercise period shall not exceed ten years from the date of grant. However, if the Grantee of an Incentive Stock Option is the owner of Common Stock (as determined under Section 424(d) of the Code) who possesses more
than 10% of the total combined voting power of all classes of stock of the Company or a Parent Corporation or Subsidiary Corporation, the exercise period shall not exceed five years. Notwithstanding any determinations by the Committee regarding the
exercise period of any Stock Option, all outstanding Stock Options shall become immediately exercisable upon a Change of Control of the Company (as defined in Section 11 below). 
  
 (d) Vesting of Options and Restrictions on Shares. The vesting period for Stock Options
shall commence on the date of grant and shall end on the date or dates, determined by the Committee, that shall be specified in the Grant Letter; provided, however, that unless otherwise specified in the Grant Letter, each Stock Option shall vest
and become exercisable in cumulative installments to the extent of 25% of the number of shares originally covered thereby on and after the first, second, third and fourth anniversaries of the grant of the Stock Option, if the Grantee is an employee
of the Company or a Parent Corporation or Subsidiary Corporation (or an Affiliate, in the case of a Nonqualified Stock Option), or a non-employee member of the Board in the case of a Nonqualified Stock Option, on such anniversary. The
Committee may impose upon the shares of Common Stock issuable upon the exercise of a Stock Option such restrictions as it deems appropriate and specifies in the Grant Letter. During any period in which such restrictions apply, the provisions of
Section 6(d) below shall be applicable to such shares, and the Committee, in such circumstances as it deems equitable, may determine that all such restrictions shall lapse. Notwithstanding any other provision of the Plan, all outstanding Stock
Options shall become immediately exercisable upon the earliest to occur of the following, if at such time the Grantee is an employee of the Company or a Parent Corporation or Subsidiary Corporation (or an Affiliate, in the case of a Nonqualified
Stock Option), or a non-employee member of the Board in the case of a Nonqualified Stock Option: (i) the Grantee’s normal retirement date, (ii) five years from the date of the Grant, (iii) the Grantee’s death or Disability, or (iv) the
occurrence of a Change of Control of the Company (as defined in Section 11 below). For purposes of this Plan, “Disability” shall mean a physical or mental impairment of sufficient severity that the Grantee is both eligible for and in
receipt of benefits under the long-term disability program maintained by the Company. 
  
 (e) Manner of Exercise. A Grantee may exercise a Stock Option by delivering a duly completed notice of exercise to the Secretary of the Company. Unless other arrangements
satisfactory to the Company are made, no shares of Common Stock shall be issued on the exercise of a Stock Option unless paid for in full at the time of purchase. Payment for shares of Common Stock purchased upon the exercise of a Stock
Option shall be made in cash or, with the consent of the Committee, in whole or in part in such shares of Common Stock held for at least six months valued at the then fair market value thereof. Stock certificates for the shares of Common Stock so
paid will be issued and delivered to the person entitled thereto only at the Company’s office in Philadelphia, PA. No person shall have any rights as a stockholder with respect to any share of Common Stock covered by a Stock Option unless and
until such person shall have become the holder of record of such share, and, except as otherwise permitted in 
  

 4 

 Section 3(b) hereof, no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property or distributions or other rights) in respect of such share for which the record date is prior to the date on which such person shall have become the holder of record thereof. 
  
 (f) Termination of Employment, Retirement, Disability or
Death. 
  
 (1) (A) If a Grantee is
an employee and ceases to be an Eligible Participant for any reason other than retirement, Disability or death, any Stock Option which is otherwise exercisable by the Grantee shall terminate unless exercised by the Grantee within 90 days after the
date on which the Grantee ceases to be an Eligible Participant (or within such other period of time, which may be longer or shorter than 90 days, specified in the Grant Letter), but in any event no later than the date of expiration of the option
exercise period. 
  
 (B) In the event of the
Disability or death of such Grantee, any Stock Option which was otherwise exercisable by such Grantee shall terminate unless exercised by the Grantee (or the Grantee’s personal representative) within one year after the date on which the Grantee
ceases to be an Eligible Participant (or within such other period of time, which may be longer or shorter than one year, specified in the Grant Letter), but in any event no later than the date of expiration of the option exercise period. (C) In the
event of the retirement of such Grantee, any Stock Option which was otherwise exercisable by such Grantee at the date of retirement may be exercised by the Grantee at any time prior to the normal expiration of the option exercise term. The term
“retirement” as used herein shall mean a Grantee’s retirement as defined under the Company’s Pension Plan. 
  
 (2) If a Grantee is a non-employee director and ceases to be an Eligible Participant due to Grantee’s failure to be nominated for
reelection to the Board or failure to be reelected after nomination, any Stock Option which is otherwise exercisable by the Grantee shall terminate unless exercised by the Grantee within 90 days after the date on which the Grantee ceases to be an
Eligible Participant (or within such other period of time, which may be longer or shorter than 90 days, as may be specified in the Grant Letter), but in any event no later than the date of expiration of the option exercise period. In the event of a
voluntary departure from the Board, Disability or death of such Grantee, any Stock Option which was otherwise exercisable by such Grantee at the date of such voluntary departure from the Board, Disability or death, may be exercised by the Grantee
(or the Grantee’s personal representative) at any time prior to the normal expiration of the option exercise term. 
  
 (g) Limits on Incentive Stock Options. Each Grant of an Incentive Stock Option shall provide that: 
  
 (1) the Stock Option is not transferable by the Grantee,
except, in the case of an individual Grantee, by will or the laws of descent and distribution; 
  

 5 

 (2) the Stock Option is exercisable only by the Grantee, except as otherwise provided
herein or in the Grant Letter in the event of the death of an individual Grantee; and 
  
 (3) the aggregate fair market value of the Common Stock on the date of the Grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year under the Plan and under any other stock option plan of the Company shall not exceed $100,000. 
  
 (h) Exchange Act Limitation. Unless the Grantee could otherwise transfer Common Stock
issued pursuant to the Stock Option without incurring liability under Section 16(b) of the Exchange Act, at least six months must elapse from the date of acquisition of the Stock Option until the date of disposition of the Common Stock issued upon
exercise thereof. 
  
 (i) Replacement
Options. If a Stock Option granted pursuant to the Plan may be exercised by a Grantee by means of a stock-for-stock swap method of exercise as provided in 5(e) above, then the Committee may, in its sole discretion, authorize the Grantee to
automatically receive a replacement Stock Option pursuant to this part of the Plan. This replacement option shall cover a number of shares determined by the Committee. The per share exercise price of the replacement option shall equal the then
current fair market value of a share of Stock, and shall have a term extending to the expiration date of the original Stock Option. The Committee shall have the right, in its sole discretion and at any time, to discontinue the automatic grant of
replacement options if it determines the continuance of such grants to no longer be in the best interest of the Company. 
  
 6. Restricted Stock Grants 
  
 The Committee may issue shares of Common Stock to an Eligible Participant pursuant to an incentive or long range compensation plan, program or contract
approved by the Committee (a “Restricted Stock Grant”). The following provisions are applicable to Restricted Stock Grants: 
  
 (a) General Requirements. Shares of Common Stock issued pursuant to Restricted Stock Grants will be issued for or in consideration
for cash or services rendered having a value, as determined by the Board, at least equal to the par value thereof. All conditions and restrictions imposed under each Restricted Stock Grant, and the period of years during which the Restricted Stock
Grant will remain subject to such restrictions, shall be set forth in the Grant Letter and designated therein as the “Restriction Period.” All restrictions imposed under any Restricted Stock Grant shall lapse on such date or dates as the
Committee may approve until the restrictions have lapsed as to 100% of the shares, except that upon a Change of Control of the Company, all restrictions on the transfer of the shares which have not been forfeited prior to such date shall immediately
lapse and all such shares shall become fully vested. In addition, the Committee, in circumstances that it deems equitable, may determine as to any or all Restricted Stock Grants, that all the restrictions shall lapse, notwithstanding any Restriction
Period. 
  

 6 

 (b) Number of Shares. The Committee, in its sole discretion, shall determine the
number of shares of Common Stock that will be granted in each Restricted Stock Grant. 
  
 (c) Requirement of Relationship with Company. If the Grantee’s relationship with the Company (as an employee or non-employee member of the Board, as the case may be) terminates during the
period designated in the Grant Letter as the Restriction Period, the Restricted Stock Grant shall terminate as to all shares covered by the Grant as to which restrictions on transfer have not lapsed, and such shares shall be immediately returned to
the Company. The Committee may, in its sole discretion, provide for complete or partial exceptions to the provisions of this Section 6(c). 
  
 (d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction Period, a Grantee may not sell, assign,
transfer, pledge or otherwise dispose of the shares of Common Stock to which such Restriction Period applies except to a Successor Grantee pursuant to Section 10(a) below. Each certificate representing a share of Common Stock issued or transferred
under a Restricted Stock Grant shall contain a legend giving appropriate notice of the restrictions in the Grant. The Grantee shall be entitled to have the legend removed from the stock certificate or certificates representing any such shares as to
which all restrictions have lapsed. 
  
 (e)
Shareholder Rights. Except as provided in this Section 6, the Grantee shall have, with respect to shares of Common Stock issued pursuant to a Restricted Stock Grant, all of the rights of a shareholder, including the right to vote the
shares and the right to receive any cash dividends. 
  
 7. Stock
Appreciation Rights 
  
 (a) General
Provisions. Stock Appreciation Rights (“SARs”) may be granted in conjunction with all or part of any Stock Option granted under the Plan. In the case of a Nonqualified Stock Option, such rights may be granted either at or after the
time of grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock Option. The exercise price of each SAR shall be equal to (i) the exercise price or option price of the
related Stock Option or (ii) the fair market value of a share of Common Stock as of the date of grant of such Stock Appreciation Right, but only in such circumstances where the SAR is granted subsequent to the date of grant of the related Stock
Option and an exercise price established in accordance with clause (i) above would result in the disallowance of the Company’s expense deduction pursuant to Section 162(m) of the Code. 
  
 (b) Number of SARs. The number of SARs granted to a
Grantee which shall be exercisable during any given period of time shall not exceed the number of shares of Common Stock which the Grantee may purchase upon the exercise of the related Stock Option during such period. Upon the exercise of a Stock
Option, the SARs relating to the Common Stock covered by the Stock Option shall terminate. Upon the exercise of any SARs, the related Stock Option shall terminate to the extent of an equal number of shares of Common Stock. 
  

 7 

 (c) Settlement Amount. Upon a Grantee’s exercise of some or all of the
Grantee’s SARs, the Grantee shall receive in settlement of such SARs an amount equal to the stock appreciation (as defined herein) for the number of SARs exercised, payable in cash, Common Stock or a combination thereof. The “stock
appreciation” for an SAR is the difference between the option price specified for the related Stock Option (or the exercise price otherwise determined under (a), above) and the fair market value of the underlying Common Stock on the date of
exercise of the SAR. 
  
 (d) Settlement
Election. Upon the exercise of any SARs, the Grantee shall have the right to elect the portions of the settlement amount that the Grantee desires to receive in cash and shares of Common Stock, respectively. For purposes of calculating the
number of shares of Common Stock to be received upon settlement, shares of Common Stock shall be valued at their fair market value on the date of exercise of the SARs. Notwithstanding the foregoing, the Committee shall have the right (i) to
disapprove a Grantee’s election to receive such settlement in whole or in part in cash, and to require that shares of Common Stock be delivered in lieu of cash or (ii) to require that settlement be made in cash if the Company does not or may
not in the future have sufficient shares authorized for issuance. If shares of Common Stock are to be received upon exercise of an SAR, cash shall be delivered in lieu of any fractional share. 
  
 (e) Exercise. Any SAR is exercisable only during the
period when the Stock Option to which it is related is also exercisable. 
  
 8.
Phantom Stock 
  
 (a) General
Provisions. The Committee may grant Phantom Stock in such amounts as it deems appropriate. Phantom Stock shall give the Grantee the right to receive shares of Common Stock on a conversion date specified by the Committee. The
Committee may establish conditions on the conversion of Phantom Stock and restrictions on vesting, if any, as it deems appropriate. The period of years during which a Phantom Stock Grant will be subject to any vesting restrictions shall be set forth
in the Grant Letter and designated as the “Restriction Period”. All vesting restrictions imposed under a Phantom Stock Grant shall lapse on such date or dates as the Committee may approve, except that upon a Change of Control of the
Company, all restrictions shall immediately lapse and the Phantom Stock shall become fully vested. In addition, the Committee, in circumstances that it deems equitable, may determine as to any or all Phantom Stock Grants that the Grants shall not be
subject to vesting restrictions, or that the restrictions shall lapse notwithstanding any Restriction Period. Each share of Phantom Stock shall be granted at full value with no exercise price. 
  
 (b) Number of Shares of Phantom Stock; Accounts. The
Committee, in its sole discretion, shall determine the number of shares that will be granted pursuant to each Phantom Stock Grant. The Company shall credit to a bookkeeping account established on its records all shares of Phantom Stock credited to a
Grantee. 
  
 (c) Requirement of Relationship with
Company. Except as provided in the Grant Letter, if the Grantee’s relationship with the Company (as an employee or non-employee member 
  

 8 

 of the Board, as the case may be) terminates during any period designated in the Grant Letter as the Restriction Period,
the Phantom Stock Grant shall terminate as to all shares covered by the Grant as to which vesting restrictions have not lapsed, and such shares shall be forfeited. The Committee may, in its sole discretion, provide for complete or partial exceptions
to the provisions of this Section 8(c). 
  
 (d)
Dividend Equivalents. The Company shall credit dividend equivalents on Phantom Stock as and when dividends are payable on Common Stock. Dividend equivalents shall be converted to additional shares of Phantom Stock
on the dividend payment date and credited to the Grantee’s accounts. 
  
 (e) Conversion. On the date specified in the Grant Letter as the conversion date for the Grantee’s Phantom Stock, the Grantee shall receive in settlement of such Phantom Stock a number of
shares of common Stock equal to the Phantom Stock then credited to the Grantee’s account. Payment shall be made in whole shares of Common Stock, with fractional shares paid in cash. 
  
 (f) No Rights as a Shareholder. A Grantee shall not have any rights as a
stockholder with respect to any Phantom Stock, including with respect to dividends and voting. Grantees shall be unsecured creditors of the Company with respect to Phantom Stock Grants. 
  
 9. Performance Share Awards 
  
 (a) General Provisions. The Committee may grant Performance Share Awards (“Performance Share Awards”) to key employees of
the Company under and pursuant to this Section 9 and the Company’s Performance Share Plan adopted by the Board effective February 8, 2005, or any successor thereto (the “Performance Plan”). A Performance Share Award shall entitle the
Grantee to receive shares of Common Stock or a payment in cash upon settlement of the Performance Share Award at the conclusion of the Award Term (as defined in the Performance Plan), contingent upon the satisfaction of certain Performance Goals (as
defined in the Performance Plan) established by the Committee. The terms and conditions of each Performance Share Award, including the Grantee, the target number of shares thereunder, the Performance Goals, the Award Term, and the formula, method or
matrix for determining payout, shall be determined by the Committee in accordance with the Performance Plan and set forth in the Grant Letter. Shares of Common Stock issued under a Performance Share Award shall be granted at full value with no
exercise price. 
  
 (b) Number of Shares;
Accounts. The Committee, in its sole discretion, shall determine the target number of shares of Common Stock that will be subject to each Performance Share Award. The actual number of shares that may be issued upon settlement of a
Performance Share Award will be determinable at the conclusion of the Award Term. The Company shall establish on its records and maintain a bookkeeping account in which shall be recorded the number of shares of Common Stock subject to a Performance
Share Award and the number of shares actually credited to a Grantee. 
  

 9 

 (c) Termination of Relationship with Company. If the Grantee’s employment with
the Company terminates during the Award Term of a Performance Share Award then, depending upon the reason for such termination, such Performance Share Award may continue in force or may terminate, as provided by the applicable provisions of the
Performance Plan. 
  
 (d) Change of Control.
Upon a Change of Control of the Company, any outstanding Performance Share Awards shall be treated in accordance with the Performance Plan. 
  
 (e) Settlement. Upon the conclusion of the Award Term of a Performance Share Award as specified in the Grant Letter, the Grantee
shall receive in settlement of such Performance Share Award a number of shares of Common Stock or a payment in cash, or a combination thereof, as may be determined in accordance with the Performance Plan. 
  
 (f) No Rights as a Shareholder. A Grantee shall not have
any rights as a stockholder with respect to shares of Common Stock subject to a Performance Share Award prior to the issuance of such shares, including with respect to dividends and voting. Grantees shall be unsecured creditors of the Company with
respect to Performance Share Awards. 
  
 10. Transferability of Options and
Grants 
  
 (a) Restrictions on
Transferability. Only a Grantee (or, in the case of an individual Grantee, his or her authorized legal representative) may exercise rights under a Grant except as otherwise stated herein and in Section 10(b) below. No individual Grantee may
transfer those rights except by will or by the laws of descent and distribution or, in the case of a Nonqualified Stock Option, if permitted by the Committee in its sole discretion, pursuant to a qualified domestic relations order as defined under
the Code or Title I of ERISA or the rules thereunder or pursuant to Section 10(b) below. Upon the death of an individual Grantee, the personal representative or other person entitled to succeed to the rights of the Grantee (“Successor
Grantee”) may exercise such rights. A Successor Grantee shall furnish proof satisfactory to the Company of such person’s right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution.

  
 (b) Nonqualified Stock Options.
Notwithstanding the foregoing, the Committee may provide that a Grantee may transfer Nonqualified Stock Options to family members, one or more trusts for the benefit of family members, or one or more partnerships of which family members are the only
partners, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were
applicable to the Option immediately before the transfer. 
  
 11. Change of
Control of the Company 
  
 As used herein, a “Change
of Control” shall be deemed to have taken place if (i) any Person (except for an employee or his or her family, the Company or any employee benefit plan of the Company or of any Affiliate, or any Person or entity organized, appointed or
established 
  

 10 

 by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and
Associates of such Person shall become the Beneficial Owner in the aggregate of 20% or more of the shares of the Company then outstanding and entitled to vote for directors generally, (ii) any Person (except an employee and his or her family),
together with all Affiliates and Associates of such Person, purchases substantially all of the assets of the Company, or (iii) during any twenty-four (24) month period, individuals who at the beginning of such period constituted the Board cease for
any reason to constitute a majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of at least seventy-five percent (75%) of the directors who were not directors at the beginning of such period was
approved by a vote of at least seventy-five percent (75%) of the directors in office at the time of such election or nomination who were directors at the beginning of such period. For purposes of this definition, “Affiliate” and
“Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act; “Person” shall mean any individual, firm, corporation, partnership or other entity; and “Beneficial Owner”
shall mean: 
  
 (i) that such Person or any of
such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the “Beneficial Owner” of securities tendered pursuant to
a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; 
  
 (ii) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 under the Exchange Act), including without limitation, pursuant to any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the “Beneficial Owner” of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable successor report); or 
  
 (iii) where voting securities are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person’s Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy described
in the proviso to subsection (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this definition shall cause a Person engaged in business as an underwriter of securities to be the
“Beneficial Owner” of any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until expiration of forty (40) days after the date of such acquisition. 
  

 11 

 12. Dissolution, Liquidation or Winding Up 
  
 If the Company is to be dissolved or liquidated, then, at least ten days prior to the effective date of such event, the
Company shall give each Grantee with any outstanding Grants written notice of such event. Each such Grantee shall thereupon have the right to exercise in full any installments of such Grants not previously exercised (whether or not the right to
exercise such installments has accrued pursuant to such Grants), within ten days after such written notice is sent by the Company. Any installments of such Grants not so exercised shall thereafter lapse and be of no further force or effect.

  
 13. Amendment and Termination of the Plan and Grants 

 
 (a) Amendment. The Board may amend or terminate the
Plan at any time, subject to the following limitations: 
  
 (1) the approval by the stockholders of the Company and approval by the Committee shall be required in respect of any amendment to the extent then required by applicable law or by the regulations of the U.S.
Securities and Exchange Commission or the New York Stock Exchange or any other applicable exchange; and 
  
 (2) the Board shall not amend the Plan without stockholder approval if such amendment would cause the Plan, any Grant or the exercise of
any right under the Plan to fail to comply with the requirements of Rule 16b-3 under the Exchange Act (or any successor provision), or if such amendment would cause the Plan or the Grant or exercise of an Incentive Stock Option to fail to comply
with the requirements of Section 422 of the Code including, without limitation, a reduction of the option price set forth in Section 5(b) above or an extension of the period during which an Incentive Stock Option may be exercised as set forth in
Section 5(c) above. 
  
 (b) Termination of
Plan. The Plan shall terminate on December 31, 2006, unless earlier terminated by the Board or unless extended by the Board with the approval of the stockholders. 
  
 (c) Termination and Amendment of Outstanding Grants. 
  
 (1) General. A termination or amendment of the Plan
that occurs after a Grant is made shall not result in the termination or amendment of the Grant unless the Grantee consents or unless the Committee acts under Section 21(b) below. The termination of the Plan shall not impair the power and authority
of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under Section 21(b) below or may be amended by agreement of the Company and the Grantee which is
consistent with the Plan. 
  

 12 

 (2) No Repricing. Neither the Company, the Board nor the Committee shall, without
the further approval of the stockholders of the Company either prior or subsequent to such action, authorize (i) the amendment of any outstanding Grant to reduce the exercise price per share of such Grant, or (ii) the cancellation and replacement of
such Grant in exchange for a Grant having a lower exercise price per share, except for an exchange in connection with a merger, consolidation, acquisition, reorganization, spin-off or other corporate transaction. This Section 13(c)(2) is intended to
prohibit the repricing of “underwater” Grants and shall not be construed to prohibit the adjustments provided for in Section 3(b) of this Plan. 
  
 14. Funding of the Plan 
  
 The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants under the Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of Grants. 
  
 15. Rights of Eligible Participants 
  
 Nothing in the Plan shall entitle any Eligible Participant or other person to any claim or right to any Grant under the Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving any Eligible Participant or Grantee any rights to be retained by the Company in any capacity, whether as an employee, non-employee member of the Board, independent contractor, consultant or
otherwise. 
  
 16. Withholding of Taxes 
  
 The Company shall have the right to deduct from all Grants paid in cash any
federal, state or local taxes required by law to be withheld with respect to such Grants paid in cash. In the case of Grants paid in Common Stock, the Company shall have the right to require the Grantee to pay to the Company the amount of any taxes
which the Company is required to withhold in respect of such Grants or to take whatever action it deems necessary to protect the interests of the Company in respect of such tax liabilities, including, without limitation, withholding a portion of the
shares of Common Stock otherwise deliverable pursuant to the Plan. The Company’s obligation to issue or transfer shares of Common Stock in connection with any Grant shall be conditioned upon the Grantee’s compliance with the requirements
of this section to the satisfaction of the Committee. 
  
 17. Agreements
with Grantees 
  
 Each Grant made under the Plan shall be
evidenced by a Grant Letter containing such terms and conditions as the Committee shall approve. 
  

 13 

 18. Requirements for Issuance of Shares 
  
 No Common Stock shall be issued or transferred under the Plan unless and until all applicable legal requirements have been
complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Stock Option, Restricted Stock Grant, SAR, Phantom Stock Grant or Performance Share Award on the Grantee’s undertaking in writing to comply
with such restrictions on any subsequent disposition of the shares of Common Stock issued or transferred thereunder as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof,
and certificates representing such shares may be legended to reflect any such restrictions. 
  
 19. Headings 
  
 The section headings of the Plan are for reference only. In the event of a conflict between a section heading and the content of a section of the Plan, the content of the section shall control. 
  
 20. Effective Dates 
  
 (a) Effective Date of the Plan. The Plan
shall be effective as of January 1, 1995, subject to the approval of the Company’s stockholders within 12 months after such effective date. 
  
 (b) Effectiveness of Section 16 Provisions. The provisions of the Plan that refer to, or are applicable to persons subject to,
Section 16 of the Exchange Act shall be effective, if at all, upon the registration of the Common Stock under the Exchange Act, and shall remain in effect thereafter for so long as the Common Stock is registered under the Exchange Act. 

 
 21. Miscellaneous 
  
 (a) Substitute Grants. The Committee may
make a Grant to an employee, a non-employee director, or an independent contractor or consultant of another corporation, if such person shall become an Eligible Participant by reason of a corporate merger, consolidation, acquisition of stock or
property, reorganization or liquidation involving the Company or an Affiliate and such other corporation. Any such Grant shall be made in substitution for a stock option or restricted stock grant granted by the other corporation (“Substituted
Stock Incentives”), but the terms and conditions of the substitute Grant may vary from the terms and conditions required by the Plan and from those of the Substituted Stock Incentives. The Committee shall prescribe the provisions of the
substitute Grants. 
  
 (b) Compliance with
Law. The Plan, the exercise of Grants and the obligations of the Company to issue or transfer shares of Common Stock under Grants shall be subject to all applicable laws and required approvals by any governmental or regulatory agencies. With
respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan shall comply with all applicable conditions of Rule 16b-3 or any successor provisions under the Exchange
Act. The Committee may revoke any Grant if it is contrary to law or modify any Grant to bring it into compliance with any valid and mandatory government regulations. The Committee may also adopt rules regarding the withholding of taxes on payments
to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this section. 
  
 This amendment and restatement of the Radian Group Inc. Equity Compensation Plan was adopted by the Board of Directors of the Company on February 8,
2005, effective as of such date. 
  

 14

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