-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PqJsxaWpolNNohS5i0CoPxdUmMPl77v7BjchZld5MKNrzliNvFsnEGlpP5IvD/xx QpYeMeHhSA1SmfrDzVH2Sw== 0000950133-97-003251.txt : 19970918 0000950133-97-003251.hdr.sgml : 19970918 ACCESSION NUMBER: 0000950133-97-003251 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 28 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970912 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPACEHAB INC \WA\ CENTRAL INDEX KEY: 0001001907 STANDARD INDUSTRIAL CLASSIFICATION: GUIDED MISSILES & SPACE VEHICLES & PARTS [3760] IRS NUMBER: 911273737 STATE OF INCORPORATION: WA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-27206 FILM NUMBER: 97679744 BUSINESS ADDRESS: STREET 1: 1595 SPRING HILL ROAD STREET 2: STE 360 CITY: VIENNA STATE: VA ZIP: 22182 BUSINESS PHONE: 7038213000 10-K 1 SPACEHAB, INCORPORATED FORM 10-K. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) [ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the Fiscal Year Ended June 30, 1997. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from to ------------- ------------ Commission File No. 0-27206 SPACEHAB, INCORPORATED 1595 SPRING HILL ROAD, SUITE 360 VIENNA, VA 22182 (703) 821-3000 Incorporated in the State of Washington IRS Employer Identification Number 91-1273737 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Title of Each Class Name of Each Exchange Common Stock on which Registered (no par value) NASDAQ National Market Number of shares of Common Stock (no par value) outstanding as of July 25, 1997: 11,146,237. Aggregate market value of Common Stock (no par value) held by non-affiliates of the registrant on July 25, 1997, based upon the closing price of the Common Stock on the Nasdaq National Market of $8.88 was approximately $79,017,836. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO . --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]. DOCUMENTS INCORPORATED BY REFERENCE: Proxy Statement for the Annual Meeting of Stockholders to be held October 21, 1997. Parts I, II and III of Form 10-K 2 PART I This document may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including (without limitation) under "Products and Services," "Company Strategy," "Dependence on a Single Customer," "Research and Development," "Competition" and "Backlog" of Item 1 and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- General" and "--Liquidity and Capital Resources" of Item 7. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements. In addition to those risks and uncertainties discussed herein, such risks and uncertainties include, but are not limited to, whether the Company will fully realize the economic benefits under its NASA and other customer contracts, the successful development and commercialization of the Science Double Module, the ICC system and related new commercial space assets, technological difficulties, product demand and market acceptance risks, the effect of economic conditions, uncertainty in government funding and the impact of competition. ITEM 1. BUSINESS COMPANY BACKGROUND AND HISTORY SPACEHAB, Incorporated ("SPACEHAB" or the "Company") was incorporated in 1984 and is the first company to commercially develop, own and operate pressurized habitable modules that provide space-based laboratory research facilities and cargo services aboard the U.S. Space Shuttle system (the "Space Shuttle" or "STS"). The Company presently offers its SPACEHAB Modules in a single modular version (the "Single Module"), a logistics double modular version (the "Logistics Double Module") and is currently developing a science double module (the "Science Double Module") and an unpressurized logistics carrier system for use in conjunction with its modules. A SPACEHAB Single Module, when installed in the cargo bay of a Space Shuttle, more than doubles the working and living space availability to astronauts for research, experimentation, habitation and storage. All versions of the SPACEHAB Modules can accommodate a combination of lockers, racks and soft stowage arrangements which are provided as a service primarily to the U.S. National Aeronautics and Space Administration ("NASA"). SPACEHAB Modules, which have been outfitted with systems to facilitate laboratory research experiments in the near-weightless ("microgravity") environment of space, are also capable of transporting food, water, oxygen and other supplies (collectively, "logistics") to the Russian Mir space station and the planned International Space Station (the "ISS"). SPACEHAB also provides a full range of pre- and post-flight experiment and payload processing services, and in-flight operations support to assist astronauts and researchers, in space and on the ground, in connection with the performance of experiments aboard SPACEHAB Modules. From June 1993 through June 1997, SPACEHAB Modules have flown eight successful missions on the Space Shuttle. The Company is committed to expand its business with NASA while also diversifying its revenue and customer base by targeting new and related space services markets. On February 12, 1997, a wholly-owned subsidiary of SPACEHAB acquired the operating assets and business of Astrotech Space Operations, L.P. ("Astrotech") from Northrop Grumman Corporation. Astrotech is the premier commercial provider of satellite payload processing facilities in the United States providing launch site preparation of flight-ready satellites to major U.S. space launch companies and satellite manufacturers, including Lockheed Martin Corporation ("Lockheed Martin"), Motorola Corporation ("Motorola"), The Boeing Company ("Boeing") and Orbital Sciences Corporation ("Orbital Sciences"). The Astrotech acquisition diversified SPACEHAB's customer base to include commercial customers of space satellite payload processing services and broadened the Company's services to include services in support of manned as well as unmanned space activities. 2 3 INDUSTRY OVERVIEW The U.S. space program encompasses four broad objectives: to advance scientific research, to establish a permanent human presence in space, to develop new technologies that contribute to U.S. economic growth and security and to foster improved international relations through peaceful cooperation in space with Europe, Japan, Russia and other nations. SPACEHAB is focused on two markets: (i) microgravity and life sciences space research and (ii) space support services such as space station logistics and resupply, ground operations and payload processing. Microgravity and Life Sciences Space Research In orbit, the forces of inertia and gravity counterbalance each other, thereby creating a condition of near weightlessness known as "microgravity." In a microgravity environment, materials and living matter behave in fundamentally different ways than they do on Earth. This phenomenon has stimulated worldwide interest from scientists and commercial researchers who are seeking improved ways to manipulate and process materials and to study biological processes that cannot otherwise be achieved in ground-based laboratories. The demand for access to a microgravity environment can be divided into two broad categories: scientific research and commercial applications. NASA and other U.S. and international government research organizations provide support for both basic scientific research and its commercial applications to determine the fundamental effects that gravity has on physical processes. For the 1997 Government fiscal year, NASA budgeted $366.1 million to conduct scientific research and commercial microgravity applications aboard the Space Shuttle (excluding the associated Space Shuttle launch costs for these experiments). Space Support Services Space support services include providing logistics and payload processing support to NASA, other governments and commercial customers of the Space Shuttle and International Space Station ("ISS"). Permanently orbiting facilities such as the Russian space station Mir and the planned ISS require reliable sources of logistics: food, clothing, equipment and supplies that sustain the astronauts and enable them to conduct research. NASA's current plans call for the Space Shuttle to be launched at least seven times per year for the foreseeable future. NASA has three more Space Shuttle logistics missions to Mir scheduled during the Company's fiscal 1998. As currently planned, the ISS will require approximately five Space Shuttle logistics missions per year. In order to support Space Shuttle and ISS operations, NASA requires ground operations and payload support services before and after each mission. Payload processing operations entail payload scheduling, mission planning, safety/certification analysis, physical integration of the payload into its carrier (such as SPACEHAB modules), the integration of the carriers into the Space Shuttle's cargo bay, flight operations, technical data gathering and synthesis, and launch and landing site activities. NASA currently spends between $272 million and $315 million per year on processing payloads for Space Shuttle operations. Space support services also involve the provision of specialized services and support near launch sites for commercial satellite manufacturers and launch services. These activities include mechanical assembly or reassembly, electrical check, calibration, liquid propellant loading and related activities. 3 4 PRODUCTS AND SERVICES SPACEHAB Single Modules are aluminum cylinders, measuring 10 feet in length by 13.5 feet in diameter, that incorporate a patented design including a truncated top and flat-end caps. These fully instrumented modules provide experiment resources such as power, data management, thermal control and vacuum venting. SPACEHAB Single Modules are employed primarily for research missions. In fiscal 1996, the Company completed a development program and introduced the Logistics Double Module. This module was optimized to carry logistics and is now being used by NASA to carry vital supplies to the astronauts and cosmonauts who reside on the Russian space station Mir. SPACEHAB invested $13.4 million in the design, development, and production of the Logistics Double Module. Additionally, during fiscal 1997, in an effort to anticipate the need of customers, the Company began the full-scale development and construction of its Science Module with double module hardware, which when combined with a Single Module becomes the Science Double Module. This Science Double Module will be fully dedicated to microgravity research and is expected to be available in late 1999. SPACEHAB's fundamental business strategy is based on carefully anticipating customer requirements, investing capital to develop space-flight assets, contracting with established aerospace companies for engineering and asset production while retaining ownership of these assets and then providing innovative, cost-effective solutions that meet customer requirements using fixed-price service contracts. This strategy has been successful in obtaining two significant contracts with NASA: a $184 million Commercial Middeck Augmentation Module contract (the "CMAM Contract") for five missions and a $52.2 million Mir contract (the "Mir Contract") for four missions. The CMAM Contract, signed in November 1990, required SPACEHAB to furnish NASA with SPACEHAB module accommodations for experiments developed by the Centers for the Commercial Development of Space ("CCDS") on five Space Shuttle missions. The fifth and final CMAM mission was completed successfully during September 1996. The basic Mir Contract, signed in July 1995, required the Company to provide Single and Double Module accommodations for the provision of logistics resupply to the Mir space station on four Space Shuttle missions. The fourth and final mission was completed successfully in May 1997. In June 1997, NASA exercised all three options for $38.0 million under the Mir Contract, providing a firm backlog of logistics resupply missions into 1998. The Mir Contract options call for two Logistics Double Module missions and one Single Module mission scheduled for September 1997, January 1998 and May 1998, respectively. In late September 1996, the Company entered into agreements with the Japanese Space Agency (NASDA) and the European Space Agency (ESA) (collectively, the "NASDA/ESA Contract"). Pursuant to the NASDA/ESA Contract, SPACEHAB provided hardware and integration and operations for scientific microgravity experiments to NASDA and ESA aboard the Logistics Double Module on STS-84. This mission was completed in May 1997. In fiscal 1997, SPACEHAB initiated the full-scale development of the Science Double Module. The Company expects that this Module will be available in late 1999 and will meet or exceed all of NASA's projected requirements for dedicated microgravity and life sciences research that had been performed by Spacelab, the U.S. government-owned habitable module which is scheduled to be retired after its final mission in 1998. As a result of the anticipated retirement of Spacelab, the Company believes that its flight-proven assets position SPACEHAB to become the sole provider of crew-tended microgravity research capabilities for the Space Shuttles. 4 5 The Company believes that its success in capturing new business is directly linked to its ability to identify and rapidly capitalize on emerging market opportunities. The Company intends to foster this entrepreneurial initiative by proposing new commercial business arrangements for services in the space industry in each of its target markets. Additionally, the Company plans to selectively pursue acquisitions of complementary businesses, such as the Astrotech acquisition, engineering facilities and hardware to improve its ability to perform work associated with the Space Shuttles and the ISS. The Company intends to continue the SPACEHAB Incubator Program, which is intended to evaluate, sponsor and invest in a portfolio of commercially focused, promising microgravity research and development activities. The Company believes that the demand for microgravity space research conducted on SPACEHAB Modules will increase both before and after the ISS becomes operational. There is a substantial and growing worldwide backlog for microgravity experiments, both with NASA laboratories and among the NASA-sponsored Centers for the Commercial Development of Space ("CCDS"), which suggests that even after the ISS becomes operational, demand for microgravity experimentation may continue to exceed capacity. The Astrotech payload processing business serves the commercial satellite manufacturing and launch services industries. Although payload processing is generally associated with the final preparation of a satellite or other space payload for launch, it is also the first step in the launch process and requires specialized facilities and support usually located at the launch site. Astrotech's payload processing activities provide the necessary resources for mechanical assembly or reassembly, electrical check, calibration, liquid propellant loading and numerous other related activities. Additionally, Astrotech's specialized facility includes, but is not limited to, clean rooms, airlock systems, overhead crane systems, hazard-proof work areas and environmentally controlled rooms. Astrotech has reached exclusive multiyear agreements with Lockheed Martin to process all commercial Atlas payloads and with Boeing to process all Delta payloads and all Sea Launch program payloads at Boeing's facility in Long Beach, California. COMPANY STRATEGY SPACEHAB's strategy to enhance its position in its two core markets is based on the following seven principles: 1. Focusing on Quality of Service. The Company intends to maintain its reputation for product reliability, process innovation and performance excellence. 2. Expanding Company-Owned Spaceflight Assets. The Company successfully completed the Logistics Double Module that is being used by NASA to provide logistics for the Mir space station. Initial design and development of the Science Double Module and an unpressurized logistics carrier system, has been initiated to expand the Company's assets. 3. Maintaining Position as Low-Cost Provider. The Company continues to offer its payload processing and logistics support services to NASA and other customers on a fixed-price basis that it believes to be the lowest in the industry. 4. Continuing Entrepreneurial Initiative. The Company continues to develop and offer innovative business arrangements to meet NASA and other customer requirements. 5. Leveraging Skills of International Partners. The Company continued to expand its international partner base in 1997. SPACEHAB entered into an agreement with Daimler-Benz for it to design and produce pallet attachment hardware for the Integrated Cargo Carrier, the first commercial component of the ISS. In August 1997, SPACEHAB also contracted with RSC Energia, the Russian commercial space agency, to develop and produce the Integrated Cargo Carrier pallet. 5 6 6. Acquiring Complementary Businesses and Assets. The Company continues to evaluate opportunities to acquire complementary businesses, engineering facilities, and hardware to improve its ability to perform work associated with the Space Shuttle and the ISS. 7. Attracting and Recruiting Talented Personnel. The Company hired several highly experienced executives in 1997 to expand business development efforts in microgravity and life sciences research, the ISS program, and Russian space activities and seeks to recruit additional experienced and talented personnel. Through the Company's contracts, it continues to implement its business strategy by identifying customer requirements, creating innovative technical solutions, raising private capital to develop assets and providing services pursuant to those contracts. DEPENDENCE ON A SINGLE CUSTOMER Approximately $49.7 million (or 88%) of the Company's fiscal year 1997 revenue was generated from two NASA contracts - the CMAM Contract and the Mir Contract. While the acquisition of Astrotech and the NASDA/ESA Contract represent additional revenue sources, the Company anticipates that revenue from NASA will continue to account for a significant amount of the Company's revenue over the next several years. There are no assurances, however, that NASA will require the Company's module services in the future. Therefore, the Company's failure to execute new contracts with NASA would have a material adverse effect on the Company's financial condition and results of operations. Accordingly, the Company continues to focus its efforts on diversifying its customer base to include commercial companies, as evidenced with the Astrotech acquisition. RESEARCH AND DEVELOPMENT The Company believes that the timely development of new products and enhancements to existing hardware are essential to maintaining its competitive position. In the past three fiscal years, the Company has spent an aggregate of approximately $3.0 million on research and development. Most of the Company's research and development funds were spent on the design, development and qualification of the new Double Modules that are optimized to carry cargo and science experiments. The first flight of the Logistics Double Module was successfully completed in September 1996. The Company also performed research and development activities to enhance the basic capabilities of its module system with new features such as a video system switch, a digital television downlink capability, and an experiment data interface, which would result in time savings for astronauts while conducting experiments inside SPACEHAB Modules. Beginning in fiscal 1996 and continuing throughout fiscal 1997, the Company has been working on the development of a new proprietary module communications system that will be independent of the Space Shuttle's existing data downlink. Once implemented, it is expected that researchers with experiments on a SPACEHAB mission will be able to have 24-hour, real-time monitoring and control of their experiment hardware from their laboratories anywhere in the world. In fiscal 1997, the Company focused its research and development efforts on another SPACEHAB Double Module that will be designed to carry experiments, the Science Double Module. This Module is being designed to satisfy the Space Shuttle-based research requirements of NASA, the ISS partners and the scientific research community beginning in late 1999. 6 7 Additional research and development has been conducted to expand the Company's product and service lines to meet market requirements for low-cost unpressurized carriers for science experiments and cargo. SPACEHAB is developing an Integrated Cargo Carrier ("ICC") to carry unpressuried cargo to the ISS, based on a patented pallet technology (the "Unpressurized Cargo Pallet" or "UCP") that can be used independently or in tandem with the SPACEHAB Single or Double Modules. The ICC's design is such that it would be located in what is ordinarily unused volume in the front of the Space Shuttle's cargo bay. By expanding the capabilities of the Space Shuttle and by offering flexibility in the mix of pressurized and unpressurized cargo carried on each mission, the Company believes that the ICC could become the preferred method for providing logistics and utilization resupply to the ISS. COMPETITION Currently, there are no other companies that compete directly with SPACEHAB in providing pressurized module services that are carried aboard the Space Shuttles. NASA has a government-owned and operated system, Spacelab, that provides services similar to those provided by SPACEHAB modules. However, NASA has terminated the Spacelab program with its final mission scheduled for March 1998. The Company has contracted for the design and construction of the Science Double Module with Boeing (formerly McDonnell Douglas Aerospace). The Science Double Module represents a commercial replacement for NASA's Spacelab. The Company believes that this module will significantly outperform Spacelab in terms of technology, capacity, functionality and cost-effectiveness. The Company's long-term strategy for growth is to provide research, logistics, infrastructure and payload processing services to NASA and others during the International Space Station era. This strategy could require the Company to compete with commercial companies such as Lockheed-Martin, Boeing and others who have existing NASA support contracts, greater financial resources and manufacturing capabilities, and larger marketing, sales and technical organizations than the Company. In fiscal 1997, SPACEHAB entered into an agreement with United Space Alliance ("USA"), a Boeing and Lockheed Martin joint venture, to expand the commercial use of the Space Shuttle fleet. SPACEHAB's existing strategic relationships with Boeing, Alenia Spazio S.p.A., Mitsubishi Corporation and Daimler-Benz A.G. may provide additional opportunities for teaming and partnerships that management believes will enable the Company to compete for market share. The Italian Space Agency has contracted to build a mini pressurized logistics module ("MPLM") intended for use in connection with the ISS. Although the MPLM is intended to be competitive with SPACEHAB's Modules for ISS logistics missions, SPACEHAB believes that its Modules will be able to compete favorably for such missions. Astrotech's payload processing facilities are located in Florida and California. At present, management believes that Astrotech's U.S. competition is limited to the California Vandenberg Air Force Base ("VAFB") launch site where a competitor, California Commercial Spaceport, Inc. ("CCSI") is located. CCSI was established by obtaining surplus U.S. Air Force facilities at the VAFB launch complex before Astrotech established its facilities there and when no commercial alternative was available. To the Company's knowledge, CCSI has won several contracts to process NASA spacecraft for launch from VAFB, but CCSI does not have payload processing facilities in Florida, where the majority of U.S. commercial satellite launches occur. 7 8 BACKLOG A significant portion of the Company's revenue is currently generated from its contract with NASA, which, similar to contracts with other agencies of the U.S. government, contain provisions for which NASA may terminate the agreement "for convenience." The Company's contract with NASA is conditioned by its terms upon NASA receiving an adequate annual appropriation of funds from the U.S. Congress. Failure to receive funds from Congress or a withdrawal by Congress of prior appropriations would permit NASA to terminate its contracts with SPACEHAB "for convenience." For fiscal year 1997, both the U.S. Senate and House of Representatives have authorized and approved an annual appropriation of $13.8 billion for NASA, including $2.1 billion for the ISS, indicating a commitment by the government to the space industry. SPACEHAB anticipates that a portion of future revenue will be derived from contracts with entities other than agencies of the U.S. government which will not be subject to federal contract regulations such as termination "for convenience of the government" or federal government funding restrictions. As of June 30, 1997, the Company's contract backlog is estimated to be approximately $48.5 million, of which $38.0 million represents U.S. government funded backlog and $10.5 million represents non-U.S government contracts. CERTAIN REGULATORY MATTERS The Company is subject to federal, state and local laws and regulations designed to protect the environment and to regulate the discharge of materials into the environment. The Company believes that its policies, practices and procedures are properly designed to prevent unreasonable risk of environmental damage and consequential financial liability to the Company. Compliance with environmental laws and regulations has not had in the past, and, the Company believes, will not have in the future, material effects on the capital expenditures, earnings or competitive position of the Company. EMPLOYEES As of June 30, 1997, the Company employed 61 regular employees, 21 of whom are employed by the Astrotech subsidiary. Of these 61 employees, 17 (approximately 28%) hold advanced degrees and 6 (approximately 10%) hold doctorate degrees. Additionally a significant number of the Company's employees have experience in both the space industry and/or governmental space agencies, with a special expertise in commercial space and human space flight. None of the Company's employees are covered by collective bargaining agreements. Underlying all of SPACEHAB's efforts has been the dedication and skill of its personnel. The Company believes that the dedication of its employees is critical to its success and that its relations with its employees are excellent. ITEM 2. PROPERTIES The Company and its wholly-owned subsidiary, Astrotech, currently occupy six locations, with the corporate headquarters located at 1595 Spring Hill Road, Suite 360, Vienna, Virginia 22182. The corporate headquarters occupy approximately 9,700 square-feet of office space and house SPACEHAB's 18-person executive management team. The term of the present lease expires on March 7, 2001. 8 9 The Company's 19-person operations management team is located at 1331 Gemini Avenue, Suites 300 & 310, Houston, Texas 77058. The Houston offices consist of approximately 7,800 square feet of non-contiguous office space located near the Johnson Space Center. Presently there are two leases, one expiring on February 28, 1998 and one expiring on December 14, 1999. The Company's payload processing facility is located near the Kennedy Space Center in Cape Canaveral, Florida. The facility is contained in an approximately 40,000 square-foot plant. The Company owns the building which houses the payload processing facility but leases the land upon which it is constructed. The payload processing facility has a prime work area of approximately 10,000 square-feet. This work area is designed to accommodate the SPACEHAB Single and Double Modules and includes 11 secure experiment/payload integration and work areas from 300 square-feet to 1,000 square-feet each, two off-line modification shops, a tool room, a stock room and a conference/training room. The term of the lease for the land expires August 6, 1998, and is renewable at the option of the Company for two successive five-year periods. Upon expiration of the land lease, all improvements on the property revert at no cost to the lessor. Astrotech, occupies three locations. Astrotech's headquarters are located at 12510 Prosperity Drive, Suite 100, Silver Spring, Maryland 20904. The headquarters occupy approximately 3,000 square-feet of leased office space at this site and house a 5-person management and administrative team. The term of the present lease expires in May 1998. Astrotech's 12-person engineering and support team is located in a six building owned facility at 1515 Chaffee Drive, Titusville, Florida 32780. This 80,000 square-foot facility supports non-hazardous and hazardous material processing, payload storage and customer offices. These buildings presently occupy one-third of the 37.5-acre property owned by Astrotech, with the remaining two-thirds available for expansion. Astrotech has a 4-person technical staff located at the Vandenberg Air Force Base in Vandenberg, California. Astrotech presently rents a 60-acre site on the Air Force Base and owns four buildings comprising 16,500 square-feet, which are dedicated to the same functions provided at the Florida facility. The term of the present land lease expires on July 13, 2013. Upon expiration of the land lease, all improvements on the property revert at no cost to the lessor. The Company believes that its current facilities and equipment are generally well maintained and in good condition and are adequate for its present and foreseeable needs. ITEM 3. LITIGATION The Company is not currently involved in any material legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were voted upon during the final quarter of fiscal 1997. 9 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock (the "Common Stock") trades on the NASDAQ National Market System under the symbol "SPAB". The Common Stock has been publicly traded since December 22, 1995, the date of the closing of the Company's initial public offering. The quarterly high and low stock prices for fiscal 1997 and 1996 are as follows:
Fiscal 1997: - ------------ High Low ---- --- First Quarter $11 1/4 $ 8 Second Quarter $ 8 1/2 $ 5 1/2 Third Quarter $ 7 1/8 $ 5 Fourth Quarter $ 9 1/4 $ 5 3/4 Fiscal 1996: - ------------ High Low ---- --- First Quarter $12 1/4 $12 Second Quarter $15 1/4 $11 3/4 Third Quarter $16 $ 8 3/4
The Company has never paid cash dividends. It is the present policy of the Company to retain earnings to finance the growth and development of its business and, therefore, the Company does not anticipate paying cash dividends on its Common Stock in the foreseeable future. The Company has authorized 30,000,000 shares of Common Stock. At July 25, 1997, 11,146,237 shares of Common Stock were outstanding. The Company had approximately 1,800 shareholders of record of its Common Stock on June 30, 1997. SALES OF UNREGISTERED SECURITIES During fiscal 1997, the Company issued warrants to purchase 53,000 shares of Common Stock to a consultant for services rendered. Such issuance was deemed to be exempt from registration under the Securities Act of 1933. The Company believes that the recipient of securities in this transaction is an accredited investor who intended to acquire the securities for investment purposes and not with a view to or for sale in connection with any distribution thereof, and that such recipient had adequate access to information about the Company. 10 11 ITEM 6. SELECTED FINANCIAL DATA The selected financial data presented below are derived from the audited consolidated financial statements of SPACEHAB. This selected financial information should be read in conjunction with the Consolidated Financial Statements of the Company and the notes thereto included elsewhere in this report.
Nine Months Year Ended Ended Years Ended September 30, June 30, June 30, ------------------------------------------- ------------- ------------- 1993 1994 1995 1996(1) 1997 ------------ --------------- -------------- ------------- ------------- (in thousands, except per share data) Statement of Operations Data: Revenue(2) $42,467 $ 43,800 $ 46,059 $ 56,397 $ 56,601(3) Costs of revenue 23,204 24,227 23,349 20,985 34,120 ------------ --------------- -------------- ------------- ------------- Gross profit 19,263 19,573 22,710 35,412 22,481 Marketing, general and administrative expenses 7,906 5,064 3,816 4,056 8,567 Research and development expenses 3,076 - 1,600 100 1,252 ------------ --------------- -------------- ------------- ------------- Operating income 8,281 14,509 17,294 31,256 12,662 Interest expense, net of capitalized amounts 4,209 4,863 1,365 699 955 Net income 4,117 8,638(4) 15,809 29,829 13,832(5) Net income per common share $ 0.62 $ 1.30 $ 2.37 $ 3.21 $ 1.24 Shares used in computing net income per common share 6,650 6,660 6,671 9,303 11,133 Other Data: Cash provided by (used for) operations $ 22,246 $ 21,831 $ 26,838 $ 13,151 $(857) Capital expenditures 16,589 76 4,943 6,266 34,446 Balance Sheet Data (at period end): Working capital (deficit) $(31,066) $(20,589) $ 7,192 $ 45,942 $ 5,455 Total assets 118,083 95,261 86,701 129,709 114,450 Long-term debt, excluding current portion 30,325 22,884 24,886 17,318 12,725 Stockholders' equity (deficit) (29,894) (21,184) (1,715) 71,596 86,622
- ------------------------------ (1) Effective October 1, 1995, the Company changed its fiscal year-end to June 30. (2) The Company recognizes revenue upon the completion of each flight under the Mir and CMAM Contracts. For new contract awards for which the capability to successfully complete the contract can be demonstrated at contract inception, revenue recognition under the percentage-of-completion method is being reported based on costs incurred over the period of the contract. (3) Includes revenues of $2,860 generated by Astrotech subsequent to its acquisition on February 12, 1997. (4) Includes an extraordinary loss of $934, net of taxes, relating to the write-off of unamortized deferred debt issuance costs, in conjunction with a refinancing and retirement of debt on that date. (5) Includes an extraordinary gain of $3,274, net of taxes, relating to the amendment and restatement of a credit agreement. 11 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL SPACEHAB was incorporated in 1984 to commercially develop space habitat modules to operate in the cargo bay of the Space Shuttles. The Company currently operates under one contract with NASA, the Mir Contract, with a total contract value of $90.2 million, including $38.0 million for the three Mir option missions scheduled to be flown in fiscal 1998. The Company's revenues for fiscal 1997 were generated primarily from the Mir Contract, the CMAM Contract, the NASDA/ESA Contract and through the customer contracts of Astrotech. SPACEHAB generates revenue by leasing lockers and/or volume within the SPACEHAB Modules and by integration and operations support services provided to scientists and researchers responsible for the experiments and/or logistics supplies for missions aboard the shuttle system. Under the CMAM and Mir Contracts, the Company recognizes revenue only at the completion of each Space Shuttle mission utilizing Company assets. Accordingly, the Company's quarterly revenue and profits have fluctuated dramatically based on NASA's launch schedule and will continue to do so under the Mir Contract and any other contract for which revenue is recognized only upon completion of a mission. For new contract awards for which the capability to successfully complete the contract can be demonstrated at contract inception, revenue recognition under the percentage-of-completion method is being reported based on costs incurred over the period of the contract. The percentage-of-completion method results in the recognition of revenue over the period of contract performance, thereby decreasing the quarter-by-quarter fluctuations of reported revenue. In September 1996, SPACEHAB entered into the NASDA/ESA Contract with NASDA and ESA, pursuant to which SPACEHAB provided hardware and integration and operations for scientific microgravity experiments aboard the SPACEHAB Logistics Double Module on STS-84. SPACEHAB began integration work on the NASDA/ESA Contract during the first quarter of fiscal 1997. This mission was completed in May 1997, concurrently with the final mission under the basic Mir Contract. The expenses associated with the operations of SPACEHAB are recorded differently based on the type of expense. Costs of revenue include integration and operations expenses associated with the performance of two types of efforts: (i) sustaining engineering in support of all missions under a contract and (ii) mission specific experiment support. Expenses associated with sustaining engineering are expensed as incurred. Mission specific expenses relating to the CMAM Contract and the Mir Contract are recorded as assets and not expensed until the specific Space Shuttle mission is flown and the related revenue is recognized. Costs associated with performance of the NASDA/ESA Contract were expensed as incurred. Other costs of revenue include depreciation expense and costs associated with the Astrotech payload processing facilities. Flight related insurance covering transportation of the SPACEHAB Modules from SPACEHAB's payload processing facility to the Space Shuttle, in-flight insurance and third-party liability insurance are also included in costs of revenue and are recorded as incurred. Marketing, general and administrative and interest and other expenses are recognized when incurred. Astrotech revenue is derived from various multiyear fixed price contracts with satellite and launch vehicle manufacturers. The services and facilities Astrotech provides to its customers support the final assembly, checkout and countdown functions associated with preparing a satellite for launch. This preparation includes: the final assembly and checkout of the satellite, installation of the solid rocket motors, loading of the liquid propellant, encapsulation of the satellite in the launch vehicle, transportation to the launch pad and command and control of the satellite during pre-launch countdown. Revenue provided by the Astrotech payload processing facilities is recognized ratably over the occupancy period of the satellites in the Astrotech facilities. 12 13 RESULTS OF OPERATIONS In 1996, the Company elected to change its fiscal year end from September 30 to June 30. Financial information for 1996, therefore, reflects nine months of operations. Further, fiscal 1997 results include the operations of Astrotech subsequent to its acquisition on February 12, 1997. Due to the Company's rate of growth and its contract schedule, information for fiscal 1996 has not been annualized. Fiscal 1997 as Compared to Fiscal 1996 Revenue. Revenue for the year ended June 30, 1997 increased 0.4% to $56.6 million, as compared to $56.4 million for the nine months ended June 30, 1996. This increase is primarily due to the additional revenue generated by Astrotech, offset by the decrease in revenue related to the completion of the CMAM Contract during the fiscal year 1997. Costs of Revenue. Costs of revenue for fiscal year 1997 increased 62.7% to $34.1 million, as compared to $21.0 million for the nine months ended June 30, 1996. Integration, operations and transportation expenses for fiscal year 1997 increased 67.4% to $23.8 million, as compared to $14.2 million for the nine months ended June 30, 1996. There were three missions flown during fiscal year 1997, as compared to two missions flown during the nine months ended June 30, 1996. Because mission specific expenses are reported at the time of a flight under the Mir Contract and CMAM Contract, these expenses are significantly higher during a period in which there are more flights. Additionally, all of the fiscal 1997 missions were Double Module missions, which require a significantly higher amount of integration and operations effort and costs than a Single Module mission. Integration costs related to the CMAM Contract and Mir Contract were $18.4 million and $3.5 million respectively, for the year ended June 30, 1997 as compared to $7.6 million and $6.5 million, respectively, for the nine months ended June 30, 1996. Operating Expenses. Operating expenses for fiscal year 1997 increased 136.2% to $9.8 million, as compared to $4.2 million for fiscal year 1996. Research and development expenses for fiscal year 1997 were $1.2 million, as compared to $0.1 million for the nine months ended June 30, 1996. During fiscal 1997, the Company increased its investment in research and development in order to facilitate future contracts. Included in the Company's fiscal 1997 research and development budget was the Company's Science Double Module, as previously discussed, and the SPACEHAB Universal Communications System ("SHUCS"), which is being developed to provide reliable and Shuttle-independent data communication channels that are responsive to payload user requirements. Marketing, general and administrative expenses for fiscal year 1997 increased 111.2% to $8.6 million, as compared to $4.1 million during the nine months ended June 30, 1996. This increase is primarily attributable to the Company's efforts to increase the strength of its engineering, design and research and development departments and reflects twelve months of operations as compared to nine months. Interest Expense. Interest expense, net of capitalized amounts, for fiscal year 1997 increased 36.6% to $1.0 million as compared to $0.7 million for the nine months ended June 30, 1996. Interest Income. Interest income for fiscal year 1997 increased to $1.8 million from $1.2 million for the nine months ended June 30, 1996. This is due to the fact that there were three additional months of interest proceeds from short term, commercial paper and interest bearing cash accounts in fiscal 1997. Net Income. Net income for fiscal year 1997 decreased 53.6% to $13.8 million (or $1.24 per share), as compared to $29.8 (or $3.21 per share) million for the nine months ended June 30, 1996. This decrease is primarily due to an increase in costs of revenue and an increase in operating expenses, partially offset by an extraordinary gain of $3.3 million, net of taxes (or $0.29 per share), which was recorded in fiscal 1997 as a result of the early retirement of debt owed to a group of senior lenders. Income tax expense for these periods was $3.0 million and $1.9 million, respectively, due to the Company's use of available net operating loss carryforwards, offset by alternative minimum taxes. As of June 30, 1997, the Company had 13 14 approximately $4.4 million of available net operating loss carryforwards expiring between 2006 and 2009 to offset future regular taxable income. Utilization of these net operating loss carryforwards may be subject to limitations in the event of significant changes in the stock ownership of the Company. There are no restrictions on transfers or sales of shares of Common Stock that would prevent such a change from occurring. The effects of inflation and changing prices have not significantly impacted the Company's net sales and revenue or income from continuing operations during fiscal 1997. Nine Months Ended June 30, 1996 as Compared to the Fiscal Year Ended September 30,1995 Revenue. Revenue for the nine months ended June 30, 1996 increased 22.4% to $56.4 million, as compared to $46.1 million for fiscal year 1995. The results of operations for this new fiscal period include revenue for two missions completed during the quarter ended June 30, 1996. This revenue is attributable to the Company's completion in April 1996 of the first mission under the Mir Contract and the completion in June 1996 of the Company's fourth CMAM mission. In comparison, during fiscal year 1995, SPACEHAB completed one mission under the CMAM Contract, providing all of the revenue reported for fiscal year 1995. Costs of Revenue. Costs of revenue for the nine months ended June 30, 1996 decreased 10.1% to $21.0 million, as compared to $23.3 million for fiscal year 1995. Integration, operations and transportation expenses for each of the nine months ended June 30, 1996 and the fiscal year ended September 30, 1995 were $14.2 million. These amounts are approximately equal in absolute dollars but, when compared on a basis of nine months to twelve months, the fiscal 1996 cost is proportionately higher. First, mission specific costs of $8.4 million for the nine months ended June 30, 1996 supported two missions, while mission specific costs of $8.2 million in fiscal year 1995 supported only one mission. Second, sustaining engineering costs were $5.8 million in fiscal 1996, as compared to $6.0 million in fiscal 1995. Total integration, operations and transportation costs were only marginally higher in fiscal 1996 even though they supported two flights, thereby reducing the cost per flight for sustaining engineering and reducing total costs per mission in fiscal 1996. Operating Expenses. Operating expenses for the nine months ended June 30, 1996 decreased 23.3% to $4.2 million, as compared to $5.4 million for fiscal year 1995. The decrease is primarily due to the shortened reporting period for fiscal 1996 of nine months, as compared to the twelve-month reporting period for fiscal year 1995, coupled with a decrease in research and development expenses. There was $0.1 million incurred for research and development expense for the nine months ended June 30, 1996, as compared to $1.6 million for fiscal year 1995. The research and development expenditures for fiscal 1995 were used in the development of the SPACEHAB Logistics Double Module that was required to perform the Mir Contract. Expenditures for research and development associated with the new SPACEHAB Science Double Module for microgravity and life sciences did not commence until July 1996. Marketing, general and administrative expenses for the nine months ended June 30, 1996 increased 6.3% to $4.1 million, as compared with $3.8 million during fiscal year 1995. Components of the increase in fiscal 1996 include increases in salaries and benefits of approximately $0.6 million for additional staff needed for business development and project management, offset by a decrease of $0.4 million in expenses due to the shorter fiscal year. Interest Expense. Interest expense, net of capitalized amounts, for the nine months ended June 30, 1996 decreased 48.8% to $0.7 million, as compared to $1.4 million for fiscal year 1995, primarily due to substantially lower average revolving loan indebtedness under the Company's credit agreement (the "Credit Agreement") for the nine months ended June 30, 1996. The lower average revolving loan indebtedness was a result of repayments by the Company during the nine months ended June 30, 1996 of $7.4 million on interest bearing debt. An amount outstanding of $5.5 million due to a group of insurance companies under the Credit Agreement during the nine months ended June 30, 1996 remained non-interest bearing. 14 15 Interest Income. Interest income for the nine months ended June 30, 1996 increased to $1.2 million from $0.1 million, due to the investment of approximately $40.0 million of initial public offering proceeds in short term, low risk commercial paper and interest bearing cash accounts. Net Income. Net income for the nine months ended June 30, 1996 increased 88.7% to $29.8 million, as compared to $15.8 million for fiscal year 1995. Income tax expense for these periods was $1.9 million and $0.2 million, respectively, due to the Company's use of available net operating loss carryforwards, offset by alternative minimum taxes. LIQUIDITY AND CAPITAL RESOURCES The Company has historically financed its capital expenditures, research and development and working capital requirements through payments received under both the CMAM Contract and the Mir Contract, investments received in private and public equity offerings and borrowings under credit facilities. During December 1995, SPACEHAB completed an initial public offering of 4,014,500 shares of Common Stock, which provided the Company with net proceeds of approximately $43.3 million. On June 16, 1997, the Company signed an agreement with a financial institution securing a $10.0 million revolving line of credit (the "Revolving Line of Credit") that the Company may use for working capital purposes. As of June 30, 1997, no amounts were drawn on this line of credit. Further, on July 14, 1997, Astrotech obtained a five-year term loan (the "Term Loan Agreement"), which is guaranteed by SPACEHAB and provides drawdowns of up to $15.0 million for general corporate purposes. Cash Flows From Operating Activities. Cash provided by (used for) operations for fiscal year 1995, the nine months ended June 30, 1996 and fiscal year 1997 was $26.8 million, $13.1 million and ($0.9) million, respectively. Under both the CMAM Contract and the Mir Contract, progress payments are structured such that expenses incurred under these contracts are billed to NASA. NASA made progress payments under the CMAM Contract on specified dates for specified amounts. Progress payments under the Mir Contract are billed to NASA monthly at 95% of the costs incurred in the prior month. As the Company projected, net cash flows were used in completing the CMAM Contract and Mir Contract for which significant progress payments had previously been received. Additionally, cash flows were used for operating activities during fiscal year 1997 due to increases in research and development costs associated with expanding the client base of the Company. Cash Flows Used in Investing Activities. For fiscal years 1995, the nine months ended June 30, 1996 and fiscal 1997, cash flows used in investing activities consisted only of capital expenditures of $4.9 million, $6.3 million and $34.4 million, respectively. Expenditures during fiscal year 1995 and the nine months ended June 30, 1996 were for (i) the development and construction of a tunnel and an adapter ring to be used in conjunction with the Logistics Double Module and (ii) structural upgrade work performed on the SPACEHAB structural test article so that it can be attached to an existing Single Module to form a Logistics Double Module. The Company invested a total of $11.9 million in the development and construction of the Logistics Double Module during fiscal 1995 and the nine months ended June 30, 1996. The Company paid approximately $20.1 million for Astrotech during fiscal 1997. In addition, during fiscal 1997, the Company began the construction of its Science Double Module. The Company spent approximately $12.7 million on the project during fiscal 1997 and anticipates that it will spend between $35.0 million and $38.0 million in the aggregate to complete this project. The Company expects to continue funding any additional capital expenditures and working capital requirements from internally generated cash flow, drawdowns on existing credit facilities and through future debt and/or equity offerings. Cash Flows From Financing Activities. For fiscal 1995, the nine months ended June 30, 1996 and fiscal 1997, cash flows provided by (used for) financing activities were ($1.2) million, $36.9 million and 15 16 ($2.6) million, respectively. On August 20, 1996, an existing credit agreement was amended and restated. Under this amendment, the revolving credit commitment from McDonnell Douglas was canceled and, in exchange for the full satisfaction of two term loans owed to a group of insurance companies, the Company paid $2.5 million to said companies at closing and agreed to pay an additional $2.0 million under a new non-interest bearing term loan. The new term loan is due in installments of $0.5 million in each of August 1997 and 1998, and $0.3 million in each of August 1999, 2000 and 2001. Under this new agreement, all prior liens and encumbrances on the Company's assets and all prior restrictive covenants pursuant to this credit agreement were released. The Company believes that its available cash and cash equivalents plus borrowings under its existing credit facilities will be sufficient to meet its cash flow from operations and other funding requirements for at least the next 12 months. The Company anticipates requirements for additional financing to complete the design and development of additional spaceflight hardware and will initiate such financing as the timing of its asset development efforts and financial market conditions dictate. RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128, "Earnings per Share," (Statement 128). Statement 128 supersedes Accountings Principles Board Opinion No. 15, "Earnings per Share" (APB 15) and its related interpretations and promulgates new accounting standards for the computation and manner of presentation of the Company's earnings per share. The Company is required to adopt the provisions of Statement 128 during the second quarter of fiscal 1998. Earlier application is not permitted; however, upon adoption the Company will be required to restate previously reported annual and interim earnings per share data in accordance with the provisions of Statement 128. The Company does not believe that the adoption of Statement 128 will have a material impact on the computation or manner of presentation of its earnings per share data as currently of previously presented under APB 15. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" (Statement 130). Statement 130 establishes standards for the reporting and display of comprehensive income and its components in the financial statements. The Company is required to adopt the provisions of Statement 130 for the year ended June 30, 1999. Earlier application is not permitted; however, upon adoption, the Company will be required to reclassify previously reported annual and interim financial statements. The Company believes that the disclosure of comprehensive income in accordance with the provisions of Statement 130 will not materially impact the manner of presentation of its financial statements as currently and previously reported. 16 17 SPACEHAB, INCORPORATED AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 AND 1997 (WITH INDEPENDENT AUDITORS' REPORT THEREON) 17 18 INDEPENDENT AUDITORS' REPORT The Board of Directors SPACEHAB, Incorporated and Subsidiary: We have audited the accompanying consolidated balance sheets of SPACEHAB, Incorporated and subsidiary (the Company) as of June 30, 1996 and 1997, and the related consolidated statements of income, stockholders' equity (deficit), and cash flows for the year ended September 30, 1995, the nine months ended June 30, 1996 and the year ended June 30, 1997. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SPACEHAB, Incorporated and subsidiary as of June 30, 1996 and 1997, and the results of their operations and their cash flows for the year ended September 30, 1995, the nine months ended June 30, 1996 and the year ended June 30, 1997, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP McLean, Virginia August 15, 1997 18 19 SPACEHAB, INCORPORATED AND SUBSIDIARY Consolidated Balance Sheets
============================================================================================== June 30, ------------------------ ASSETS 1996 1997 - ---------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 50,795,548 12,886,731 Accounts receivable (note 4) 5,445,765 5,176,255 Prepaid expenses and other current assets 184,660 199,247 - ---------------------------------------------------------------------------------------------- Total current assets 56,425,973 18,262,233 - ---------------------------------------------------------------------------------------------- Property and equipment: Flight modules 94,477,790 95,045,548 Module improvements in progress - 13,012,819 Payload processing facility 3,384,667 17,650,915 Furniture, fixtures and equipment 615,036 3,368,211 - ---------------------------------------------------------------------------------------------- 98,477,493 129,077,493 Less accumulated depreciation (27,987,042) (38,115,620) - ---------------------------------------------------------------------------------------------- Property and equipment, net 70,490,451 90,961,873 Goodwill, net of accumulated amortization of $55,947 - 3,394,773 Deferred mission costs 2,705,422 1,438,910 Other assets 86,769 392,587 - ---------------------------------------------------------------------------------------------- Total assets $129,708,615 114,450,376 ============================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------------------------------------------------------- Current liabilities: Loans payable under credit agreement, current portion (note 6) $ 2,500,000 500,000 Accounts payable and accrued expenses 3,270,882 2,408,111 Accrued consulting and subcontracting services due to McDonnell Douglas 4,712,733 9,052,308 Advanced billings - 846,855 - ---------------------------------------------------------------------------------------------- Total current liabilities 10,483,615 12,807,274 Loans payable under credit agreement, net of current portion (note 6) 6,179,063 1,500,000 Notes payable to shareholder (note 7) 9,968,503 11,225,246 Convertible note payable (note 8) 1,170,338 - Deferred flight revenue 30,311,227 2,295,898 - ---------------------------------------------------------------------------------------------- Total liabilities 58,112,746 27,828,418 - ---------------------------------------------------------------------------------------------- Commitments (notes 9, 14, 15 and 16) Stockholders' equity (notes 8, 12 and 13): Common stock, no par value, authorized 30,000,000 shares, issued and outstanding 11,069,237 and 11,146,237 shares, respectively 79,862,700 81,057,164 Additional paid-in capital 16,299 16,299 Retained earnings (deficit) (8,283,130) 5,548,495 - ---------------------------------------------------------------------------------------------- Total stockholders' equity 71,595,869 86,621,958 - ---------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $129,708,615 114,450,376 ==============================================================================================
See accompanying notes to consolidated financial statements. 19 20 SPACEHAB, INCORPORATED AND SUBSIDIARY Consolidated Statements of Income
======================================================================================================= Year ended Nine months ended Year ended September 30, 1995 June 30, 1996 June 30, 1997 - ------------------------------------------------------------------------------------------------------- Revenue $ 46,059,000 56,397,000 56,600,766 - ------------------------------------------------------------------------------------------------------- Costs of revenue: Integration, operations and transportation 14,155,419 14,220,334 23,799,089 Depreciation 8,256,417 6,192,313 9,824,535 Insurance and other 937,250 572,500 496,400 - ------------------------------------------------------------------------------------------------------- Total costs of revenue 23,349,086 20,985,147 34,120,024 - ------------------------------------------------------------------------------------------------------- Gross profit 22,709,914 35,411,853 22,480,742 - ------------------------------------------------------------------------------------------------------- Operating expenses: Marketing, general and administrative 3,815,536 4,055,680 8,567,268 Research and development 1,600,000 100,000 1,251,394 - ------------------------------------------------------------------------------------------------------- Total operating expenses 5,415,536 4,155,680 9,818,662 - ------------------------------------------------------------------------------------------------------- Income from operations 17,294,378 31,256,173 12,662,080 Interest expense, net of capitalized interest (note 3) (1,364,520) (698,997) (955,015) Interest and other income, net 114,662 1,183,462 1,821,472 - ------------------------------------------------------------------------------------------------------- Net income before income taxes and extraordinary item 16,044,520 31,740,638 13,528,537 Income tax expense (note 14) 235,664 1,911,895 2,970,943 - ----------------------------------------------------------------------- ------------------------------ Net income before extraordinary item 15,808,856 29,828,743 10,557,594 Extraordinary item - gain on early retirement of debt, net of taxes and legal fees (note 6) - - 3,274,031 - ------------------------------------------------------------------------------------------------------- Net income $ 15,808,856 29,828,743 13,831,625 - ------------------------------------------------------------------------------------------------------- Net income per common and common equivalent share: Net income before extraordinary item $ 2.37 3.21 0.95 Extraordinary item - - 0.29 - ------------------------------------------------------------------------------------------------------- $ 2.37 3.21 1.24 ======================================================================================================= Shares used in computing net income per common and common equivalent share 6,671,346 9,303,487 11,133,243 =======================================================================================================
See accompanying notes to consolidated financial statements. 20 21 SPACEHAB, INCORPORATED AND SUBSIDIARY Consolidated Statements of Stockholders' Equity (Deficit)
=================================================================================================================================== Convertible preferred stock Common stock --------------------------------- ------------------------------- Shares Amount Shares Amount - ----------------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1994 4,011,345 $ 2,310,670 4,908,427 $ 30,410,094 Common stock issued upon stock option exercises - - 25,000 60,000 Common stock issued in private placement (note 12) - - 150,000 3,600,000 Net income - - - - - ----------------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1995 4,011,345 2,310,670 5,083,427 34,070,094 Common stock issued upon stock option exercises - - 75,000 180,000 Common stock issued in public offering, net of expenses (note 12) - - 4,014,500 43,301,936 Common stock issued upon conversion of preferred stock (note 12) (4,011,345) (2,310,670) 1,671,312 2,310,670 Common stock issued in private placement guarantee (note 12) - - 224,998 - Net income - - - - - ----------------------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1996 - - 11,069,237 79,862,700 Common stock issued upon stock option exercises - - 2,000 24,000 Common stock issued upon conversion of debt (note 8) - - 75,000 1,170,464 Net income - - - - - ----------------------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1997 - $ - 11,146,237 $ 81,057,164 ===================================================================================================================================
==================================================================================================================== Additional Retained Total paid-in earnings stockholders' capital (deficit) equity (deficit) - -------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1994 16,299 (53,920,729) (21,183,666) Common stock issued upon stock option exercises - - 60,000 Common stock issued in private placement (note 12) - - 3,600,000 Net income - 15,808,856 15,808,856 - -------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1995 16,299 (38,111,873) (1,714,810) Common stock issued upon stock option exercises - - 180,000 Common stock issued in public offering, net of expenses (note 12) - - 43,301,936 Common stock issued upon conversion of preferred stock (note 12) - - - Common stock issued in private placement guarantee (note 12) - - - Net income - 29,828,743 29,828,743 - -------------------------------------------------------------------------------------------------------------------- Balance at September 30, 1996 16,299 (8,283,130) 71,595,869 Common stock issued upon stock option exercises - - 24,000 Common stock issued upon conversion of debt (note 8) - - 1,170,464 Net income - 13,831,625 13,831,625 - -------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1997 16,299 5,548,495 86,621,958 ====================================================================================================================
See accompanying notes to consolidated financial statements. 21 22 SPACEHAB, INCORPORATED AND SUBSIDIARY Consolidated Statements of Cash Flows
==================================================================================================================================== Year ended Nine months ended Year ended September 30, 1995 June 30, 1996 June 30, 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 15,808,856 29,828,743 13,831,625 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 8,489,642 6,387,245 10,184,525 Gain on early retirement of debt -- -- (4,092,537) Interest converted to notes payable 1,480,772 1,424,513 1,300,077 Changes in assets and liabilities: Decrease (increase) in accounts receivable (5,565,092) 119,327 1,842,565 Decrease (increase) in prepaid expenses and other current assets (9,360) (131,686) (14,587) Decrease in deferred mission costs 251,494 445,267 1,266,512 Decrease (increase) in other assets (227,872) 193,490 (256,887) Increase (decrease) in deferred flight revenue 3,955,856 (27,752,069) (28,015,329) Increase (decrease) in accounts payable and accrued expenses 674,600 1,993,470 (1,003,796) Decrease in advanced billings -- -- (239,040) Increase in accrued consulting and subcontracting services 1,978,940 642,753 4,339,575 - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) operating activities 26,837,836 13,151,053 (857,297) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Payments for modules under construction -- -- (13,580,577) Purchase of Astrotech, net of cash acquired -- -- (20,133,945) Purchases of property and equipment (4,942,876) (6,266,330) (731,138) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used for investing activities (4,942,876) (6,266,330) (34,445,660) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Proceeds from note payable to insurers 150,000 -- -- Payments of note payable to insurers (9,707,045) (3,854,079) (2,520,000) Proceeds from note payable to shareholder 11,229,054 7,358,661 -- Payments of note payable to shareholder (21,537,965) (10,116,713) -- Payments of legal fees on early retirement of debt -- -- (109,860) Proceeds from exercise of stock options 60,000 180,000 24,000 Proceeds from issuance of common stock, net of expenses 3,600,000 43,301,936 -- - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used for) financing activities (16,205,956) 36,869,805 (2,605,860) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 5,689,004 43,754,528 (37,908,817) Cash and cash equivalents at beginning of year 1,352,016 7,041,020 50,795,548 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of year $ 7,041,020 50,795,548 12,886,731 ====================================================================================================================================
See accompanying notes to consolidated financial statements. 22 23 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements June 30, 1996 and 1997 - ------------------------------------------------------------------------------ (1) DESCRIPTION OF THE COMPANY SPACEHAB, Incorporated (the Company) is the first company to commercially develop, own and operate habitable modules that provide space-based laboratory research facilities and cargo services aboard the U.S. Space Shuttle system. The Company currently owns and operates three pressurized laboratory and logistics supply modules which significantly enhance the capabilities of the Space Shuttle fleet. The Company is currently constructing a new science module with associated double module hardware. The Company's modules are unique to the U.S. Space Shuttle. To date, the Company has successfully completed eight missions aboard the Space Shuttle and substantially all of the Company's revenue has been generated under contracts with NASA. The Company's contracts are subject to periodic funding allocations by NASA. NASA's funding is dependent on receiving annual appropriations from the United States government. On February 12, 1997, the Company acquired the assets and certain of the liabilities of Astrotech Space Operations, L.P., a subsidiary of Northrop Grumman, nationally recognized as the leading provider of commercial satellite launch processing services and payload processing facilities in the United States. These services are provided at the Astrotech facilities in Cape Canaveral, Florida and Vandenberg Air Force Base in California, and are provided to launch service providers on a fixed-price basis. Additionally, Astrotech provides management and consulting services to the Boeing Company for its Sea Launch program at the Boeing facility in Long Beach, California. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The consolidated financial statements include the accounts of SPACEHAB, Incorporated and its wholly owned subsidiary, Astrotech Space Operations, Inc. (Astrotech). All significant intercompany transactions have been eliminated in consolidation. FISCAL YEAR Effective October 1, 1995, the Company changed its fiscal year-end from September 30 to June 30. Accordingly, the accompanying consolidated financial statements present the Company's results of operations for the year ended September 30, 1995, the nine months ended June 30, 1996, and the year ended June 30, 1997. (Continued) 23 24 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (2) CONTINUED CASH AND CASH EQUIVALENTS For purposes of its statements of cash flows, the Company considers short-term investments with original maturities of 3 months or less to be cash equivalents. The Company intends to hold all of these investments to maturity and as such are recognized at cost plus accrued interest, which approximates market value. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. The Company's flight modules are depreciated over a ten-year period using the straight-line method. All furniture, fixtures and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets. The Company's payload processing facilities are depreciated using the straight-line method over their estimated useful lives ranging from sixteen to thirty years. During fiscal year 1997, SPACEHAB adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of" (Statement 121). Statement 121 requires that long-lived assets to be held and used, including goodwill, be reviewed by the Company for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the undiscounted net cash flows associated with the asset are less than the asset's carrying amount. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair market value. The adoption of Statement 121 did not have a material impact on the Company's results of operations for the year ended June 30, 1997. GOODWILL The excess of the cost over the fair value of Astrotech's net tangible and identifiable intangible assets acquired has been assigned to goodwill. Goodwill is being amortized on a straight-line basis over twenty years. DEFERRED MISSION COSTS Deferred mission costs are expenses directly related to specific missions and are recognized as costs of revenue as the respective missions are completed. (Continued) 24 25 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (2) CONTINUED STOCK-BASED COMPENSATION During fiscal year 1997, the Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-based Compensation" (Statement 123), which encourages, but does not require, the recognition of stock-based employee compensation at fair value. The Company has elected to continue to account for stock-based employee compensation using the intrinsic value method as prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock-Issued to Employees", and related interpretations. Accordingly, compensation cost for options to purchase common stock granted to employees is measured as the excess, if any, of the fair value of common stock at the date of the grant over the exercise price an employee must pay to acquire the common stock. Warrants to purchase common stock granted to other than employees as consideration for goods or services rendered are recognized at fair market value. REVENUE RECOGNITION Revenue is recognized upon completion of each module flight for the CMAM and Mir contracts. Total contract price is allocated to each flight based on the amount of services the Company provides on the flight relative to the total services provided for all flights under contract. Obligations associated with a specific mission, e.g., integration services, are also recognized upon completion of the mission. For new contract awards for which the capability to successfully complete the contract can be reasonably assured and costs at completion can be reliably estimated at contract inception, revenue recognition under the percentage-of-completion method is being reported based on costs incurred over the period of the contract. Revenue provided by the Astrotech payload processing facilities is recognized ratably over the occupancy period of the facilities. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. INCOME TAXES The Company recognizes income taxes under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (Continued) 25 26 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (2) CONTINUED NET INCOME PER SHARE Income per common and common equivalent share is calculated by dividing net income by the weighted average number of common and common equivalent shares, to the extent dilutive, during the period. Common stock equivalents are comprised of common stock options and warrants. Pursuant to Securities and Exchange Commission Staff Accounting Bulletin Topic 4:D, stock issued and stock options granted during the 12-month period preceding the date of the Company's initial public offering have been included in the calculation of weighted average shares of common and common equivalent shares outstanding for all periods through the date of the initial public offering using the treasury stock method, based on the initial public offering price per share (note 12). The computation of income per common and common equivalent share, assuming full dilution, includes all other common stock that potentially may be issued as a result of conversion privileges, including the convertible note payable (note 8). Any reduction of less than 3 percent in the aggregate has not been considered dilutive in the presentation of income per common share, assuming full dilution. All computations of income per common share include the effect of the 1 for 2.4 reverse split of common stock (note 12). In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share," (Statement 128). Statement 128 supersedes Accounting Principles Board Opinion No. 15, "Earnings per Share" (APB 15) and its related interpretations, and promulgates new accounting standards for the computation and manner of presentation of the Company's earnings per share. The Company is required to adopt the provisions of Statement 128 during the year ending June 30, 1998. Earlier application is not permitted; however, upon adoption the Company will be required to restate previously reported annual and interim earnings per share data in accordance with the provisions of Statement 128. The Company does not believe that the adoption of Statement 128 will have a material impact on the computation or manner of presentation of its earnings per share data as currently or previously presented under APB 15. ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from these estimates. (Continued) 26 27 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (2) CONTINUED RECLASSIFICATIONS Certain 1995 and 1996 amounts have been reclassified to conform to the 1997 consolidated financial statement presentation. (3) STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION Cash paid for interest costs was approximately $513,000, $264,000 and $1,300,000 for the year ended September 30, 1995, the nine months ended June 30, 1996, and the year ended June 30, 1997, respectively. The Company capitalized interest of approximately $262,000, $766,000 and $345,000 during the year ended September 30, 1995, the nine months ended June 30, 1996, and the year ended June 30, 1997, respectively, related to the module improvements in progress. The Company paid approximately $140,000, $248,000, and $2,385,000 for income taxes during the year ended September 30, 1995, the nine months ended June 30, 1996 and the year ended June 30, 1997, respectively. During fiscal year 1997, the Company's convertible note payable, with a carrying value of approximately $1.2 million, was converted into 75,000 shares of common stock (note 8). (4) ACCOUNTS RECEIVABLE At June 30, 1996 and 1997, accounts receivable consisted of:
1996 1997 - ------------------------------------------------------------------ U.S. government contracts: Billed $ 3,724,476 - Unbilled 1,721,289 3,520,742 - ------------------------------------------------------------------ Total U.S. government contracts 5,445,765 3,520,742 - ------------------------------------------------------------------ Commercial contracts: Billed - 1,344,302 Unbilled - 311,211 - ------------------------------------------------------------------ Total commercial contracts - 1,655,513 - ------------------------------------------------------------------ Total accounts receivable $ 5,445,765 5,176,255 ==================================================================
The Company anticipates collecting substantially all receivables within one year. (Continued) 27 28 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (5) ACQUISITION OF ASTROTECH The Company paid $20,135,987, including transaction costs, to acquire substantially all of the assets and certain of the liabilities of Astrotech. The purchase was effective on February 12, 1997. The business combination has been accounted for using the purchase method. The purchase price has been allocated to the assets and liabilities acquired based on appraisals and other studies. The purchase price was allocated as follows: Cash $ 2,042 Receivables 1,573,055 Land 580,000 Buildings 13,389,000 Furniture, fixtures and equipment 2,319,159 Goodwill 3,450,720 Other assets 48,931 Accounts payable (141,025) Advanced billings (1,085,895) - ---------------------------------------------------------------- Total purchase price $ 20,135,987 ================================================================
The following represents pro forma combined results of operations for the current year and preceding year as if the acquisition of Astrotech had occurred as of October 1, 1995:
Nine months ended Year ended June 30, 1996 June 30, 1997 - ---------------------------------------------------------------------- Revenue $ 62,716,117 59,980,318 Gross profit 39,902,147 23,531,400 Income before extraordinary item 31,621,920 10,309,377 Net income 31,621,920 13,583,408 - ---------------------------------------------------------------------- Net income per common and common equivalent share $ 3.40 1.21 ======================================================================
The Company has generated revenues of approximately $2,900,000 from Astrotech's operations since the date of acquisition. (6) LOANS PAYABLE UNDER CREDIT AGREEMENT Previous to an August 1996 amendment, the Company's credit agreement consisted of a $6,458,000 term loan bearing interest at 1 percent per month and a $5,495,000 noninterest-bearing term loan with several insurance companies. In addition, a revolving credit commitment with McDonnell Douglas, a shareholder, provided a maximum outstanding balance of $6,000,000 and bore interest at a rate of 1 percent per month. (Continued) 28 29 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (6) CONTINUED In August 1996, the Company's credit agreement was amended. Under the amendment, the revolving credit commitment from McDonnell Douglas was canceled. In exchange for the full satisfaction of the Company's term loans with the various insurance companies, the Company paid the insurance companies $2,500,000 and agreed to pay an additional $2,000,000 under a new noninterest-bearing term loan. The new term loan is due in installments of $500,000 on each of August 1, 1997 and 1998, and $333,333 on each of August 1, 1990, 2000 and 2001. As a result of this amended and restated agreement, the Company recognized an extraordinary gain of $3,274,031, net of income taxes and other related expenses of $818,506 and $109,860, respectively, during the year ended June 30, 1997. Aggregate interest cost incurred on the debts due under the various credit agreements was approximately $524,000, $561,000, and $64,000 for the year ended September 30, 1995, the nine months ended June 30, 1996 and the year ended June 30, 1997, respectively. (7) NOTES PAYABLE TO SHAREHOLDER The Company issued subordinated notes for a portion of the amount due to Alenia Spazio S.p.A. (Alenia), a shareholder, under a previously completed construction contract for the Company's flight modules. Such notes had aggregate outstanding balances of $9,968,503 and $11,225,246 at June 30, 1996 and 1997, respectively. The notes bear interest at an annual rate of 12 percent, compounded quarterly with all accrued interest originally payable 45 days after the first mission under the CMAM contract and semiannually thereafter. During the year ended September 30, 1995, Alenia agreed to defer the payment of interest and principal until November 1998. Principal on the notes was due at the earlier of 45 days after the seventh launch under the Mir contract, or June 15, 1997; however, no amount of principal or interest on the notes is due until all amounts under the amended and restated credit agreement (note 6) are repaid. As such, no principal payments are due under these notes until August 1, 2001. Interest cost accrued on the notes to Alenia was approximately $1,017,000, $846,000, and $1,300,000 for the year ended September 30, 1995, the nine months ended June 30, 1996 and the year ended June 30, 1997, respectively. (Continued) 29 30 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (8) CONVERTIBLE NOTE PAYABLE On August 12, 1992, the Company issued a subordinated promissory note to an investment bank in the amount of $900,000, carrying interest at LIBOR plus 3 percent, and maturing six months after the payment of all other indebtedness due under the amended and restated credit agreement and the subordinated notes to Alenia. Through June 30, 1996, the Company had elected to defer the payment of interest under the note, which accrued and was converted to additional outstanding principal. The note was convertible at the option of the holder into 75,000 shares of the Company's common stock at any time prior to maturity. On October 25, 1996, the investment bank exercised its option to convert the note into the Company's common stock. In accordance with the terms of the agreement, interest that accrued during fiscal year 1997 of approximately $25,000 through the date of conversion was waived. Interest cost incurred on this note was approximately $82,000 and $58,000 for the years ended September 30, 1995 and the nine months ended June 30, 1996, respectively. (9) CREDIT FACILITIES On June 16, 1997, the Company entered into a $10,000,000 line of credit agreement with a financial institution. Outstanding balances on the line of credit accrue interest at either the lender's prime rate or a LIBOR-based rate. This loan is collateralized by certain assets of the Company. The term of the agreement is through October 1998. At June 30, 1997, the Company has not drawn against the line of credit. On July 14, 1997, the Company's subsidiary, Astrotech, entered into another credit facility for loans of up to $15,000,000 with a financial institution. This loan is collateralized by the assets of Astrotech and certain other assets of the Company, and is guaranteed by the Company. Interest accrues at LIBOR plus three percent. (10) FAIR VALUE OF FINANCIAL INSTRUMENTS The following table presents the carrying amounts and estimated fair values of the Company's financial instruments as of June 30, 1997 in accordance with Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments."
Carrying Fair amount value - -------------------------------------------------------------------- Financial liabilities: Loans payable under credit agreement $ 2,000,000 1,629,679 Notes payable to shareholder 11,225,246 11,225,246 ====================================================================
(Continued) 30 31 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (10) CONTINUED The fair value of the Company's long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities. The carrying amounts of cash and cash equivalents, short-term investments, receivables, and accounts payable and accrued expenses approximate their fair market value because of the relatively short duration of these instruments. (11) NASA CONTRACTS COMMERCIAL MIDDECK AUGMENTATION MODULE CONTRACT On November 30, 1990, NASA and the Company entered into the Commercial Middeck Augmentation Module contract (CMAM) to lease to NASA a portion of the middeck augmentation modules and related integration services at an aggregate firm fixed price of $184,236,000 over six missions. During the year ended September 30, 1994, the terms of the CMAM contract were amended to reduce the number of missions from six to five, although the total locker space leased by NASA and the contract value remained the same. NASA paid the Company progress payments based on achieving certain integration milestones. During the year ended September 30, 1995, the nine months ended June 30, 1996, and the year ended June 30, 1997, NASA made progress payments of $35,377,000, $8,857,000, and $0, respectively, to the Company. During the year ended September 30, 1995, and the nine months ended June 30, 1996 and the year ended June 30, 1997, the Company recognized approximately $46,059,000, $45,634,000, and $7,963,000, respectively, of revenue under the CMAM contract. The CMAM contract was completed during fiscal year 1997. MIR SPACE STATION CONTRACT On July 14, 1995, NASA and the Company completed final negotiations to lease the Company's flight modules and provide related integration services over four missions to the Russian Space Station Mir during 1996 and 1997, at an aggregate firm fixed price of $53,980,000. During December 1995, the contract was amended whereby the contract price was adjusted to $52,506,600 in exchange for the indemnification by NASA of certain damage to, or loss of, the modules during flight. During July 1997, the Company and NASA further amended the terms of the basic contract to provide for three additional missions to take place in September 1997, January 1998, and May 1998, for an additional $38,000,000. (Continued) 31 32 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (11) CONTINUED NASA pays the Company progress payments on a monthly basis. During the year ended September 30, 1995, the nine months ended June 30, 1996, the year ended June 30, 1997, the Company received approximately $9,073,000, $19,907,000, and $20,438,000, respectively, from NASA relating to the contract. During the nine months ended June 30, 1996 and the year ended June 30, 1997, the Company recognized $10,772,000 and $41,734,600, respectively, of revenue under the original contract relating to completion of the first four missions. As of June 30, 1997, the Company has $2,940,513 of unbilled retainages due from NASA. These amounts are expected to be collected within the next 12 months. (12) STOCKHOLDERS' EQUITY INITIAL PUBLIC OFFERING In December 1995 and January 1996, the Company sold, through an underwritten initial public offering, 4,014,500 common shares at $12.00 per share, which resulted in net proceeds to the Company of $43,301,936 after associated commissions and discounts, and other expenses of the offering. REVERSE STOCK SPLIT Prior to the initial public offering, on December 11, 1995, the Company's Board of Directors effected a 1 for 2.4 reverse split of common stock whereby each 2.4 shares of existing common stock were exchanged for one share of common stock. All share and per share data appearing in the consolidated financial statements and notes thereto have been retroactively adjusted for this reverse split. PRIVATE EQUITY PLACEMENT During August 1995, the Company completed the sale of 150,000 shares of its common stock to five investors for an aggregate price of $3,600,000. The terms of sale included a guarantee by the Company that in the event of the completion of an initial public offering prior to December 31, 1996, the investors would realize no less than a 25 percent premium on their investment based on the initial offering price. Based on the initial public offering price, the Company issued an aggregate of 224,998 common shares to the investors in settlement of the guarantee. (Continued) 32 33 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (12) CONTINUED CONVERTIBLE PREFERRED STOCK As a result of the initial public offering of the Company's common stock, all of the Company's preferred stock was automatically converted into common stock on a 2.4 shares of common stock for each share of preferred stock in accordance with the terms of the preferred stock. (13) COMMON STOCK OPTION AND STOCK PURCHASE PLANS NON-QUALIFIED OPTIONS Prior to the adoption of the 1994 Stock Incentive Plan (the 1994 Plan), stock options granted to the Company's officers and employees were part of their employment contract or offer. The number and price of the options granted was defined in the employment agreements and such options vest incrementally over a period of four years and generally expire within ten years of the date of grant. THE 1994 PLAN Under the terms of the 1994 Plan, the number and price of the options granted to employees is determined by the Board of Directors and such options vest, in most cases, incrementally over a period of four years and expire no more than ten years after the date of grant. THE DIRECTORS' STOCK OPTION PLAN Under the terms of the Directors' Stock Option Plan (the Directors' Plan), each nonemployee member of the Board of Directors is annually granted options to purchase 5,000 shares of common stock at exercise prices equal to the fair market value at the date of grant. Options under the Directors' Plan vest after one year and expire seven years from the date of grant. 1997 EMPLOYEE STOCK PURCHASE PLAN During the year ended June 30, 1997, the Company adopted, pending shareholder approval, an employee stock purchase plan that permits eligible employees to purchase shares of common stock of the Company at prices no less than 85 percent of the current market price. The plan will be implemented, and all full-time employees will be eligible to participate, effective October 1, 1997. (Continued) 33 34 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (13) CONTINUED STOCK OPTION ACTIVITY SUMMARY The following table summarizes the Company's stock option plans:
Non-qualified Options 1994 Plan Directors' Plan --------------------------- ------------------------- ---------------------- Weighted Weighted Weighted average average average Shares exercise Shares exercise Shares exercise outstanding price outstanding price outstanding price - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding at 9/30/94 723,444 $ 10.72 212,492 $ 12.00 - $ - Granted 235,408 12.16 43,664 12.00 - - Exercised 25,000 2.40 - - - - Forfeited - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding at 9/30/95 933,852 11.31 256,156 12.00 - - Granted 8,133 24.00 744,582 13.85 - - Exercised 75,000 2.40 - - - - Forfeited 246,523 12.00 - - - - - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding at 6/30/96 620,462 12.28 1,000,738 13.35 - - Granted 14,166 8.88 1,027,350 6.90 50,000 7.00 Exercised - - 2,000 12.00 - - Forfeited 186,309 12.00 776,088 13.14 - - - ------------------------------------------------------------------------------------------------------------------------------------ Outstanding at 6/30/97 448,319 12.01 1,250,000 8.20 50,000 7.00 Options exercisable at: September 30, 1995 708,862 11.09 45,831 12.00 - - June 30, 1996 543,585 12.07 58,247 12.00 - - June 30, 1997 442,219 12.15 819,132 8.49 - - - ------------------------------------------------------------------------------------------------------------------------------------ Weighted-average fair value at date of grant during the fiscal year ended: June 30, 1996 8,133 $ 24.00 744,582 $ 13.85 - $ - June 30, 1997 14,166 8.88 1,027,350 6.90 50,000 7.00 ====================================================================================================================================
(Continued) 34 35 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidation Financial Statements - -------------------------------------------------------------------------------- (13) CONTINUED The following table summarizes information about the Company's stock options outstanding at June 30, 1997:
Options outstanding Options exercisable ------------------------------------- ----------------------- Weighted- average Weighted- Weighted- remaining average average Range of exercise Number contractual exercise Number exercise prices outstanding life (years) price exercisable price - ----------------------------------------------------------------------------------- $24.00 8,133 4.01 $24.00 2,033 $24.00 $12.00 to $14.88 682,454 2.48 $12.70 656,890 $12.62 $5.75 to $8.88 1,057,732 5.73 $ 6.78 602,428 $ 5.73 - ----------------------------------------------------------------------------------- 1,748,319 1,261,351 ===================================================================================
The Company applies APB Opinion 25 and related interpretations in accounting for its plans. Accordingly, as all options have been granted at exercise prices equal to the fair market value as of the date of grant, no compensation cost has been recognized under these plans in the accompanying consolidated financial statements. Had compensation cost been determined consistent with Statement 123, the Company's net income and earnings per common share would have been reduced to the pro forma amounts indicated below:
Nine months ended Year ended June 30, 1996 June 30, 1997 - ----------------------------------------------------------------------------------- Net income before extraordinary item: As reported $ 29,828,743 10,557,594 Pro forma 29,256,916 8,964,083 =================================================================================== Net income per common and common equivalent share: As reported $ 3.21 0.95 Pro forma 3.14 0.80 ===================================================================================
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in fiscal years 1996 and 1997: 0.0 percent dividend growth; expected volatility of 38 percent; risk-free interest rates ranging from 5.50 percent to 6.82 percent; and expected lives ranging from two to six years. (Continued) 35 36 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (13) CONTINUED The effects of compensation cost as determined under Statement 123 on net income in fiscal year 1996 and 1997 may not be representative of the effects on pro forma net income in future periods. WARRANTS The Company also has 744,246 currently exercisable warrants outstanding to purchase the Company's common stock at prices ranging from $9.00 to $14.40 per share, with various expiration dates through February 2002. All such warrants were issued at exercise prices equivalent to, or in excess of, the determined fair market value of the Company's common stock at the date of issuance. (14) INCOME TAXES The components of income tax expense are as follows:
Year ended Nine months ended Year ended September 30, 1995 June 30, 1996 June 30, 1997 - ----------------------------------------------------------------------------------------- Current: Federal $ 235,664 1,911,895 3,084,500 State and local - - 704,949 ========================================================================================= 235,664 1,911,895 3,789,449 - ----------------------------------------------------------------------------------------- Deferred: Federal - - - State and local - - - - ----------------------------------------------------------------------------------------- - - - - ----------------------------------------------------------------------------------------- Income tax expense $ 235,664 1,911,895 3,789,449 =========================================================================================
(Continued) 36 37 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (14) CONTINUED A reconciliation of the expected amount of income tax expense calculated by applying the statutory federal income tax rate, of 34 percent to income before taxes, to the actual amount of income tax expense recognized follows:
Year ended Nine months ended Year ended September 30, 1995 June 30, 1996 June 30, 1997 - -------------------------------------------------------------------------------- Expected expense $ 5,455,137 10,791,817 5,865,338 Change in valuation (5,222,201) (8,884,006) (2,639,848) allowance State income tax -- -- 563,959 Other 2,728 4,084 -- - -------------------------------------------------------------------------------- Income tax expense $ 235,664 1,911,895 3,789,449 ================================================================================
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 1996 and 1997 are presented below: 1996 1997 - ----------------------------------------------------------------------------- Deferred tax assets: Net operating loss carryforwards $ 6,791,224 1,503,751 General business credit carryforwards 2,189,414 2,189,414 Alternative minimum tax credit carryforwards 2,270,234 5,043,547 Capitalized research and development costs 6,099,099 4,222,712 Other 248,000 63,588 - ----------------------------------------------------------------------------- Total gross deferred tax assets 17,597,971 13,023,012 Less - valuation allowance 6,712,732 2,058,156 - ----------------------------------------------------------------------------- Net deferred tax assets 10,885,239 10,964,856 - ----------------------------------------------------------------------------- Deferred tax liabilities: Property and equipment, principally due to differences in depreciation 10,819,784 10,873,300 Other 65,455 91,556 - ----------------------------------------------------------------------------- Total gross deferred tax liabilities 10,885,239 10,964,856 - ----------------------------------------------------------------------------- Net deferred taxes $ - - =============================================================================
(Continued) 37 38 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (14) CONTINUED The valuation allowances for deferred tax assets as of October 1, 1994 and 1995 were $23,028,141 and $16,857,228, respectively. The net changes in the total valuation allowance for the year ended September 30, 1995, the nine months ended June 30, 1996, and the year ended June 30, 1997 were decreases of $6,170,913, $10,144,496, and $4,654,576, respectively. At June 30, 1997, the Company had accumulated net operating losses of $4,422,796 available to offset future regular taxable income. These operating loss carryforwards expire between the years 2006 and 2009. Utilization of these net operating losses may be subject to limitations in the event of significant changes in stock ownership of the Company. Additionally, the Company has approximately $10,556,779 and $5,043,547 of research and experimentation and alternative minimum tax credit carryforwards, respectively, available to offset future regular tax liabilities. The research and experimentation credits expire between the years 2001 and 2007; the alternative minimum tax credits carryforward indefinitely. (15) EMPLOYEE BENEFIT PLAN The Company has a defined contribution retirement plan which covers all employees and officers. The Company contributed $85,114 into the Plan during the year ended June 30, 1997. No contributions were made by the Company during the year ended September 30, 1995 or the nine months ended June 30, 1996. The Company has the right, but not the obligation, to make contributions to the plan in future years at the discretion of the Company's Board of Directors. (16) COMMITMENTS INTEGRATION AND OPERATIONS CONTRACTS During fiscal year 1994, the Company entered into a cost-plus-fee contract, as amended, with McDonnell Douglas, a shareholder, for standard integration and operation services for up to seven missions aboard the Space Shuttle relating to missions to the Mir Space Station. The maximum estimated amount to be payable under this contract is approximately $48,500,000. The period of performance on this contract began in November 1994 and continues through July 1998. As of June 30, 1996 and 1997, approximately $11,700,000 and $28,300,000, respectively, had been cumulatively incurred by the Company under this contract. (Continued) 38 39 SPACEHAB, INCORPORATED AND SUBSIDIARY Notes to Consolidated Financial Statements - ------------------------------------------------------------------------------ (16) CONTINUED MODULE CONSTRUCTION CONTRACT During fiscal year 1997, the Company entered into a $36,800,000 cost-plus-fee contract with McDonnell Douglas, a shareholder, to construct a new science module with associated double module hardware. The Company expects to take delivery of the module in the spring of 1999. The Company has incurred approximately $12,700,000 in construction costs through June 30, 1997. LEASES The Company is obligated under noncancelable operating leases for office space, storage space, and the land for a payload processing facility. Future minimum payments under these noncancelable operating leases are as follows: Year ending June 30, ------------------------------------------- 1998 $ 623,000 1999 421,000 2000 313,000 2001 223,000 2002 and thereafter 414,000 ------------------------------------------- $ 1,994,000 ===========================================
Rent expense for the year ended September 30, 1995, the nine months ended June 30, 1996, and the year ended June 30, 1997, was approximately $211,000, $183,000, and $456,000, respectively. - ------------------------------------------------------------------------------ 39 40 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information concerning the Company's directors and executive officers; as well as with respect to Item 405 of Regulation S-K will be contained in the Company's definitive 1997 Proxy Statement in accordance with the Company's annual meeting of stockholders and is hereby incorporated by reference thereto. ITEM 11. EXECUTIVE COMPENSATION. The information required by this item will be contained in the Company's definitive 1997 Proxy Statement with respect to the Company's annual meeting of stockholders and is hereby incorporated by reference thereto. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by this item will be contained in the Company's definitive 1997 Proxy Statement with respect to the Company's annual meeting of stockholders and is hereby incorporated by reference thereto. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by this item will be contained in the Company's definitive 1997 Proxy Statement with respect to the Company's annual meeting of stockholders and is hereby incorporated by reference thereto. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of the report: 1. Financial Statements. The following consolidated financial statements of SPACEHAB, Incorporated and subsidiary and related notes, together with the report thereon of KPMG Peat Marwick LLP, the Company's independent auditors, are set forth herein as indicated below. PAGE Report of KPMG Peat Marwick LLP, Independent Public 18 Accountants Consolidated Balance Sheets 19 Consolidated Statements of Income 20 Consolidated Statements of Stockholders' Equity 21 Consolidated Statements of Cash Flows 22 Notes to Consolidated Financial Statements 23 40 41 2. Financial Statement Schedules. All financial statement schedules required to be filed in Part IV, Item 14 (a) have been omitted because they are not applicable, not required, or because the required information is included in the financial statements or notes thereto. 3. Exhibits. EXHIBIT NO. DESCRIPTION OF EXHIBIT 2.1*/ Asset Purchase Agreement, dated February 5, 1997, by and among Spacehab Acquisition Corp.; SPACEHAB, Incorporated; Astrotech Space Operations, L.P.; and Northrop Grumman Corporation. 2.2*/ Amendment No. 1 to Asset Purchase Agreement, dated as of February 12, 1997, by and among Spacehab Acquisition Corp; SPACEHAB, Incorporated; Astrotech Space Operations, L.P.; and Northrop Grumman Corporation. 3.1* Amended and Restated Articles of Incorporation of the Company. 3.2* Amended and Restated By-Laws of the Company. 10.1* NAS 9-18371, dated November 30, 1990, between the National Aeronautics and Space Administration ("NASA") and the Registrant (including the amendments thereto) (the "CMAM Contract"). 10.2* Cost Plus Incentive Fee Contract (Number SHB 1002), dated July 11, 1990, between the Registrant and McDonnell Douglas Corporation, McDonnell Douglas Aerospace-Huntsville Division ("McDonnell Douglas") (including the amendments thereto) (the "CMAM I/O Contract"). 10.3* Cost Plus Incentive Fee Contract (Number SHB 1009), dated November 23, 1994, between the Registrant and McDonnell Douglas (including the amendments thereto) (the "Mir I/O Contract"). 10.4* Cost Plus Incentive Fee Contract (Number SHB 1010), dated November 23, 1994, between the Registrant and McDonnell Douglas (including the amendments thereto) (the "Double Module Contract"). 10.5* NAS 9-19250, dated July 14, 1995, between NASA and the Registrant (including amendments thereto) (the "Mir Contract"). 10.6* Amended and Restated Representation Agreement, dated August 15, 1995, by and between the Registrant and Mitsubishi Corporation. 10.7* Letter Agreement dated August 15, 1995, by and between the Registrant and Mitsubishi Corporation. 10.8* Exclusive European Broker Agreement, dated February 15, 1989, by and between Intospace, GmbH and the Registrant. 41 42 10.9* Memorandum of Agreement, dated July 28, 1995, between the Registrant and McDonnell Douglas Corporation. 10.10* Amended and Restated Credit Agreement (the "Credit Agreement"), dated December 29, 1993, among the Registrant, the Insurers listed therein, McDonnell Douglas Corporation, the Chase Manhattan Bank (National Association), as agent. 10.11* Amendment No. 1 to the Credit Agreement, dated July 18, 1995. 10.12*** Amended and Restated Credit Agreement, dated August 20, 1996 among the Registrant, the Insurers listed therein and the Chase Manhattan Bank (National Association), as agent. 10.13* SPACEHAB, Incorporated Directors' Stock Option Plan. 10.14* SPACEHAB, Incorporated 1994 Stock Incentive Plan. 10.15*** Office Building Lease Agreement, dated November 30, 1995, between The Equitable Life Assurance Society of The United States and the Registrant (Vienna, Virginia headquarters lease). 10.16* Agreement of Sublease, dated April 9, 1991, by and between Eastern American Teak Corporation and the Registrant (land lease for Cape Canaveral, Florida facility). 10.17* Letter Agreement, dated March 24, 1995, between Alenia Spazio and the Registrant. 10.18* Consulting Agreement, dated August 7, 1995, by and between CSP Associates, Inc. and the Registrant. 10.19*** Extension of Consulting Agreement between CSP Associates, Inc. and the Registrant, dated February 21, 1996. 10.20*** Consulting Agreement, dated August 14, 1996, by and between Gordon S. Macklin and the Registrant. 10.21** Employment and Non-Interference Agreement, dated December 27, 1995, between the Company and Chester M. Lee. 10.22** Employment and Non-Interference Agreement, dated December 27, 1995, between the Company and David A. Rossi. 10.23** Employment and Non-Interference Agreement, dated December 27, 1995, between the Company and Nelda J. Wilbanks. 10.24** Employment and Non-Interference Agreement, dated December 27, 1995, between the Company and M. Dale Steffey. 10.25** Employment and Non-Interference Agreement, dated December 27, 1995, between the Company and Margaret E. Grayson. 10.26** Employment and Non-Interference Agreement, dated December 27, 1995, between the Company and Richard P. Hora. 42 43 10.27** Indemnification Agreement, dated December 27, 1995, between the Company and Dr. Shelley A. Harrison. 10.28** Indemnification Agreement, dated December 27, 1995, between the Company and Dr. Edward E. David, Jr. 10.29** Indemnification Agreement, dated December 27, 1995, between the Company and Richard P. Hora. 10.30** Indemnification Agreement, dated December 27, 1995, between the Company and Robert A. Citron. 10.31** Indemnification Agreement, dated December 27, 1995, between the Company and Alvin L. Reeser. 10.32** Indemnification Agreement, dated December 27, 1995, between the Company and James R. Thompson. 10.33** Indemnification Agreement, dated December 27, 1995, between the Company and Jeffrey Schuss. 10.34** Indemnification Agreement, dated December 27, 1995, between the Company and Dr. Brad S. Meslin. 10.35** Indemnification Agreement, dated December 27, 1995, between the Company and Chester M. Lee. 10.36** Indemnification Agreement, dated December 27, 1995, between the Company and David A. Rossi. 10.37** Indemnification Agreement, dated December 27, 1995, between the Company and Dr. Shi H. Huang. 10.38** Indemnification Agreement, dated December 27, 1995, between the Company and Nelda J. Wilbanks. 10.39** Indemnification Agreement, dated December 27, 1995, between the Company and M. Dale Steffey. 10.40** Indemnification Agreement, dated December 27, 1995, between the Company and Margaret E. Grayson. 10.41** Indemnification Agreement, dated December 27, 1995, between the Company and Dr. Udo Pollvogt. 10.42** Indemnification Agreement, dated December 27, 1995, between the Company and Ernesto Vallerani. 10.43** Indemnification Agreement, dated December 27, 1995, between the Company and Hironori Aihara. 10.44***** NASDA Contract, dated July 1996, between the Registrant and Mitsubishi Corporation (the "NASDA/ESA Contracts"). 43 44 10.45***** ESA Contract, dated September 1996, between the Registrant and INTOSPACE GmbH (the "NASDA/ESA Contracts"). 10.46 Amendment to the Agreement, dated as of August 27, 1996, between the Registrant and Mitsubishi Corporation. 10.47 Letter Contract Number SHB 1014, dated August 13, 1997, between the Registrant and McDonnell Douglas Aerospace - Huntsville. 10.48 Letter Agreement, dated July 23, 1997, between the Registrant and Daimler-Benz. 10.49 Cost Plus Fee Contract (Number SHB 1013), dated July 31, 1997, between the Registrant and McDonnell Douglas Corporation, McDonnell Douglas Aerospace Huntsville Division (the "Science Double Module Contract"). 10.50 Amendment dated March 8, 1996, to Office Building Lease Agreement, dated November 30, 1995, between The Equitable Life Assurance Society of the United States and the Registrant (Vienna, Virginia headquarters lease). 10.51 Agreement of Sublease, dated February 26, 1996, by and between Barrios Technology, Inc. and the Registrant (Expansion of Houston Facility). 10.52 Office Building Lease Agreement, dated October 6, 1993, between Astrotech and the Secretary of the Air Force (Lease number SPCVAN -2-94-0001). 10.53 Office Building Lease Agreement, dated May 30, 1983, between Astrotech and Randolph Park Associates II Limited Partnership (Silver Spring, Maryland headquarters lease). 10.54 Loan and Security Agreement, dated June 16, 1997, between the Registrant, Astrotech and Signet Bank. (the "Revolving Credit Agreement"). 10.55 Loan and Security Agreement, dated July 14, 1997, between Astrotech and the CIT Group/Equipment Financing, Inc. (the "Term Loan Agreement"). 10.56 Employment and Non-Interference Agreement, dated April 1, 1997, between the Company and Dr. Shelly A. Harrison. 10.57 Employment and Non-Interference Agreement, dated April 10, 1997, between the Company and John M. Lounge. 10.58 Indemnification Agreement, dated October 22, 1996, between the Company and John M. Lounge. 10.59 Consulting Agreement, dated August 15, 1997, between Gordon S. Macklin and the Registrant. 10.60 Extension of Consulting Agreement, dated August 18, 1997, between CSP Associates, Inc. and the Registrant. 10.61 Consulting Agreement, dated October 24, 1996, between Harbor Securities and the Registrant. 44 45 10.62 Teaming Agreement, dated May 29, 1997, between United Space Alliance, LLC (USA) and the Registrant. 10.63 Letter Agreement, dated July 30, 1997, between RSC Energia (Energia) and the Registrant. 10.64 Letter of Cancellation, dated June 10, 1997, of the Memorandum of Agreement, dated July 28, 1995, between McDonnell Douglas and the Registrant (with attachment thereto). 10.65 Royalty Agreement, dated May 1, 1997, between the University of Maryland Biotechnical Institute (UMBI) and the Registrant. 10.66 Agreement, dated July 15, 1997, between UAB Research Foundation on behalf of the University of Alabama at Birmingham, Center for Macromolecular Crystallography and the Registrant (including amendments thereto). 10.67 Letter Agreement, dated April 26, 1996, between Pennsylvania State University, Center for Cell Research and the Registrant. 10.68 SA42, dated July 16, 1997, between NASA and the Registrant (Amendment to the Mir Contract). 11. Statement regarding Computation of Per Share Earnings. 21. Subsidiary of the Registrant. 23. Consent of KPMG Peat Marwick LLP. 27. Financial Data Schedule. * Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 33- 97812) and all amendments thereto, originally filed with the Securities and Exchange Commission on October 5, 1995. ** Incorporated by reference to the Registrant's Report on Form 10-Q for the quarter ended December 31, 1995, filed February 14, 1996. *** Incorporated by reference to the Registrant's Report on Form 10-K for the fiscal year ended June 30, 1996, filed with the Securities and Exchange Commission on September 17, 1996. **** Incorporated by reference to the Registrant's Annual Report on Form 10-K/A for the year ended June 30, 1996, filed with the Securities and Exchange Commission on December 20, 1996. ***** Incorporated by reference to the Registrant's Report on Form 10-Q/A for the quarter ended September 30, 1996, filed with the Securities and Exchange Commission on December 20, 1996. */ Incorporated by reference to the Registrant's Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 1997. 45 46 (b) The following report on Form 8-K was filed by the Registrant during the period covered by this report. 1. Report on Form 8-K filed on February 27, 1997 disclosing the Registrant's acquisition of substantially all of the assets of Astrotech Space Operations, L.P. 46 47 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. SPACEHAB, Incorporated By: /S/ DR. SHELLY A. HARRISON --------------------------------- Dr. Shelley A. Harrison Chairman of the Board and Chief Executive Officer Date: September 12, 1997 By: /S/ MARGARET E. GRAYSON ---------------------------------- Margaret E. Grayson Vice President of Finance, Treasurer and Assistant Secretary (Principal Accounting Officer and CFO) Date: September 12, 1997 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of this registrant in the capacities and on the dates indicated. Director - ------------------------------ Hironori Aihara /s/ Robert A. Citron Director September 12, 1997 - ------------------------------ Robert A. Citron /s/ Dr. Edward A. David, Jr. Director September 12, 1997 - ------------------------------ Dr. Edward A. David, Jr. - ------------------------------ Dr. Shi H. Huang Director /s/ Chester M. Lee Director September 12, 1997 - ------------------------------ Chester M. Lee /s/ Dr. Brad M. Meslin Director September 12, 1997 - ------------------------------ Dr. Brad M. Meslin /s/ Gordon S. Macklin Director September 12, 1997 - ------------------------------ Gordon S. Macklin /s/ Dr. Udo Pollvogt Director September 12, 1997 - ------------------------------ Dr. Udo Pollvogt /s/ Alvin L. Reeser Director September 12, 1997 - ------------------------------ Alvin L. Reeser 47 48 Director - ------------------------------ James R. Thompson Director - ------------------------------ Prof. Ernesto Vallerani 48 EX-10.46 2 AMENDMENT TO MITSUBISHI AGREEMENT. 1 EXHIBIT 10.46 AMENDMENT TO AGREEMENT BETWEEN SPACEHAB, INC. AND MITSUBISHI CORPORATION ("AGREEMENT") DATED AUGUST 27, 1996 SECTION TWO OF THIS AGREEMENT IS AMENDED AS FOLLOWS: 2.0 Fixed Price "Mitsubishi shall pay SHI a fixed price of $3,280,000 for all of the "Standard Services" provided by SHI, and $152,548.50 for the "Optional Services" as set forth in the SOW (a total of $3,432,548.50). The "Optional Services" price of $152,548.50 is composed of the following price elements" provided in support of the PCRS experiment on STS 84. 1. Use of UAB-CMC analytical facilities and services, postflight $93,750.00 2. Mitsubishi/NASDA's share of total mission late access/early retrieval service charges $44,062.50 3. Transportation of selected crystals to Japan $14,736.00
Payment to SHI shall be made as follows: 62.05% ($2,130,000.00) Upon execution of this agreement 25.93% ($ 890,000.00) On or before November 1, 1996 12.02% ($412,548.50) On or before 30 days after launch of STS-84"
EXHIBIT A OF THIS AGREEMENT IS AMENDED AS FOLLOWS: II. RESPONSIBILITIES OF SPACEHAB, INC. (SHI) B. PROVISION OF OPTIONAL SERVICES, ITEM 5. "Provision by the UAB-CMC of two X-ray collection facilities (two image plate detectors) from the UAB-CMC for a one week period immediately following the mission." MITSUBISHI CORPORATION SPACEHAB, INC. By: /s/ Kazushi Ochi By: /s/ Nelda Wilbanks -------------------------------------- -------------------------------- Name: Kazushi Ochi Name: Nelda Wilbanks -------------------------------------- -------------------------------- Title Manager, Space Systems Unit Title: Contracts Administrator -------------------------------------- -------------------------------- Information Systems & Services -------------------------------------- Division C -------------------------------------- Date: Date: 25 June 1997 -------------------------------------- --------------------------------
2 AMENDMENT TO AGREEMENT BETWEEN SPACEHAB, INC. AND MITSUBISHI CORPORATION ("AGREEMENT") DATED AUGUST 27, 1996 SECTION TWO OF THIS AGREEMENT IS AMENDED AS FOLLOWS: 2.0 Fixed Price "Mitsubishi shall pay SHI a fixed price of $3,280,000 for all of the "Standard Services" provided by SHI, and $284,736 for the "Optional Services" as set forth in the SOW (a total of $3,564,736). Payment to SHI shall be made as follows: 59.75% ($2,130,000) Upon execution of this agreement 24.97% ($ 890,000) On or before November 1, 1996 15.28% ($ 544,736) On or before 30 days after launch of STS-84"
The "Optional Services" price of $284,736.00 is composed of the following price elements provided in support of the PCRS experiment on STS-84. 1. Use of UAB-CMC analytical facilities, post flight $93,750.00 2. Mitsubishi/NASDA's share of total mission late access/ Early retrieval service charges $176,250.00 3. Transportation of selected crystals of Japan $14,736.00
SOW ADDENDUM, SECTION B., PROVISION OF OPTIONAL SERVICES, ADD THE FOLLOWING AS NEW ITEM 7. "Provision of passive thermal containers and internal refrigerant and packing materials required to transport the required quantity of sample blocks from the UAB CMC to Tokyo's Narita Airport via commercial airliner. Purchase of a dedicated passenger compartment seat onboard the aircraft to safely accommodate and protect these containers. Provision of a trained technician to accompany these crystal-laden containers to a designated place in NASDA's TSKUBS Space Center." head office of Mitsubishi Corporation. MITSUBISHI CORPORATION SPACEHAB, INC. By: /s/ Kazushi Ochi By: /s/ Nelda Wilbanks -------------------------------------- -------------------------------- Name: Kazushi Ochi Name: Nelda Wilbanks -------------------------------------- -------------------------------- Title Manager, Space Systems Unit Title: Contracts Administrator -------------------------------------- -------------------------------- Information Systems & Services -------------------------------------- Division C -------------------------------------- Date: Date: 25 June 1997 -------------------------------------- --------------------------------
AGREEMENT This agreement ("Agreement") is made this 27th day August, 1996, between SPACEHAB, Incorporated ("SHI"), a Washington state corporation, with principal offices located in Vienna, Virginia and MITSUBISHI Corporation ("MITSUBISHI"), a Japanese corporation, with principal offices located in Tokyo, Japan, on behalf of the National Space Development Agency of Japan ("NASDA", collectively "Buyer"). 3 WHEREAS MITSUBISHI desires to lease from SHI the Commercial Vapor Diffusion Apparatus protein crystal growth hardware and purchase associated services for use by NASDA aboard the STS-84 SHI Double Module Mission to Mir ("STS-84") currently scheduled for, and no sooner than, May 1997; and WHEREAS SHI desires to lease to MITSUBISHI such Commercial Vapor Diffusion Apparatus protein crystal growth hardware and sell such associated services on STS-84; NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: 1. STATEMENT OF WORK SHI will provide, at the times and locations set forth therein and pursuant to the terms and conditions of this Agreement, the hardware, supplies and services described in the Statement of Work ("SOW") attached hereto as Exhibit A and incorporated herein by this reference. 2. FIXED PRICE MITSUBISHI shall pay SHI a fixed price of $3,280,000 for all of the "Standard Services" provided by SHI, and $270,000 for the "Optional Services" as set forth in the SOW. Payment to SHI shall be made as follows: 60% ($2.13 million) upon execution of this Agreement 25% ($0.89 million) on or before November 1, 1996 15% ($0.53 million) on or before 30 days after launch of STS-84
3. PAYMENT TERMS AND CONDITIONS a. The initial payment set forth above shall be made by Mitsubishi within 30 days of its execution of this Agreement, but in no event later than October 31, 1996. SHI will bill MITSUBISHI prior to the remaining above-referenced payment due dates. In the event of a material change in the STS-84 launch date only, SHI will prepare a revised Payment Schedule corresponding to the changed launch date. b. SHI shall send a Final Accounting/Billing to MITSUBISHI as promptly as possible after completion of the last service provided for by SHI under this Agreement. The Final Accounting/Billing will address any additional payment required from MITSUBISHI (including but not limited to payments for Optional Services not previously paid) or refund due MITSUBISHI as a result of a price reduction for Optional Services pursuant to Section 4 below. If, as a result of Final Accounting/Billing, an additional MITSUBISHI payment or refund is required, such payment or refund shall be due 30 days after the billing date of the Final Billing. c. In the event STS-84 is delayed. suspended, or postponed, there may be additional charges to MITSUBISHI as specified in the following circumstances: Delay caused By NASA - MITSUBISHI pays only additional service costs, if any, required/provided by NASA and/or SHI. SHI agrees to notify MITSUBISHI of any such costs prior to incurring the costs, if possible. and to negotiate terms and conditions thereof with MITSUBISHI. 3 4 Delay caused by SHI - MITSUBISHI pays only additional service costs, if any, required/provided by NASA. SHI agrees to notify MITSUBISHI of any such costs prior to incurring the costs, if possible and payment terms and conditions of additional service costs will be negotiated by the parties. Delay caused by MITSUBISHU NASDA - MITSUBISHI pays any additional NASA costs charged to SHI which may be required or caused by any delay, suspension or postponement of the launch in excess of the 72 hours allowable delay for which NASA does not charge. - MITSUBISHI pays for any additional costs incurred by SHI for services provided by NASA and/or SHI. - In the event NASDA delivers the payload described in the SOW ("CVDA") so late that SHI, in its sole judgment, is unable to process the CVDA in time to meet the launch schedule, SHI will terminate this Agreement and will retain as liquidated damages all payments made by MITSUBISHI up through the date of termination. 4. OPTIONAL SERVICES The "Optional Services" set forth in the SOW may be requested by MITSUBISHI. Any optional services requested by MITSUBISHI other than those Optional Services listed in the SOW are not included in the pricing set forth in Section 2 above, and shall be charged to MITSUBISHI at the cost to SHI to perform and/or purchase such optional services. To the extent any of the Optional Services are shared with other SHI customer payloads, the price for such Optional Services to MITSUBISHI shall be reduced to reflect a prorate distribution of the Optional Services costs among all SHI customer users thereof 5. APPLICABILITY OF NASA/SHI SPACE SHUTTLE AGREEMENTS SHI and MITSUBISHI acknowledge that performance of the services described in this Agreement and the SOW depends upon the agreement[s1 governing NASA's lease of the SHI module for STS-84 or any other missions covered herein ("NASA Contracts"). Any changes to these NASA/SHI agreement[s] that are imposed by NASA and which prevent SHI from providing the services described herein shall not constitute a breach of this Agreement by either SHI or MITSUBISHI. In the event of such changes by NASA, SHI and MITSUBISHI agree to negotiate an equitable adjustment to this Agreement that satisfies both parties as well as NASA's new requirements. If there are any conflicts between this Agreement and the requirements of the NASA Contracts applicable to this Agreement, the NASA Contracts terms and conditions shall take precedence. 6. EXCHANGE OF DOCUMENTATION AND INFORMATION a. SHI and MITSUBISHI shall exchange all documents and information required for each party to fulfill its responsibilities under this Agreement. b. All technical data furnished to SHI under this Agreement shall be provided with no restricted rights for use, duplication, and disclosure in any manner and for any purpose whatsoever in performance of this Agreement by SHI and its contractors and subcontractors, and without a restrictive legend, except as provided below. It is the intent of the parties that the designation of proprietary technical data or trade secrets shall be kept to a minimum in order to facilitate implementation of this Agreement. c. In the event any of the technical data required to be furnished to SHI under this Agreement is considered by MITSUBISHI to be proprietary or a trade secret (such as detailed design, manufacturing and processing information) and MITSUBISHI desires to maintain proprietary or trade secret rights for such data MITSUBISHI shall inform SHI that the data is considered proprietary or a trade secret and any data so provided shall be conspicuously marked by MITSUBISHI "Proprietary" or "Trade Secret" prior to submittal to SHI. SHI agrees that the data will not without permission of MITSUBISHI, be duplicated, 4 5 used or disclosed by SHI or its contractors and subcontractors for any purpose other than as necessary to carry out SHl's obligations pursuant to the agreements referenced in Section 5 above or this Agreement. If required by such contractors and/or subcontractors, the data will only be furnished after the contractors and/or subcontractors have agreed with SHI in writing to protect the data from unauthorized use, duplication and disclosure. d. SHI considers all data (including data reduction and analysis) obtained or derived from the CVDA as a result of the activities for which MITSUBISHI has paid SHI under this Agreement to be property of MITSUBISHI, and, in order to protect trade secrets and other property rights of MITSUBISHI in such data SHI will maintain such data, in confidence. SHI will not acquire, as a result of launch and associated services under this Agreement, any rights to MITSUBISHI's copyrights, trademarks, trade secrets, inventions, or patents which may be used in or result from the CVDA or any rights to MITSUBISHI's proprietary or trade secret data except the right to use duplicate, and disclose such data, as set forth above. 7. PERMITS AND LICENSES SHI shall obtain any permit or license that may be required to provide the services to be furnished under this Agreement. MITSUBISHI will be responsible for obtaining any permit or license that may be required to perform an activity unique to the CVDA that is not included in the foregoing, such as tests involving use of radioactive materials or particular requirements of MITSUBISHI's own government, or governmental authorities outside the United States. 8. ALLOCATION OF CERTAIN RISKS AND LIMITATION OF LIABILITY a. Inter-Party Waiver of Liability. In carrying out this Agreement, SHI, NASDA/MITSUBISHI, and NASA, will respectively utilize their property and employees in the SPPF, NASA facilities, and during payload processing activities and STS Operations in close proximity to one another and to others. Furthermore, the parties recognize that all participants are engaged in the common goal of meaningful exploration, exploitation and utilization of outer space. In furtherance of this goal, the parties hereto agree to a no-fault, no-subrogation, inter-party waiver of liability pursuant to which each party agrees not to bring claims in arbitration or otherwise against or sue the other party or other customers of SHI, and agrees to absorb the financial and any other consequences arising out of damage to its own property and employees as a result of participation in the payload processing activities and STS Operations, irrespective of whether such damage is caused by SHI, MITSUBISHI, other SHI customers, NASA, or other NASA customers participating in payload processing activities and STS Operations and regardless of whether such damage arises through negligence or otherwise. b. Extension of Inter-Party Waiver. The parties agree that this common goal will also be advanced through extension of the inter-party waiver of liability to other participants in the payload processing activities and STS Operations. Accordingly, the parties agree to extend the waiver as set forth in Section 8a above to the other party's and NASA's contractors and subcontractors at every tier, as third party beneficiaries, whether or not such contractors or subcontractors causing damage bring property or employees to SHI's SPPF or retain title to other interest in property provided by them to be used, or otherwise involved, in the payload processing and Launch Activity. Specifically, the parties intend to protect these contractors and subcontractors from claims, including "products liability" claims, which might otherwise be pursued by the parties, or the contractors or subcontractors of the parties, or other customers of SHI or the contractors or subcontractors of such other customers. Moreover, it is the intent of the parties that each will take all necessary and reasonable steps to foreclose claims for damage by any participant in a payload processing and Launch Activity, under the same conditions and to the same extent as set forth in Section 8a above, except for claims between MITSUBISHI and its contractors or subcontractors and claims between SHI and its contractors and subcontractors. 5 6 c. Broad Construction of Inter-Party Waiver. The parties intend that the inter-party waiver of liability set forth above be broadly construed to achieve the intended objectives. d. Insurance Coverage In Lieu of Cross-Waiver In the event that MITSUBISHI is unable to comply with the above waiver provisions due to prohibitions by the laws of Japan, SHI agrees to purchase indemnification insurance covering participants who otherwise would have been covered by the cross waiver provisions above in the event MITSUBISHI were materially damaged by one or more of such participants during the payload processing activities or STS Operations. e. Definitions of "payload processing activity" and "STS Operations" In Section 8 "Payload processing activity" means all activity conducted at the SPPF or a NASA facility associated with the preparation of the payload(s) (including but not limited to the CVDA) for launch and SHI and/or NASA storage of all or a portion of the payload(s), and the handling and transportation of all or a portion of the payload(s) outside the confines of SHl's facility by SHI. NASA, or their contractors or subcontractors: "STS Operations" means: A. All Space Shuttle System Activity B. All payload operations C. Use of all tangible personal property (including ground support, test, training and simulation equipment related to A & B above). D. Research, design, development, test, manufacture, assembly, integration, transportation, or use of materials related to the above items, A, B & C. E. Performance of any activities related to A through D. f. The protection of cross waiver of liability for STS Operations herein agreed to shall cover a period of time during which STS Operations are being performed as follows: Beginning with the signature of an Agreement with NASA for Space Transportation System services and (i) when any employee, payload or property arrives at a United States Government Installation, or (ii) during transportation of such to the installation by a United States Government Conveyance, or (ii) at ingress of such into an Orbiter, for the purpose of fulfilling such Agreement or Arrangement, or (iv) the commencement of extravehicular activities by the Shuttle Crew for the purpose of retrieval of the payload, whichever occurs first and Ending with regard to any employee, payload or property, when such employee, payload or property departs (i) a U.S. Government Installation, or (ii) the Orbiter if it lands at other than such Installation, or (iii) a U.S. Government conveyance which transports the employee and/or payload and related property from such Installation or Orbiter. g. Risk of Patent Infringement (i) SHI agrees to indemnify MITSUBISHI,. its officers, employees and agents against any United States Patent infringement costs (including, but not limited to, any judgment against MITSUBISHI by a court of competent jurisdiction, reasonable administrative and litigation costs, and settlement payments made as a result of an administrative claim) incurred by MITSUBISHI 6 7 which are attributable to products, processes or articles of manufacture used in the facilities and Services to be furnished to MITSUBISHI by SHI hereunder. (ii) MITSUBISHI agrees to indemnify SHI AND NASA, their officers, employees and agents against any United States Patent infringement costs (including, but not limited to, judgment against SHI reasonable administrative and litigation costs, and settlement payments made as a result of an administration claim) incurred by SHI and/or NASA which are attributable to produce, processes or articles of manufacture used in the CVDA and any supporting equipment and facilities brought to the SHI SPPF by MITSUBISHI or MITSUBISHI's contractors or subcontractors and any activity performed at SHI or NASA facilities by MITSUBISHI or MITSUBISHI's contractors or subcontractors and any activity performed at SHI or NASA facilities by MITSUBISHI or MITSUBISHI's contractors or subcontractors. h. Limitation of SHI and MITSUBISHI Liability Notwithstanding any other provisions herein. to the extent that a risk of damage is not dealt with expressly in this Agreement. SHI's and the MITSUBISHI's liability under this Agreement. whether or not arising as a result of an alleged breach of this Agreement, shall be limited to direct damages only and shall not include any loss of revenue. profits or other indirect or consequential damages. 9. ASSISTANCE WITH THIRD PARTY CLAIMS In the event a third party claim is asserted against SHI or MITSUBISHI as a result of patent infringement, use of proprietary data, or damage, including claims of their respective contractors or subcontractors, arising from or in connection with the Services provided by SHI under this Agreement, SHI and MITSUBISHI each agree to give prompt notice to the other of any such claim and agree to provide each other with any assistance practicable in the defense against such claim. If a claim asserted against one party is a claim under this Agreement, the party who has agreed to indemnify shall have the right to intervene and defend, the right to control litigation of, and the right to determine the appropriateness of any settlement related to such claim. 10. WARRANTIES SHI MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTBILITY OR FITNESS FOR A PARTICULAR PURPOSE. 11. PUBLICITY RELATING TO AGREEMENT In cases where one Party intends to use results obtained from this Agreement or advertise his role in this Agreement, it shall first request the other Party for its prior written approval, which shall not be unreasonably withheld. 12. APPLICABLE LAW The Agreement shall be governed by the law of the State of Virginia 13. ARBITRATION/DISPUTES Disputes arising out of the interpretation or execution of this Agreement which cannot be resolved by negotiation shall, at the request of either Party, (after giving 30 days notice to the other Party) be submitted to arbitration. The arbitration tribunal shall sit in Washington, D.C. Disputes shall be finally settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators designated in conformity with those Rules. The decision to submit a dispute shall not excuse either party from the timely performance of is obligations hereunder which are not the subject matter of the dispute. Further, if the lack of resolution of the matter in dispute will adversely impact the timely completion of preparation for launch activities, MITSUBISHI and SHI will perform the matter in dispute in the manner determined by SHI, within the framework of this Agreement and without prejudice to the final resolution of the matter in dispute. 14. TERMINATION OF SERVICES Both parties have the right to terminate this Agreement pursuant to the following conditions only: 7 8 a. SHI may terminate this Agreement: (i) as a result of breach by MITSUBISHI if MITSUBISHI has not cured the breach within the time specified by SHI in its cure notice to MITSUBISHI (or immediately upon a non-curable breach), in which case SHI shall retain all payments made to the date of the termination, and MITSUBISHI is further liable for all costs incurred by SHI resulting from MITSUBISHI's breach of the Agreement, or (ii) as a result of any actions or inactions by NASA which materially impair SHl's ability to perform this Agreement, in which case MITSUBISHI shall be entitled to any transportation costs for which SHI is reimbursed by NASA and which were previously paid by MITSUBISHI. b. MITSUBISHI may terminate this Agreement (i) without cause at any time before installation of the CVDA into the SHI module upon sufficient written notification to SHI of such intent, in which case MITSUBISHI shall be liable for and SHI shall retain all Transportation and Lease progress payments, plus the Integration and Optional Services costs incurred up to the time of termination, as well as all termination charges, or (ii) in the event of material breach by SHI which SHI fails to cure in a reasonable time after written notice of such material breach is received from MITSUBISHI, in which case MITSUBISHI will be relieved from making any further payments to SHI subsequent to the material breach hereof. In the event NASDA cannot complete its science objectives as set forth herein due solely to a material breach hereof by SHI, SHI shall forfeit the final 15% payment set forth above, and thus any possibility of profit under this Agreement, since previous payments go directly to unrecoverable costs incurred by SHI in performance hereof. 15. ASSIGNMENTS No party shall assign to another person or entity any part of is rights this Agreement, including but not limited to rights for services related to scheduled launches, unless otherwise expressly agreed to by the other party in writing, or as may be required pursuant to law. 16. NOTICES All notices, requests, demands, and other communication hereunder shall be in writing and shall be either (1) personally delivered, (2) sent by U. S. mail or reputable overnight delivery service, or (3) transmitted by facsimile machine as follows: To SHI at : Nelda Wilbanks Contracts Administrator SPACEHAB, Inc. 1595 Spring Hill Rd. Vienna, Virginia 22182 To MITSUBISHI at: Mr. Kazushi Ochi Assistant General Manager Aerospace Department Mitsubishi Corporation 6-3 Marunouchi 2-Chome Chiyoda-ku, Tokyo 100 Japan The effective date of each notice, demand, request or other communication shall be deemed to be: (1) the date of receipt if delivered personally or by mail or overnight delivery service, or (2) the date of transmission if by 8 9 facsimile. Either party may change is address or designee for purposes hereof by informing the other party in writing of such action and the effective date of such change. 17. FORCE MAJOURE Neither party shall be liable for delays or breaches hereof resulting from events or acts beyond the control of such party, including but not limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations, and natural disasters. Upon the occurrence of such event, the party whose performance is affected shall use reasonable efforts to notify the other party of the nature and extent of any such condition and negotiate is affects. 18. COMPLETE AGREEMENT This Agreement constitutes the complete agreement and understanding with respect to the subject matter hereof between the parties. MITSUBISHI Corporation SPACEHAB, Inc. By: /s/ Tatsuo Sato By: /s/ Margaret E. Grayson ------------------- -------------------------- Name: Tatsuo Sato Name: Margaret E. Grayson ------------------- -------------------------- Title General Manager Title: Vice President - Finance ------------------- -------------------------- 9 10 EXHIBIT A SHI - MITSUBISHI (NASDA) STATEMENT OF WORK I. GENERAL DESCRIPTION OF SHI INTEGRATION AND FLIGHT SERVICES SHI will provide and maintain a pressurized module ("SPACEHAB") that fits in the cargo bay of the National Aeronautics and Space Administration's ("NASA") Space Shuttle Orbiter ("Shuttle") to act as the carrier and interface between the Shuttle and the Commercial Vapor Diffusion Apparatus payload ("CVDA"). (For the purposes herein, the term CVDA includes but is not limited to the crystal growth hardware, Commercial Refrigerator Incubation Module, and all experiment support hardware.) Power, thermal control, command and data management, environmental control, and structural support facilities and systems are available to support the CVDA. Adaptive hardware to permit physical integration of the CVDA into the SPACEHAB are also provided by SHI. The CVDA will be analytically, physically and operationally integrated with other user payloads into the SPACEHAB. SHI services will include integration, launch into orbit, in-orbit operation by a trained flight crew, return to launch site, and Reintegration and may include support to post flight analysis of space-grown crystals. Most SHI (and NASA) provided services are considered "standard" and are included in SHI's basic contract price. A few SHI and NASA-provided services are considered "optional" and are priced separately. In some cases, an optional service will be required due to the nature of the CVDA experiment (e.g. late access/early retrieval). In other cases, NASDA may choose whether or not to request the service (e.g. UAB-CMC post flight analysis support to space grown crystals). II. RESPONSIBILITIES OF SPACEHAB, INC. (SHI) A. PROVISION OF STANDARD SERVICES In support of the flight of the NASDA-sponsored CVDA experiment aboard the SPACEHAB module on STS 84, SHI shall perform the following "standard" services. 1. PROVISION OF THE REQUIRED AGREEMENTS WITH NASA TO PROVIDE SPACE SHUTTLE TRANSPORTATION ON STS-84. SHI will negotiate and execute all agreements with NASA which are required to manifest the CVDA experiment aboard SPACEHAB on STS 84. SHI will pay NASA's required transportation charges. 2. PROVISION OF COMMERCIAL VAPOR DIFFUSION APPARATUS (CVDA) HARDWARE AND EXPERIMENT DEVELOPMENT SERVICES The CVDA hardware used by NASDA Principle Investigators (PI's) to conduct microgravity investigations aboard SPACEHAB on STS 84 will be provided to NASDA by the University of Alabama - Birmingham (UAB), Center for Macromolecular Crystallography (CMC) under separate agreement between the UAB-CMC and SHI. Under this agreement, the UAB-CMC will also provide a variety of experiment development and support services for NASDA during periods of experiment planning, preflight hardware and science materials preparation, inflight operations and postflight analysis. More specifically, the UAB-CMC will provide the following services for NASDA: 10 11 a. Provide all required CVDA protein crystal growth flight hardware, training hardware and experiment support hardware. b. Provide ground based hardware and procedures for determining the proper protein crystal growth conditions in microgravity. c. Act as the primary point of contact for hardware and operational requirements development and implementation. d. Obtain all certifications necessary for flight (e.g. flight and ground safety certifications). e. Provide mission specific experiment familiarization and "hands on" training sessions to the flight crew and to NASDA technical and scientific personnel as required to support ground operator, PI, and flight crew training at U.S. and Japanese locations. This includes provision of the required training and/or flight hardware at the location of the training session. f. Support timeline specific training at the SPACEHAB Payload Processing Facility (SPPF). g. Support all Johnson Space Center (JSC) mission simulations required to complete flight and ground control team mission preparation milestones. h. Develop an "Acceptance Data Package" that will enable the CVDA hardware to be processed at the Kennedy Space Center (KSC) - preflight and postlanding. i. Provide all necessary equipment and personnel at the KSC and JSC to support premission integration and real-time mission operations. j. Provide badging for all NASDA personnel required at KSC to support loading of the space hardware and at JSC to support real-time mission operations. k. Provide transportation, personnel and equipment at the landing site in order to bring the samples back to UAB for deintegration and analysis. l. Provide photo documentation of flight grown crystals, if required by NASDA. 3. PROVISION OF EXPERIMENT INTERFACE DEFINITION AND ANALYTICAL INTEGRATION SHI will assess NASDA and UAB CMC-developed CVDA data, performance analyses, and SPACEHAB subsystem resource requirements and perform the following experiment requirements synthesis and analysis tasks: a. Development of the core SPACEHAB/CVDA Interface Control Document (ICD); the ICD Appendix A (Ground Operations Interface Requirements); the ICD Appendix B (Safety/Verification 11 12 Requirements); and the ICD Appendix C (Flight Operations Interface Requirements). b. Integration and submittal of flight and ground safety review packages to NASA (Phase II, III) as required. c. Development of experiment stowage requirements. d. Analysis of all experiment test/analytical data as it pertains to the physical (structural) interface with the SPACEHAB module. e. Performance of a mass/center of gravity (c.g.) analysis. f. Performance of an experiment materials analysis. g. Performance of an experiment SPACEHAB resource requirements assessment. 4. PROVISION OF MISSION ANALYTICAL INTEGRATION Based upon the CVDA's data and operational requirements, provided by NASDA, SHI will locate the CVDA in the SPACEHAB pressurized volume with a compatible complement of payloads, will integrate the CVDA resource requirements and safety data with those of other payloads, and will develop flight procedures and timelines for operation of the experiment inorbit. Specifically, SPACEHAB will perform the following mission integration tasks for NASDA: a. Development of an integrated Mission Requirements and Allocations Document (MRAD) which incorporates the SPACEHAB module and Shuttle mission resource requirements necessary for the successful implementation of CVDA experiment objectives. b. Development and submittal to NASA of the required Shuttle Payload Integration Plan (PIP) data as it pertains to the CVDA requirements for Shuttle resources. c. Development and implementation of an integrated Crew Training Plan which includes documentation of all requirements for CVDA flight crew training, scheduling of all CVDA crew training sessions with the NASA Training Coordinator, coordination of all CVDA familiarization and hands-on training with UAB-CMC, and direction of all integrated timeline training sessions at the SPPF. d. Development and production of a flight qualified CVDA Experiment Operations Checklist (EOC) for onboard use by the flight crew. e. Development of CVDA crew activity timeline inputs for inclusion by NASA in the integrated Shuttle Crew Activity Plan. 12 13 f. Integration of NASDA and UAB-CMC-provided CVDA flight and ground safety data into mission safety packages for review by the NASA Flight and Ground Payload Safety Review Boards. g. Representation of NASDA and the CVDA to NASA at all NASA payload integration process forums and meetings, including payload safety reviews. 5. PROVISION OF HARDWARE PHYSICAL INTEGRATION AND DEINTEGRATION This category involves the preparation for and execution of CVDA-to-SPACEHAB and SPACEHAB-to-Shuttle physical integration and deintegration tasks to support the CVDA's flight on STS 84. It includes logistics and ground operations planning, ground procedures development, integrated schedule development, hardware physical installation, and NASDA/UAB-CMC personnel accommodation elements. The activities associated with this function are performed within the SPACEHAB Payload Processing Facility (SPPF) at Cape Canaveral, Florida and in the pressurized volumes of the Shuttle and SPACEHAB at the launch pad and at the landing site. Specifically, SHI will provide to NASDA and UAB-CMC the following services: a. Coordination of shipping and receiving of flight and training hardware to and from the SPPF. b. Provision of a SPPF Customer Work Area with the necessary security and administrative/laboratory equipment to control, store and prepare for flight all CVDA parts, protein materials and supporting equipment. c. Provision at the SPPF of a high fidelity mockup of the SPACEHAB module for use in experiment interface checks and in integrated timeline training with the flight crew. d. Provision at the SPPF of a vertical late access trainer for use in developing procedures for late installation of the CVDA hardware into SPACEHAB on the launch pad. e. Integration of the CVDA-to-SPACEHAB interface hardware into the SPACEHAB prior to delivery to KSC and Reintegration of same hardware following the SPACEHAB's post-flight return to the SPPF. 6. PROVISION OF FLIGHT OPERATIONS SUPPORT For the Flight Phase, SHI will provide accommodations for NASDA, MITSUBISHI and UAB-CMC management, technical and scientific personnel support in the Mission Control Center (MCC) at the NASA Johnson Space Center. The following services will be provided at the MCC: a. Physical accommodations for personnel to monitor real-time operations during the Prelaunch, Flight, and Postlanding phases of the STS 84 mission. 13 14 b. Telemetry, voice and video data as required to monitor the progress of the CVDA experiment operations over the duration of the mission. c. Provision of a Mission Console Handbook which provides administrative, technical and logistics information about the CVDA and other experiments aboard the SPACEHAB module as well as about the cadre of NASA, NASDA, Mitsubishi, UAB-CMC and SHI personnel supporting the mission. d. Administrative services for acquiring/copying and routing of mission-related data and correspondence to local and remote locations. 7. PROVISION OF SUPPORT TO POST-FLIGHT DATA ANALYSIS SHI will provide or coordinate the provision of the required historical CVDA flight data and timeline information in support of CVDA post flight analysis activities. 8. PROVISION OF CVDA PROJECT MANAGEMENT To organize, schedule and manage the provision of the standard and optional services as described above, SHI shall provide the following CVDA project management personnel and methods: a. SHI will designate an SHI Contract Development and Implementation Manager (CDIM) who will be responsible for coordinating with the Mitsubishi CDIM all financial, scheduling, implementation progress reporting and policy matters related to this contract. The CDIM will: 1.) Coordinate SHI inputs to the development and maintenance of this contract with Mitsubishi and NASDA personnel as required. 2.) Establish methods for communication of contract implementation activities to all participants (e.g. teleconferences, e-mail lists, key meetings). b. SHI will designate an SHI CVDA Payload Coordinator (PC) for the CVDA experiment. The PC will: 1.) Be the principal SHI advocate for the successful flight of the CVDA. 2.) Be responsible for coordinating with the SHI, NASDA,UAB-CMC and NASA technical points of contact all SHI support related to the technical and operational implementation of the standard and optional services described above. 3.) Be responsible for the identification and resolution of all technical and operational issues pertaining to the flight of the CVDA experiment. 14 15 9. PROVISION OF CVDA PROJECT REPORTING In order to facilitate the routine exchange of mission integration and scheduling information and a team-oriented approach to problem identification and resolution, the following methods of communication will be established: a. The PC will hold biweekly teleconferences with key project participants to plan and/or status check integration activities and to resolve issues. b. The PC will develop and maintain a detailed, date-specific CVDA Integration Milestones Template (IMT) which identifies all key NASDA and UAB-CMC deliverables as well as all key mission preparation milestones. c. The SHI CDIM will provide monthly reports to Mitsubishi on the status of CVDA mission integration activities. d. The CDIM will provide a comprehensive report to Mitsubishi following the end of the FY 1996 budget year which describes the status of all contract services provided and key contract milestones accomplished. (The IMT described above will be the technical basis for this report, which will be submitted no later than April 15, 1996). A similar report will be provided within 30 days of the completion of the STS 84 mission. B. PROVISION OF OPTIONAL SERVICES SHI will provide or facilitate the provision of the following optional services as required by the CVDA experiment objectives and at special request by NASDA. 1. Provision by SHI of (powered) transport to the launch pad of the flight ready CVDA assembly for late installation into the SPACEHAB. 2. Provision by SHI and NASA of installation of the CVDA assembly into the SPACEHAB at the launch pad during the latest allowable period prior to the Shuttle launch. This includes the performance of an electrical Interface Verification Test after the CVDA is installed in SPACEHAB. Many SHI experiments are characterized by experiment science or research materials which are perishable, have a predetermined shelf life, or cannot be delivered to the SHI Payload Processing Facility until after the module has been taken to Kennedy Space Center (KSC) and loaded into the orbiter's cargo bay. These experiments or their science and research materials can be loaded into the SHI module or onto the Shuttle middeck during specific "access windows" which are part of KSC's orbiter flight preparation process. These late access periods may occur as far out as one month or as close to launch as approximately 24 hours (for module access) or 12 hours (for middeck access). 3. Provision by SHI and NASA of Support to all launch scrub/turnaround activities at the launch site. 15 16 4. Provision by SHI and NASA of support to early CVDA retrieval activities at the primary or first alternate landing site. In many cases, experiments which must be loaded during late access periods prior to launch must also be unloaded during "early retrieval" periods following landing in order to preserve the scientific value of their internal materials. For a landing at the prime KSC, Florida landing field, early retrieval is normally completed by landing plus five hours. For landings at the first-alternate landing field at Edwards Air Force Base, California, early retrieval is normally completed by landing plus seven hours. 5. Provision by the UAB-CMC of three X-ray data collection facilities (one image plate detector and two multi-wire detectors) from the UAB-CMC for a one week period immediately following the mission. 6. Provision by the UAB-CMC of an expert Crystallographer to render technical assistance during this data collection and analysis period. III. RESPONSIBILITIES OF MITSUBISHI Mitsubishi will serve as NASDA's administrative agent for establishing a contract relationship with SHI. Therefore, it is Mitsubishi's responsibility to establish and maintain this contract directly with SHI, on NASDA's behalf, in order for NASDA to obtain from SHI the necessary UAB-CMC hardware and SHI lease and integration services required for the successful flight of the CVDA in the SHI module. Acting in this capacity, Mitsubishi will: A. Facilitate NASDA's completion of the following critical preparatory functions in support of the flight of the CVDA experiment: 1. Timely selection and identification of all NASDA -sponsored PI's 2. Timely selection of all protein crystal growth materials for flight in the CVDA hardware. All materials shall conform to established NASA payload safety requirements documentation and are subject to review and approval by the NASA Flight and Ground Safety Review Boards. 3. Timely coordination with UAB-CMC personnel in the development of experiment functional objectives and flight and ground operations protocols and procedures. 4. Timely delivery of all protein crystal materials to the UAB-CMC in support of prelaunch sample loading activities. 5. Support to meetings, teleconferences, flight crew training sessions, integrated mission simulations and real-time missions operations 6. Designation of NASDA technical points of contact who will be responsible for coordinating with the SHI Payload Coordinator all technical activities to be performed under this Agreement B. Designation of a Mitsubishi Contract Development and Implementation Manager (CDIM) who will be responsible for coordinating with the SHI CDIM all financial, 16 17 scheduling, implementation progress reporting and policy matters related to this contract. C. Establishment and maintenance of the required contract(s) with NASDA to facilitate NASDA sponsorship of the flight of the CVDA on STS 84. D. Establishment and maintenance of the required contract with SHI to obtain SHI lease and integration services necessary for the flight of the CVDA in SPACEHAB on STS 84. E. Receipt of established contract milestone payments from NASDA and provision of established contract milestone payments to SHI for performance of these required services. 17 18 AGREEMENT This agreement ("Agreement") is made this 18th day of September, 1996 between SPACEHAB, Incorporated ("SHI"), a Washington state corporation with its principal office located in Vienna, Virginia and INTOSPACE GmbH, with its principal office located in Hannover, Germany ("INTOSPACE"), as contractor to the European Space Agency ("ESA", collectively "Buyer"). WHEREAS INTOSPACE desires to lease from SHI space in a SPACEHAB pressurized module ("SPACEHAB" or "Module") and retain SHI to act as the carrier and interface between the NASA Space Shuttle and ESA's Spacelab Self-Standing Drawer/Morphological Transition and Model Substances payload ("SSD/MOMO") aboard the STS-84 SHI Double Module Mission to Mir ("STS-84") currently scheduled for, and no sooner than, May 1997; and WHEREAS SHI desires to lease to INTOSPACE such space in the Module and to act as the carrier as follows: and interface between the NASA Space Shuttle and the SSD/MOMO aboard STS-84; NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth. the Parties agree 1. STATEMENT OF WORK SHI will provide, at the times and locations set forth therein and pursuant to the terms and conditions of this Agreement, the supplies and services described in the Statement of Work ("SOU"') attached hereto as Exhibit A and incorporated herein by this reference. 2. FIXED PRICE INTOSPACE shall pay SHI a fixed price of 1993 US$ 610,000 for all of the "Standard Services" provided by SHI, as set forth in the SOW. Payment to SHI shall be made as follows: 2% (93US$10,000) prepaid earnest money installment 58% (93US$356,000) upon execution of this Agreement 25% (93US$152,500) on or before six months before committed launch date 15% (93US$91,500) after return of STS-84 and completion of all tasks due under the Agreement
3. PAYMENT TERMS AND CONDITIONS a. prepaid earnest money installment upon execution of this Agreement on or before six months before committed launch date after return of STS-84 and completion of all tasks due under the Agreement. The initial payment set forth above shall be made by INTOSPACE within 30 days of its execution of this Agreement. SHI will bill INTOSPACE prior to the remaining above-referenced payment due dates, and payments shall be made within 30 days of invoice. Payments shall be escalated from 1993 US$ as determined by the US Bureau of Labor Statistics news release entitled "Productivity and Costs" to July 1, 1996 for all payments. In the event of a material change in the STS-84 launch date only, SHI will prepare a revised Payment Schedule corresponding to the CHANGED LAUNCH DATE. EACH revised payment schedule, if any, shall supersede all previous payment schedules and will be accompanied by an explanation to a reasonable level of detail, substantiating the changes reflected therein. b. SHI shall send a Final Accounting/Billing to INTOSPACE as promptly as possible after completion of the last service provided for by SHI under this Agreement. The Final Accounting/Billing will contain a final accounting under the Agreement and address additional payment requirements, if any, from INTOSPACE. If, as a result of foal Accounting/Billing, an additional INTOSPACE payment is required, such payment shall be due 60 days after the billing date of the Final Accounting/Billing. 18 19 c. In the event STS-84 is delayed, suspended, or postponed, there may be additional charges to INTOSPACE as specified in the following circumstances: Delay caused by NASA - INTOSPACE pays only additional service costs, if any, required/provided by NASA and/or SHI. Delay caused by SHI - INTOSPACE pays only additional service costs, if any, required/provided by NASA. Delay caused by INTOSPACE/ESA - INTOSPACE pays any additional NASA costs charged to SHI which may be required or caused by any delay, suspension or postponement of the launch in excess of the 72 hours allowable delay for which NASA does not charge. - INTOSPACE pays for any additional costs incurred by SHI for services provided by NASA and/or SHI. - In the event ESA delivers the payload described in the SOW ("SSD/MOMO") so late that SHI, in its sole judgment, is unable to process the SSD/MOMO in time to meet the launch schedule, SHI will terminate this Agreement and will retain as liquidated damages all payments made by INTOSPACE up through the date of termination. 4. OPTIONAL SERVICES There are no optional services currently anticipated under this Agreement. Any optional services requested by INTOSPACE are not included in the pricing set forth in Section 2 above, and shall be charged to INTOSPACE at the cost to SHI to perform and/or purchase such optional services. 5. APPLICABILITY OF NASA/SHI SPACE SHUTTLE AGREEMENTS SHI and INTOSPACE acknowledge that performance of the services described in this Agreement and the SOW depends upon the agreement[s] governing NASA's lease of the Module for STS-84 or any other missions covered herein ("NASA Contracts"). Any changes to these NASA/SHI agreement[s] that are imposed by NASA and which prevent SHI from providing the services described herein shall not constitute a breach of this Agreement by either SHI or INTOSPACE. In the event of such changes by NASA, SHI and INTOSPACE agree to negotiate an equitable adjustment to this Agreement that satisfied both parties as well as NASA's new requirements. If there are any conflicts between this Agreement and the requirements of the NASA Contracts applicable to this Agreement, the NASA Contracts terms and conditions shall take precedence. 6. EXCHANGE OF DOCUMENTATION AND INFORMATION a. SHI and INTOSPACE shall exchange all documents and information required for each party to fulfill its responsibilities under this Agreement. b. All technical data furnished to SHI under this Agreement shall be provided with no restricted rights for use, duplication, and disclosure in any manner and for any purpose whatsoever in performance of this Agreement by SHI and its contractors and subcontractors, and without a restrictive legend, except as provided below. It is the intent of the parties that the designation of proprietary technical data or trade secrets shall be kept to a minimum in order to facilitate implementation of this Agreement. 19 20 c. In the event any of the technical data required to be furnished to SHI under this Agreement is considered by INTOSPACE to be proprietary or a trade secret (such as detailed design, manufacturing and processing information) and INTOSPACE desires to maintain proprietary or trade secret rights for such data, INTOSPACE shall inform SHI that the data is considered proprietary or a trade secret and any data so provided shall be conspicuously marked by INTOSPACE "Proprietary" or "Trade Secret" prior to submittal to SHI. SHI agrees that the data will not, without permission of INTOSPACE, be duplicated, used or disclosed by SHI or its contractors and subcontractors for any purpose other than as necessary to carry out SHI's obligations pursuant to the agreements referenced in Section 5 above or this Agreement. If required by such contractors and/or subcontractors, the data will only be furnished after the contractors and/or subcontractors have agreed with SHI in writing to protect the data from unauthorized use, duplication and disclosure. d. SHI considers all data (including data reduction and analysis) obtained or derived from the SSD/MOMO as a result of the activities for which INTOSPACE has paid SHI under this Agreement to be property of INTOSPACE, and, in order to protect trade secrets and other property rights of INTOSPACE in such data, SHI will maintain such data in confidence. SHI will not acquire, as a result of launch and associated services under this Agreement, any rights to INTOSPACE's copyrights, trademarks, trade secrets, inventions, or patents which may be used in or result from the SSD/MOMO or any rights to INTOSPACE's proprietary or trade secret data, except the right to use duplicate, and disclose such data as set forth above. 7. PERMITS AND LICENSES SHI shall obtain any permit or license that may be required to provide the services to be furnished under this Agreement. INTOSPACE will be responsible for obtaining any permit or license that may be required to perform an activity unique to the SSD/MOMO that is not included in the foregoing, such as tests involving use of radioactive materials or particular requirements of INTOSPACE's own government[s], or governmental authorities outside the United States. 8. ALLOCATION OF CERTAIN RISKS AND LIMITATION OF LIABILITY a. Inter-Party Waiver of Liability. In carrying out this Agreement, SHI, ESA/INTOSPACE, and NASA, will respectively utilize their property and employees in the SPPF, NASA facilities, and during payload processing activities and STS Operations in close proximity to one another and to others. Furthermore, the parties recognize that all participands are engaged in the common goal of meaningful exploration, exploitation and utilization of outer space. In furtherance of this goal, the parties hereto agree to a no-fault, no subrogation, inter-party waiver of liability pursuand to which each party agrees not to bring claims in arbitration or otherwise against or sue the other party or other customers of SHI, and agrees to absorb the financial and any other consequences arising out of damage to its own property and employees as a result of participation in the payload processing activities and STS Operations, irrespective of whether such damage is caused by SHI, INTOSPACE, other SHI customers, NASA, or other NASA customers participating in payload processing activities and STS Operations and regardless of whether such damage arises through negligence or otherwise. b. Extension of Inter-Party Waiver. The parties agree that this common goal will also be advanced through extension of the inter-party waiver of liability to other participands in the payload processing activities and STS Operations. Accordingly, the parties agree to extend the waiver as set forth in Section 8a above to the other party's and NASA's contractors and subcontractors at every tier, as third party beneficiaries, whether or not such contractors or subcontractors causing damage bring property or employees to SHI's 20 21 SPPF or retain title to other interest in property provided by them to be used, or otherwise involved, in the payload processing and Launch Activity. Specifically, the parties intend to protect these contractors and subcontractors from claims, including "products liability" claims, which might otherwise be pursued by the parties, or the contractors or subcontractors of the parties, or other customers of SHI or the contractors or subcontractors of such other customers. Moreover, it is the intent of the parties that each will take all necessary and reasonable steps to foreclose claims for damage by any participant in a payload processing and Launch Activity, under the same conditions and to the same extent as set forth in Section 8a above, except for claims between INTOSPACE and its contractors or subcontractors and claims between SHI and its contractors and subcontractors. c. Broad Construction of Inter-Party Waiver. The parties intend that the inter-party waiver of liability set forth above be broadly construed to achieve the intended objectives. d. Definitions of "payload processing activity" and "STS Operations" in Section 8. "Payload processing activity" means all activity conducted at the SPPF or a NASA facility associated with the preparation of the payload(s) (including but not limited to the SSD/MOMO) for launch and SHI and for NASA storage of all or a portion of the payload(s), and the handling and transportation of all or a portion of the payload(s) outside the confines of SHI's facility by SHI, NASA, or their contractors or subcontractors: "STS Operations" means: A. All Space Shuttle System Activity B. All payload operations C. Use of all tangible personal property (including ground support, test, training and simulation equipment related to A & B above). D. Research, design, development, test, manufacture, assembly, integration, transportation, or use of materials related to the above items, A, B &; C. E. Performance of any activities related to A through D. e. The protection of cross waiver of liability for STS Operations herein agreed to shall cover a period of time during which STS Operations are being performed as follows: Beginning with the signature of an Agreement or Arrangement with NASA for Space Transportation System services and (i) when any employee, payload or property arrives at a United States Government Installation, or (ii) during transportation of such to the installation by a United States Government Conveyance, or (iii) at ingress of such into an Orbiter, for the purpose of fulfilling such Agreement or Arrangement, or (iv) the commencement of extravehicular activities by the Shuttle Crew for the purpose of retrieval of the payload, whichever occurs first and Ending with regard to any employee, payload or property, when such employee, payload or property departs (i) a U.S. Government Installation, or (ii) the Orbiter if it lands at other than such Installation, or (iii) a U.S. Government conveyance which transports the employee and/or payload and related property from such Installation or Orbiter. 21 22 f. Risk of Patent Infringement (i) SHI agrees to indemnify INTOSPACE, its officers, employees and agents against any United States Patent infringement costs (including, but not limited to, any judgment against INTOSPACE by a court of competent jurisdiction, reasonable administrative and litigation costs, and settlement payments made as a result of an administrative claim) incurred by NTOSPACE which are attributable to products, processes or articles of manufacture used in the facilities and Services to be furnished to INTOSPACE by SHI hereunder. (ii) INTOSPACE agrees to indemnify SHI and NASA, their officers, employees and agents against any United States Patent infringement costs (including, but not limited to, judgment against SHI by a court of competent jurisdiction, reasonable administrative and litigation costs, and settlement payments made as a result of an administration claim) incurred by SHI and/or NASA which are attributable to products, processes or articles of manufacture used in the SSD/MOMO and any supporting equipment and facilities brought to the SHI SPPF by INTOSPACE or INTOSPACE's contractors or subcontractors and any activity performed at SHI or NASA facilities by INTOSPACE or INTOSPACE's contractors or subcontractors and any activity performed at SHI or NASA facilities by INTOSPACE or INTOSPACE's contractors or subcontractors. g. Limitation of SHI and INTOSPACE Liability Notwithstanding any other provisions herein, to the extent that a risk of damage is not dealt with expressly in this Agreement, SHI's and the INTOSPACE's liability under this Agreement, whether or not arising as a result of an alleged breach of this Agreement, shall be limited to direct damages only and shall not include any loss of revenue, profits or other indirect or consequential damages. 9. ASSISTANCE WITH THIRD PARTY CLAIMS In the event a third party claim is asserted against SHI or INTOSPACE as a result of patent infringement, use of proprietary data, or damage, including claims of their respective contractors or subcontractors, arising from or in connection with the Services provided by SHI under this Agreement, SHI and INTOSPACE each agree to give prompt notice to the other of any such claim and agree to provide each other with any assistance practicable in the defense against such claim. If a claim asserted against one party is a claim under this Agreement, the party who has agreed to indemnify shall have the right to intervene and defend, the right to control litigation of, and the right to determine the appropriateness of any settlement related to such claim. 10. WARRANTIES SHI MAKES NO WARRANDIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANDY OF MERCHANDIBILITY OR FITNESS FOR A PARTICULAR PURPOSE. 11. PUBLICITY RELATING TO AGREEMENT In cases where one Party intends to use results obtained from this Agreement or advertise his role in this Agreement, it shall first request the other Party for its prior written approval, which shall not be unreasonably withheld. 12. APPLICABLE LAW 22 23 The Agreement shall be governed by German law, except to the extent that an issue is not governed expressly by the Agreement, in which case US Federal law shall govern all such issues. 13. ARBITRATION/DISPUTES Disputes arising out of the interpretation or execution of this Agreement which cannot be resolved by negotiation shall, at the request of either Party, (after giving 30 days notice to the other Party) be submitted to arbitration. The arbitration tribunal shall sit in Hannover, Germany. Disputes shall be finally settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators designated in conformity with those Rules. The decision to submit a dispute shall not excuse either party from the timely performance of its obligations hereunder which are not the subject matter of the dispute. Further, if the lack of resolution of the matter in dispute will adversely impact the timely completion of preparation for launch activities, INTOSPACE and SHI will perform the matter in dispute in the manner determined by SHI, within the framework of this Agreement and without prejudice to the final of the matter in dispute. 23 24 14. TERMINATION OF SERVICES Both parties have the right to terminate this Agreement pursuant to the following conditions only: a. SHI may terminate this Agreement: (i) as a result of breach by INTOSPACE if INTOSPACE has not cured the breach within are a reasonable time after written notice to INTOSPACE (or immediately upon a non-curable breach), in which case SHI shall retain all payments made to the date of the termination, and INTOSPACE is further liable for all costs incurred by SHI resulting from INTOSPACE's breach of the Agreement or, (ii) as a result of any actions or inactions by NASA which materially impair SHI's ability to perform this Agreement, in which case INTOSPACE shall be entitled to any transportation costs for which SHI is reimbursed by NASA and which were previously paid by INTOSPACE. b. INTOSPACE may terminate this Agreement (i) without cause at any time before installation of the SSD/MOMO into the SHI module upon sufficient written notification to SHI of such intent, in which case INTOSPACE shall be liable for and SHI shall retain as liquidated damages all Transportation and Lease progress payments, plus the Integration and Optional Services costs incurred up to the time of termination, as well as all termination charges, or (ii) in the event of material breach by SHI which SHI fails to cure in a reasonable time after written notice of such material breach is received from INTOSPACE, in which case INTOSPACE will be relieved from making any further payments to SHI subsequent to the material breach hereof. c. Termination In Special Cases INTOSPACE may at any time terminate this Agreement by giving written notice with immediate effect in any of the following events: - if SHI becomes insolvent or if its financial position is such that within the framework of its national law, legal action leading towards bankruptcy may be taken against it by its creditors; - if SHI resorts to fraudulent practices in connection with the contract, especially by deceit concerning the nature, quality or quantity of the supplies, and the methods or processes of manufacture employed or by the giving or offering of gifts or remuneration for the purpose of bribery to any person in the employ of an ESA Member State or of ESA or acting on its behalf, irrespective of whether such bribes or remuneration are made on the initiative of SHI or otherwise. 15. ASSIGNMENTS a. Assignment, delegation or use as security on a first mortgage of this Agreement or rights or duties hereunder by SHI is hereby consented to by INTOSPACE. 24 25 b. INTOSPACE shall not assign to another person or entity any party of its rights under this Agreement, including but not limited to rights for services related to scheduled launches, except to ESA for the SSD/MOMO, and as otherwise expressly agreed to by SHI in writing, and as may be required pursuant to law. c. In the event that INTOSPACE receives notice that this Agreement has been assigned to a lending institution, INTOSPACE agrees (1) to acknowledge such assignment; (2) that any Agreement or agreement so assigned may neither be amended in any material respect nor terminated by SHI without the prior consent of such lending institutions; and (3) will promptly notify the lending institutions of any default by SHI and will provide the lending institution with a reasonable opportunity for the cure of such default. 16. NOTICES All notices, requests, demands, and other communication hereunder shall be in writing and shall be either (1) personally delivered, (2) sent by mail or reputable overnight delivery service, or (3) transmitted by facsimile machine as follows: To SHI: Nelda Wilbanks Contracts Administrator SPACEHAB, Inc. 1595 Spring Hill Road, Suite 360 Vienna, VA 22182 To INTOSPACE: Thomas Hauschild INTOSPACE GmbH Sophienstrasse 6 D-30159 Hannover I Germany The effective date of each notice, demand, request or other communication shall be deemed to be: (1) the date of receipt if delivered personally or by mail or overnight delivery service, or (2) the date of transmission if by facsimile. Either party may change its address or designee for purposes hereof by informing the other party in writing of such action and the effective date of such change. 17. FORCE MAJEURE Neither party shall be liable for delays or breaches hereof resulting from events or acts beyond the control of such party, including but not limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations, and natural disasters. Upon the occurrence of such event, the party whose performance is affected shall use reasonable efforts to notify the other party of the nature and extent of any such condition and negotiate its affects. 18. COMPLETE AGREEMENT This Agreement constitutes the complete agreement and understanding with respect to the subject matter hereof between the parties. INTOSPACE SHI, INC. By: /s/ Jurgen Vonder Lippe By: /s/ David Rossi ------------------------- -------------------- Name: Jurgen Vonder Lippe Name: David Rossi ------------------------- -------------------- Title Managing Director Title: Sr. Vice President ------------------------- ------------------- 25 26 Exhibit A SHI-INTOSPACE (ESA) STATEMENT OF WORK: I. General Description of SHI Integration Flight Services SHI will provide and maintain a pressurized module ("SPACEHAB") that fits the cargo bay of the National Aeronautics and Space Administration (NASA) Space Shuttle Orbiter ("Shuttle") to act as the carrier and interface between the Shuttle and the Self-Standing [Drawer/Morphological Transition and Model Substances ("SSD/MOMO") payload. Power, thermal control, command and data management, environmental control, and structural support facilities and systems are available to support SSD/MOMO. Adaptive SPACEHAB rack hardware to permit physical integration of SSD/MOMO into the SPACEHAB are also provided by SHI. The SSD/MOMO will be analytically, physically and operationally integrated with other user payloads into the SPACEHAB. SHI services will include SSD/MOMO launch into orbit, in-orbit operation by a trained flight crew, return of SSD/MOMO to the launch site and to the SPACEHAB Payload Processing Facility (SPPF); deintegration of all SSD/MOMO hardware, and return of SSD/MOMO hardware to ESA. All SHI (and NASA) provided services for the SSD/MOMO are considered "standard" and are included in SHI's basic contract price. There are no known requirements for SPACEHAB or NASA-provided "optional" services (e.g. late access/early retrieval) for the SSD/MOMO payload. II RESPONSIBILITIES OF SPACEHAB, INC. (SHI) A. PROVISION OF STANDARD SERVICE In support of the flight of the ESA sponsored SSD/MOMO experiment aboard the SPACEHAB module on STS 84, SHI shall perform the following "standard" services. 1. Provision of Standard Services SHI will negotiate and execute all agreements with NASA which are required to manifest the SSD/MOMO experiment aboard SPCEHAB on STS 84. SHI will pay NASA's required transportation charges according to established payment methods and milestones. 26 27 2. Provision of Experiment Interface Definition and Analytical Integration SHI will assess ESA developed SSD/MOMO data, performance analyses, and SPACEHAB subsystem resource requirements and perform the following experiment requirements synthesis and analysis tasks: a. Development of the core SPACEHAB/SSD/MOMO Interface Control Document (ICD); the ICD Appendix A (Ground Operations Interface Requirements); the ICD Appendix B (Safety/Verification Requirements); and the ICD Appendix C (Flight Operations Interface Requirements). b. Integration and submittal of flight and ground safety review packages to NASA (Phase II, III) as required. c. Development of experiment stowage requirements. d. Analysis of all experiment test/analytical data as it pertains to the physical (structural) interface with the SPACEHAB rack and module. e. Performance of a mass/center of gravity (c.g.) analysis f. Performance of an experiment materials analysis g. Performance of an experiment SPACEHAB resource requirements assessment. 3. Provision of Mission Analytical Integration Based upon the SSD/MOMO's data and optional requirements, provided by ESA, SHI will locate the SSD/MOMO in a SPACEHAB rack within the SPACEHAB pressurized volume (with a compatible complement of payloads), will integrate the SSD/MOMO resource requirements and safety data with those of other payloads, and will develop flight procedures and timelines for operation of the experiment in-orbit. Specifically, SPACEHAB will perform the following mission integration tasks for ESA: a. Development of an integrated Mission Requirements and Allocations Document (MRAD) which incorporates the SPACEHAB module and Shuttle mission 27 28 resource requirements necessary for the successful implementation of SSD/MOMO experiment objectives. b. Development and submittal to NASA of the required Shuttle Payload Integration Plan (PIP) data as it pertains to the SSD/MOMO requirements for Shuttle resources. c. Development and implementation of an integrated Crew Training Plan which includes documentation of all requirements for SSD/MOMO flight crew training, scheduling of all SSD/MOMO crew training sessions with the NASA Training Coordinator, coordination of all SSD/MOMO training sessions with the affected SSD/MOMO Principle Investigators and Payload Element Developers, and direction of all integrated timeline training sessions at the SPPF. d. Development and production of a flight qualified SSD/MOMO Experiment Operations Checklist (EOC) for onboard use by the flight crew. e. Development of SSD/MOMO crew activity timeline inputs for inclusion by NASA in the integrated Shuttle Crew Activity Plan. f. Radon of ESA-provided SSD/MOMO flight and ground safety data into mission safety packages for review by the NASA Flight and Ground Payload Safety Review. g. Representation of ESA and the SSD/MOMO to NASA at all NASA payload integration process forums and meetings, including payload safety reviews. 4. Provision of Hardware Physical Integration and Deintegration This category involves the preparation for and execution of SSD/MOMO-to-SPACEHAB and SPACEHAB-to-Shuttle physical integration and deintegration tasks to support the SSD/MOMO's flight on STS 84. It includes logistics and ground operations planning, ground procedures development, integrated schedule development, hardware physical installation, and ESA personal accommodation elements. The activities associated with this function are performed within the SPACEHAB Payload Processing Facility (SPPF) at Cape Canaveral, Florida. Specifically, SHI will provide to ESA the following services: a. Coordination of shipping and receiving of flight and training hardware to and from the SPPF. 28 29 b. Provision of a SPPF Customer Work Area with the necessary security and administrative/laboratory equipment to control, store and prepare for flight all SSD/MOMO parts, element materials and supporting equipment. c. Provision at the SPPF of a high fidelity mockup of the SPACEHAB module for use in experiment interface checks and in integrated timeline training with the flight crew. d. Integration of the SSD/MOMO into the SPACEHAB rack and into the SPACEHAB module and performance of a SPACEHAB resource accommodations Interface Verification Test (IVI) prior to the module's delivery to KSC; and deintegration of the same hardware following the SPACEHAB module's post-flight return to the SPPF. 5. Provision of Flight Operations Support For the Flight Phase, SHI will provide accommodations for ESA and INTOSPACE management, technical and scientific personnel in the Mission Control Center (MCC) at the NASA Johnson Space Center. The following services will be provided at the MCC: a. Physical accommodations for personnel to monitor real-time operations during the Prelaunch, Flight, and Postlanding phases of the STS 84 mission. b. Telemetry, voice and video data as required to monitor the progress of the SSD/MOMO experiment operations over the duration of the mission c Provision of a Mission Console Handbook which provides administrative, technical and logistics information about the SSD/MOMO and other experiments aboard the SPACEHAB module as well as about the cadre of NASA, ESA, INTOSPACE and SHI personnel supporting the mission. Administrative services for acquiring/copying and routing of mission-related data and correspondence to local and remote locations. 6. Provision of Support to Post-Flight Data Analysis SHI will provide or coordinate the provision of the required historical SSD/MOMO flight data and timeline information and in support of SSD/MOMO post flight analysis activities. 8. Provision of SSD/MOMO Project Management 29 30 To organize, schedule and manage the provision of the standard and optional services as described above, SHI shall provide the follow SSD/MOMO project management personnel and methods: a. SHI will designate an SHI Contract Development and Implementation Manager (CDIM) who will be responsible for coordinating with the INTOSPACE CDIM all financial, scheduling, implementation, progress reporting and policy matters related to this contract. The CDIM will: 1.) Coordinate SHI inputs to the development and maintenance of this contract with INTOSPACE and ESA persons as required. 2.) Establish methods for communication of contract implementation activities to all participants (e.g. teleconferences, e-mail lists, key meetings). b. SHI will designate an SHI SSD/MOMO Payload Coordinator (PC) for the SSD/MOMO experiment. The PC will: 1.) Be the principal SHI advocate for the successful flight of the SSD/MOMO. 2.) Be responsible for coordinating with the SHI, ESA and NASA technical points of contact all SHI support related to the technical and operational implementation of the standard services described above. 3.) Be responsible for the identification and resolution of all technical and operational issues pertaining to the flight of the SSD/MOMO experiment. 9. Provision of SSD/MOMO Progress Report In order to facilitate the routine exchange of mission integration and scheduling information and a team oriented approach to problem identification and resolution, the following methods of communication will be established: a. The PC will hold biweekly teleconferences with key project participants to plan and/or status integration activities and to resolve issues. b. The PC will develop and maintain a detailed, date-specific SSD/MOMO Integration Milestones Template (IMT) which identifies all key deliverables as well as all key mission preparation milestones. c. The SHI CDIM will provide monthly reports to INTOSPACE on the status of SSD/MOMO mission integration activities. 30 31 B. PROVISION OF OPTIONAL SERVICES There have been no optional services identified for the SSD/MOMO experiment flight aboard SPACEHAB on STS-84. III. RESPONSIBILITIES OF INTOSPACE INTOSPACE will serve as ESA's administrative agent for establishing a contract relationship with SHI. Therefore, it is INTOSPACE's responsibility to establish and maintain this contract directly with SHI, on ESA's behalf, in order for ESA to obtain from SHI the necessary lease and integration services required for the successful flight of the SSD/MOMO in the SPACEHAB module. Acting in this capacity, INTOSPACE will: A. Facilitate ESA's completion of the following critical preparatory functions in support of the flight of the SSD/MOMO experiment: 1. All SSD/MOMO hardware and experiment materials shall conform to established NASA payload safety requirements documentation and are subject to review and approval by the NASA Flight and Ground Safety Review Boards. 2. Timely coordination with the SHI Payload Coordinator in the development of experiment functional objectives and flight and ground operations protocols and procedures. 3. Timely delivery of all SSD/MOMO to the SPPF for preflight processing. 4. ESA support to meetings' teleconferences, flight crew training sessions, integrated mission simulations and real-time missions operations. 31 32 5. Designation of ESA technical points of contact who will be responsible for coordinating with the SHI Payload Coordinator all technical activities to be performed under this Agreement. B. Designation of an INTOSPACE Contract Development and Implementation Manager (CDIM) who will be responsible for coordinating with the SHI CDIM all financial, scheduling, implementation progress reporting and policy matters related to this contract. C. Establishment and maintenance of the required contract(s) with ESA to facilitate ESA sponsorship of the flight of the SSD/MOMO on STS-84. D. Establishment and maintenance of the required contract with SHI to obtain SHI lease and integration services necessary for the flight of the SSD/MOMO in SPACEHAB on STS-84. E. Receipt of established contract milestone payments from ESA and provision of established contract milestone payments to SHI for performance of these required services. 32 EX-10.47 3 MCDONNELL DOUGLAS CONTRACT. 1 EXHIBIT 10.47 Letter Contract No. SHB 1014 Page 1 of 4 LETTER AGREEMENT To: McDonnell Douglas Aerospace - Huntsville Address: 689 Discovery Drive Huntsville, Alabama 35806 Attn: Doyle McBride Contract Administrator Dear Mr. McBride: 1. SPACEHAB, Inc. ("SPACEHAB"), hereby commercially contracts with McDonnell Douglas Aerospace - Huntsville (hereinafter referred to as "MDA-Huntsville" or "Seller"), a division of the McDonnell Douglas Corporation, for the performance of all integration and operations tasks required to successfully complete 4 SPACEHAB science missions (1 single module mission and 3 double module missions) and 2 SPACEHAB cargo double module missions (Multiple Mission Integrations and Operations (MM I/O Tasks)). The definitized contract will include options for 3 additional cargo double module missions that may be executed in accordance with the definitized schedule. 2. Except as otherwise expressly provided herein, Seller is directed, upon its execution of this contract to proceed immediately to procure the necessary materials and to commence performance of the services contemplated herein, and to pursue such work with all diligence within the funding parameters set forth in paragraph 3 below. 3. The maximum amount (including, but not limited to, a reasonable amount for termination costs and for 12 percent fee) for which SPACEHAB shall be liable under this letter contract is $998,386 ("Maximum Amount"). 4. It is expected that a successor contract, incorporating and superseding this document, will be negotiated and executed between the parties as defined below. The parties agree to promptly begin good faith negotiation of the terms of the successor contract in accordance with the following schedule: Receipt of Proposal Proposal Supplement 29 August 1997 Evaluation Complete 12 September 1997 Negotiation Complete 19 September 1997 2 Letter Contract No. SHB 1014 Page 2 of 4 Definitized Contract Signed 30 September 1997 The parties shall, as soon as possible after submission of the proposal by Seller, negotiate and agree to a final and complete Statement of Work (SOW). 5. This Letter Agreement shall terminate automatically (unless otherwise agreed to by the parties in writing) when the total of all payment obligations incurred by SPACEHAB hereunder reaches the Maximum Amount, and SPACEHAB shall not be liable for nor pay any amount above the Maximum Amount regardless of Seller's actual incurred costs hereunder. Seller shall notify SPACEHAB in writing before reaching the Maximum Amount. Such written notice shall include: (i) a proposed new Maximum Amount; (ii) an extension of the period of performance if necessary; and (iii) appropriate supporting information. Upon receipt of said notice, SPACEHAB may at its sole discretion amend this Letter Agreement to increase the Maximum Amount and/or the time of performance. 6. This contract authorizes billings hereunder to be submitted to SPACEHAB on a monthly basis. Payments shall be due within 30 days after SPACEHAB's receipt of invoices therefore (and, if requested, reasonable supporting documentation) to: McDonnell Douglas Aerospace P.O. Box 516 St. Louis, Mo 63166 Attn: Accounts Receivable 7. SPACEHAB may unilaterally decrease the Maximum Amount by issuing to Seller an Administrative Contract Funding Order ("Change Order") signed by a duly authorized representative of SPACEHAB; provided, however, that such decrease does not reduce the Maximum Amount below reasonable costs incurred under paragraph 4, (plus an 12% fee) up to the date of the Change Order and those reasonable costs which unavoidably continue after such date (Seller shall discontinue incurring such costs as soon as possible after notice of such Change Order reduction), the reasonable costs of settling terminated subcontracts, if any, and protecting and disposing of termination inventory. Upon receipt of such Change Order, Seller shall immediately stop work hereunder except as expressly permitted therein. 8. Period of performance: 7/31/97 - 9/30/97 9. This Contract shall be governed by and construed according to the laws of the State of Delaware. 3 Letter Contract No. SHB 1014 Page 3 of 4 10. The parties agree that the implied warranties of MERCHANTABILITY and fitness for a particular purpose and all other warranties, express or implied, are EXCLUDED and shall not apply to the goods and services sold under this letter contract. In no event shall Seller or SPACEHAB be liable under any legal theory for incidental or consequential damages, including, but not limited to, incidental or consequential damages for lost profits, lost sales, or loss of use. 11. Indemnity - SPACEHAB, Inc. shall indemnify and save harmless Seller, its subcontractors and any officers, directors, employees, and agents of any of them (collectively referred to hereafter as the "Indemnitee") from any liability and expense on account of loss of or damage to the property of third parties (including the U.S. Government) or bodily injury to any person, including death, caused by or resulting from the use of the goods furnished hereunder and/or arising from the provision of services hereunder excepting only such loss, damage, or injury caused by the Indemnitee's gross negligence or willful misconduct, and subject to Seller's compliance with paragraph 10, SPACEHAB, Inc. shall defend any suits or other proceeding brought against the Indemnitee related to the use of goods furnished or services provided hereunder and shall pay all reasonable expenses and satisfy all judgments which may be incurred or rendered against the Indemnitee in connection therewith to the extent such expense or judgment has not resulted from the gross negligence or willful misconduct of the Indemnitee. Seller shall give SPACEHAB, Inc., prompt written notice of any claim of such loss, damage, or injury and shall cooperate with SPACEHAB, Inc. and its insurers in every reasonable way in defending against such claim. In no event shall the indemnitee compromise or settle any claim without SPACEHAB's written consent. SPACEHAB, Inc. shall obtain insurance, naming Seller as a coinsured, against such liabilities to third parties as are referred to in this paragraph. 12. Provisions for Execution - Seller and SPACEHAB shall execute two (2) copies of this Letter Agreement, one original for each party. 13. Confidentiality - The party receiving any data, documents, drawings, models and other information and intellectual property pursuant to this Letter Agreement ("receiving party") shall keep all such information confidential and not disclose any information made available to it by the disclosing party in connection with this Letter Agreement to 1) any third party or 2) any receiving party employee, consultant or agent without a need to know. The receiving party shall return to the disclosing party all such confidential information in whatever medium it exists upon the disclosing party's request. 4 Letter Contract No. SHB 1014 Page 4 of 4 14. Key Personnel The personnel listed below are considered essential to the work being performed under this contract. Before removing, replacing, or diverting any of the listed personnel, MDA shall notify SPACEHAB, Inc. in advance, and shall provide rationale including identification and qualifications of candidate replacement, and shall not remove, replace or divert such personnel without SHI's written consent, which shall not be unreasonably withheld. In such event, the list of personnel shall then be amended accordingly. Key Personnel Title/Position J. H. James Director, SPACEHAB Program R. H. Keen SPACEHAB Chief Mission Manager D. A. Biggs Senior Manager, SPACEHAB Integration & Operations E. L. Streams Senior Manage, SPACEHAB Product Engineering W. H. Turner Senior Manager, SPACEHAB Ground Operations SPACEHAB, Inc. McDonnell Douglas Aerospace Huntsville By /s/ Nelda Wilbanks By /s/ Doyle McBride ---------------------------------- --------------------------------- Typed Name Nelda Wilbanks Typed Name Doyle McBride -------------------------- ------------------------- Title Contracts Administrator Title Contract Administrator ------------------------------- ------------------------------ Date Date -------------------------------- ------------------------------- EX-10.48 4 DAIMLER-BENZ AGREEMENT. 1 EXHIBIT 10.48 LETTER AGREEMENT To: Daimler-Benz Aerospace Address: P.O. Box 286156 D-28361 Bremen Germany Attn: Josef Kind President, Space Infrastructure Division Dear Mr. Kind: 1. Pursuant to this letter agreement ("Letter Agreement") SPACEHAB, Inc. ("SPACEHAB"), agrees to contract with Daimler-Benz Aerospace (hereinafter referred to as "DASA" or "Seller"), to refine the SPACEHAB conceptual design for a flight qualified Initial Integrated Cargo Carrier ("IICC") and associated test and support equipment in accordance with the Statement of Work ("SOW") attached hereto as Exhibit A and incorporated herein by this reference. 2. This Letter Agreement is for all activities required to complete a Preliminary Design Review ("PDR") for the IICC, as well as for long lead material orders or schedule protection activities that must be accomplished prior to PDR in order to complete the full IICC program on a schedule to support delivery of the IICC flight hardware to SPACEHAB in June of 1999. Any material procurements and efforts for schedule protection activities for the aforementioned long lead items shall be funded as a change to this Letter Agreement. The parties expect that a successor contract for the delivery of flight qualified IICC hardware, incorporating and superseding this Letter Agreement, will be negotiated and executed between the parties no later than 31 December 1997 ("Production Contract"). The parties agree to promptly begin good faith negotiation of the terms of the Production Contract. If the parties are unable to agree on terms for a production contract, and SPACEHAB contracts with a third party for production, then SPACEHAB agrees to reimburse DASA $120,000 (One Hundred Twenty Thousand U.S. Dollars) over and above the payments as per Section 4 below, for DASA's in-kind contribution to the PDR. 3. The IICC hardware includes one major element, the Unpressurized Cargo Pallet ("UCP"), which will be integrated into the IICC under the Production Contract. SPACEHAB has separately contracted with RSC-Energia to perform preliminary design of the UCP and associated test and support equipment through completion of a PDR for the UCP. DASA is expected to work directly and informally with SPACEHAB and Energia engineers as 2 required for integration of the UCP PDR into the IICC system PDR. SPACEHAB shall control and be responsible for all Interface Control Documents between DASA and Energia. Deliverables under this Letter Agreement shall be made to SPACEHAB. 4. The fixed price to be paid to DASA for the products and services under this Letter Agreement is $150,000 (One Hundred Fifty Thousand U.S. Dollars). This amount is to be paid in three payments. First payment (30% of fixed price) to be paid upon execution of this Letter Agreement. Second payment (40% of fixed price) to be paid upon acceptance by SPACEHAB of the design trade study (deliverable item # 4 of Section 4.1 of Exhibit A) due (60) sixty days after execution of this Letter Agreement. The final 30% payment shall be made at successful completion of the PDR (defined as closing out of all PDR review items and actions) fifteen (15) days after the PDR milestone. All payments shall be made by wire transfer to the account set forth in Exhibit B attached hereto and shall be completed within 30 days of written ratification of completion of the associated payment milestone by the SPACEHAB ICC Program Manager. 5. Reimbursement for Travel Expenses: The fixed price in section 4 above is for provision of the products and services associated with the attached SOW, with the sole exception of travel costs in support of program reviews, technical interchange meetings and other travel activities approved in advance by SPACEHAB. SPACEHAB shall reimburse DASA for actual pre-approved airline expenses, and on a per diem basis for hotel, meals, and other expenses. The per diem allowance shall be at the rate of $180 per day in Houston and Florida, and $430 per day in the Moscow area. Expenses for travel to any other locations shall require the approval of SPACEHAB and will be reimbursed on an actual cost basis. 6. Period of performance: From date of execution of this Letter Agreement through 31 December 1997. 7. Technical Direction: Seller shall accept technical direction from one of the following SPACEHAB individuals only: Prime Contact - Pete Gadsby, ICC Program Manager Alternate Contact - Clark Thompson, Director, Product Development 8. Provisions for Execution: Seller and SPACEHAB shall execute two (2) copies of this Letter Agreement in English (one original for each party). 9. Intellectual Property Rights: All Intellectual Property utilized in the performance of this Letter Agreement shall remain the exclusive property of the party(s) who developed, or had the rights in, the IP prior to this Letter Agreement. Rights to intellectual property jointly developed under the terms of this Letter Agreement will be negotiated between SPACEHAB and DASA as the situation arises. 2 3 10. Confidentiality: Per the Nondisclosure Agreement between the parties dated September 9, 1996. 11. All provisions herein and performance hereunder shall be governed by the laws of the Commonwealth of Virginia. 12. Any and all disputes hereunder shall be resolved by arbitration in the Washington, D.C. metropolitan area pursuant to the arbitration rules of the International Chamber of Commerce. SPACEHAB, INC. DASA By: /s/ Nelda Wilbanks By: ------------------------------------- ----------------------------- Typed Name: Nelda Wilbanks Typed Name: ---------------------------- --------------------- Title: Contracts Administrator Title: ---------------------------------- -------------------------- Date: Date: ----------------------------------- ---------------------------- 3 4 EXHIBIT B - WIRE TRANSFER INSTRUCTIONS Account of Daimler-Benz Aerospace - RI Account No. 1435264741 At Bremer Laudesbank BLZ 290 500 00 4 EX-10.49 5 MCDONNELL DOUGLAS COST PLUS FEE CONTRACT. 1 EXHIBIT 10.49 Supplemental Agreement 08 July 31, 1997 COST PLUS INCENTIVE FEE CONTRACT NUMBER SHB 1013 JULY 31, 1997 FOR SPACEHAB SCIENCE DOUBLE MODULE CONSTRUCTION BETWEEN MCDONNELL DOUGLAS CORPORATION, MCDONNELL DOUGLAS AEROSPACE HUNTSVILLE DIVISION 689 DISCOVERY DRIVE HUNTSVILLE, ALABAMA 35806 AND SPACEHAB, INCORPORATED 1595 SPRING HILL ROAD SUITE 360 VIENNA, VIRGINIA 22182 2 TABLE OF CONTENTS Article 1 - Entire Agreement........................................................................ 1 Article 2 - Definitions............................................................................. 1 Article 3 - Scope of Work........................................................................... 1 Article 4 - Period of Performance................................................................... 1 Article 5 - Contract Amount......................................................................... 1 Article 6 - Payment................................................................................. 2 Article 7 - Limitation of Funds..................................................................... 3 Article 8 - Supplies/Services and Delivery Schedule................................................. 3 Article 9 - Title and Delivery...................................................................... 3 Article 10 - Packaging and Marking................................................................... 3 Article 11 - Inspection and Acceptance............................................................... 4 Article 12 - Place of Performance.................................................................... 4 Article 13 - Items, Equipment, Property, Services to be Furnished by SPACEHAB, Inc. And/or the Government on a "No Charge" Basis............................................ 4 Article 14 - Exchange of Technical Information....................................................... 4 Article 15 - Excusable Delays........................................................................ 5 Article 16 - Changes................................................................................. 5 Article 17 - Amendments.............................................................................. 7 Article 18 - Stop Work Orders........................................................................ 6 Article 19 - Notices................................................................................. 6 Article 20 - Key Personnel........................................................................... 7 Article 21 - Termination............................................................................. 8 Article 22 - Governing Law........................................................................... 8 Article 23 - Arbitration/Disputes.................................................................... 8 Article 24 - Audit................................................................................... 8 Article 25 - Indemnity Against Patent Infringement................................................... 9 Article 26 - Limitation of Liability................................................................. 9 Article 27 - Insurance and Indemnification........................................................... 9 Article 28 - MDC Employee Injury..................................................................... 10 Article 29 - Warranty................................................................................ 10 Article 30 - Relationship of Parties................................................................. 10 Article 31 - Manned Space Flight Item................................................................ 10
i 3 Article 32 - Order of Precedence..................................................................... 11 Article 33 - Technical Data.......................................................................... 11 Article 34 - Patent Rights.......................................................................... 11
ii 4 THIS CONTRACT, by and between SPACEHAB, Inc. with an address at 1595 Spring Hill Road, Suite 360, Vienna, Virginia 22182 (hereinafter referred to as "SPACEHAB, Inc." or "SHI") and McDonnell Douglas Corporation, acting through its McDonnell Douglas Aerospace-Huntsville Division, with an address at 689 Discovery Drive, Huntsville, Alabama 35806, (hereinafter referred to as "MDC"). McDonnell Douglas Aerospace - Huntsville Division represents and warrants that it is acting on behalf of McDonnell Douglas Corporation and that it has the corporate power and authority to legally add McDonnell Douglas corporation to the terms and conditions of this Contract. The parties hereby agree as follows: Article 1 - Entire Agreement This Contract, all exhibits and other documents incorporated herein by reference, whether or not attached hereto, constitute the complete and exclusive statement of the Contract between the parties hereto. This Contract supersedes any previous understanding or agreement between SHI and MDC (oral or written) with respect to the subject matter hereof. Further, this Contract constitutes a definitization of Letter Contract SHB 1013 dated 24 July 1996 including modifications thereto through Change Order No. 06 dated 31 May 1997 between SHI and MDC. Article 2 - Definitions A. The term "MDC" shall include McDonnell Douglas Aerospace - Huntsville Division. B. The terms "General Agreement," "Basic Agreement," "Basic Terms and Conditions," "Agreement" and "Contract" shall mean this Contract and shall be deemed to include all exhibits, specifications, drawings, or other documents incorporated herein by reference. Article 3 - Scope of Work MDC is the prime Contractor responsible for performance of all work set forth in this Contracts, including work to be performed by any subcontractor. MDC shall provide design, manufacture, test and system integration services to develop SPACEHAB Science Double Module configuration in accordance with requirements identified in MDC Contract End Item (CEI) specifications ECO9000 and ECO8999 and Statement of Work (SOW) defined in document MDC 97W5614 dated July 1997, herein referenced and incorporated in their entirety. Article 4 - Period of Performance MDC shall perform the work called for under this Contract in accordance with the agreed to Statement of Work as specified in Article 3 herein, including preparation and submission of all reports, during the period of performance beginning 24 July 1996 and continuing through 15 November 1999, and as may be extended by mutual agreement. Article 5 - Contract Amount A. General. This is a Cost Plus Incentive Fee Contract. The following estimated target cost and target incentive fee is established for the effort required by the Contract for services as specified in Statement of Work defined in Article 3 above. 1 5 Estimated Target Cost: $32,873,214 Estimated Target Incentive Fee: $ 3,944,786 Estimated Target Cost Plus Target Incentive Fee: $36,838,000
B. Target Cost and Target Incentive Fee. The Target Cost and Incentive Fee of 12% specified in paragraph A above are subject to adjustment if the Contract is modified in accordance with Article 5.C.2 below. 1. "Target Cost," as used in this Contract, shall mean the cost of this Contract as initially negotiated and as modified in accordance with the Changes Clause of this Contract. 2. "Target Incentive Fee" as used in this Contract, shall mean the fee that is subject to the Incentive formula, as described in Article 5.C.1 below. C. Fees payable. 1. The Total Target Incentive Fee shall be payable under this Contract in accordance with Article 6 below and shall be increased by 30 cents for every dollar that the actual cost incurred (exclusive of fees) is less than the Target Cost, or decreased by 30 cents for every dollar that the actual cost exceeds Target Cost. In no event shall the Total Target Incentive Fee, as modified, be more than 15% or be less than 8% of the Total Target Cost. 2. Equitable Adjustment. When the work under this Contract is increased or decreased by a modification to this Contract, then the Target Cost and Incentive Fee shall be modified as appropriate in a supplemental agreement to this Contract. D. Facilities Capital Cost of Money. Facilities capital cost of money shall be an allowable cost under this contract. E. Exclusion of Taxes. The parties agree that no sales or use tax, either Alabama or Florida has been included in the target cost. Sales or use tax, if any, shall be subject to the Changes Clause of this Contract. Article 6 - Payment A. MDC shall submit invoices monthly for the payment of actual costs incurred plus the Target Incentive Fee of 12%. Such invoices shall be submitted to SHI at: SPACEHAB, Inc. 1595 Spring Hill Road Suite 360 Vienna, VA 22182 Payment will be made by or on behalf of SPACEHAB, Inc. to: McDonnell Douglas Corporation P. O. Box 516 St. Louis, Missouri 63166 Attention: Accounts Receivable 2 6 Such invoices shall be due and payable by SHI, 30 days after receipt of an invoice. If any such invoice remains unpaid 45 days after receipt of such invoice, MDC shall have the right to stop work under this Contract. If such invoice continues to remain unpaid 60 days after receipt of such invoice, MDC may at its option, consider SHI to have breached this Contract and may pursue remedies as provided by law. Article 7 - Limitation of Funds A. The sum of $ 16,400,000 is presently available for payment and is allotted to this contract covering the period of performance through August 31, 1997. It is anticipated that from time to time additional funds will be allotted in writing to this contract up to the total estimated contract price. When additional funds are allotted from time to time for continued performance of the work under this contract, the parties shall agree on the applicable period of performance which shall be covered by such funds. B. MDC agrees to use its best efforts to perform, or have performed, the work on this contract up to the point at which the total amount paid and payable by SHI under the contract approximates but does not exceed the amount specified in paragraph (A). Unless otherwise agreed in writing, SHI shall not be obligated to reimburse MDC for costs incurred in excess of the total amount allotted by SHI to this contract during the stated period of performance. C. Upon expenditure of 85% of allotted funds set forth in paragraph (A), MDC shall notify SHI in writing as to the estimated amount of additional funds required for the timely performance of the contract. Such notice shall specify any additional funds and period of performance required. D. If, after the notification called for in Paragraph (C) above, additional funds are not allotted to this contract, MDC may request that this contract be terminated, in accordance with the provisions of the Terminations Clause of this contract, and SHI shall comply. E. MDC is not obligated to continue performance under this contract (including actions under the Termination clause of this contract) or otherwise incur costs, which when added to the applicable fee would be in excess of the amount then allotted to the contract by SHI until SHI notifies MDC in writing that the amount allotted has been increased. Article 8 - Supplies/Services and Delivery Schedule A. The scope of work to be performed under this Contract shall include, the provision of all labor, materials, services, and equipment necessary to perform the work as set forth in MDC SOW MDC 97W5614 dated July 1997. Hardware Deliverables along with scheduled delivery dates are specified in SOW MDC 97W5614. B. MDC shall submit on a monthly basis to SHI a compliance report mutually agreeable to MDC and SHI which documents MDC's expenditures pertaining to this contract. Article 9 - Title and Delivery The point of delivery for any hardware required shall be Cape Canaveral, Florida USA. The point of delivery for any data required shall be SPACEHAB, Inc., Vienna, VA. Title to the deliverable hardware shall pass to SHI upon successful completion of final inspection and acceptance as provided in Article 11. Article 10 - Packaging and Marking Packaging and marking for shipment of all items ordered hereunder shall be in accordance with good commercial practice, and adequate to ensure both acceptance by common carrier and safe transportation at the most economical rate(s). 3 7 Article 11 - Inspection and Acceptance The place of final inspection and acceptance for the services and deliverable hardware called for under this Contract shall be SHI's facility at Cape Canaveral, Florida, or other designated place(s) or performance. The place of inspection and acceptance of all deliverable reports and documentation shall be at SHI, Vienna, VA with copy to SHI Houston, Texas and SHI Cape Canaveral, FL as specified by SHI. Article 12 - Place of Performance MDC shall perform the work under this contract at its facility located in Huntsville, Alabama, at SHI's facility located at Cape Canaveral, Florida, and at any other locations as may be required. Article 13 - Items, Equipment, Property, Services to be Furnished by SPACEHAB, Inc. and/or the Government on a "No Charge" Basis A. SHI and/or the Government shall furnish to MDC, for use in connection with and under the terms of this contract on a "no-charge" basis, the following SHI and/or Government owned equipment, property, items, services, etc. which are suitable for the intended use: 1. SPACEHAB Payload Processing Facility (SPPF) 24 July 1996 - 15 November 1999 2. Items/equipment as specified in Section 4 of the In accordance with SOW identified SOW identified in Article 3 above. in Article 3 above.
B. Out of tolerance conditions, inadequacies, and delivery delays in SHI and/or Government supplied items identified herein will be the basis for a MDC Contract Change proposal and subsequent Contract amendment reflecting the cost, fee, schedule, and technical impact of defective or late delivery of SHI and/or Government supplied items. C. MDC is authorized to commingle all material without physical segregation or identification to the individual SHI contracts. Article 14 - Exchange of Technical Information During the term of this Contract, SHI and MDC, to the extent of their right to do so, agree to exchange all such technical and management information as may reasonably be required for each to perform its obligations hereunder. To the extent that proprietary information of either party is disclosed, such information or data which is (i) submitted in writing, must be designated by an appropriate stamp, marking or legend thereon to be of proprietary or confidential nature, or (ii) orally submitted, must be identified as proprietary or confidential prior to disclosure and the disclosing party notifies the receiving party, in writing, specifically identifying any such proprietary or confidential information so orally submitted within thirty days after such oral submission. Notwithstanding termination or expiration of this Contract, each party will keep in confidence and prevent the disclosure of all such proprietary information and data, whether technical or commercial, to any third party. Neither party shall be liable for disclosure of any such proprietary information or data, if such information: A. Was in the public domain at the time it was disclosed, or later becomes part of the public domain other than throughout the action of the party receiving it; or B. Was known to the party receiving it at the time of disclosure; or 4 8 C. Is disclosed with the prior written approval of the other party; or D. Is disclosed by the party providing the same, to others, on a non-restricted basis; or E. Is disclosed inadvertently despite the exercise of the same degree of care that the receiving party takes to preserve or safeguard its own proprietary information; or F. Becomes known to the receiving party from a source other than the disclosing party without breach of this Section by the receiving party; or G. Is disclosed one (1) year after expiration or termination of this Contract; or H. Is disclosed to a government agency for certification or export license purposes, taking all reasonable precautions to prevent further disclosure by such agency. Article 15 - Excusable Delays Except for default of subcontractors at any tier, MDC shall not be in default because of any failure to perform this Contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of MDC. Examples of these causes include but are not limited to are (1) acts of God or of the public enemy, (2) acts of Government in either its sovereign or contractual capacity, (3) files, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of MDC. "Default" includes failure to make progress in the work so as to endanger performance. MDC shall not be in default, if the failure to perform is caused by the failure of a subcontractor at any tier to perform or make progress, and if the cause of the failure was beyond the control of both MDC and subcontractor, and without fault or negligence of either, unless (1) MDC knew of other sources to obtain the subcontracted supplies or services form to meet schedule; (2) SHI ordered MDC in writing to purchase these supplies or services from the other source; and (3) MDC failed to comply reasonably with this order. If SHI determined that any failure to perform results from one or more of the causes above, the delivery schedule shall be revised, subject to the rights of SHI under the Termination Clause of this Contract. Article 16 - Changes A. SHI may at any time, by written order, and with such concurrence to not be unreasonably withheld form MDC, make changes within the general scope of this Contract in any one or more of the following: (1) Drawings, designs, or specifications. (2) Method of shipment or packing of supplies. (3) Place of delivery. (4) Types and amounts of SHI and/or Government-Furnished Property to be provided. B. If any such change causes an increase or decrease in the estimated cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, SHI shall make an equitable 5 9 adjustment in the (1) estimated cost, delivery or completion schedule, or both; (2) amount of fee; and (3) other affected terms and shall modify the contract accordingly. C. MDC shall assert its right to an adjustment under this clause within 60 days from the date of receipt of the written order. However, if SHI decides that the facts justify it, SHI may receive and act upon a proposal submitted before final payment of the contract. D. Failure to agree to any adjustment shall be a dispute under the Disputes Clause. However, nothing in this clause shall excuse MDC from proceeding with the contract as changes. E. Notwithstanding the terms and conditions of paragraphs (a) and (b) above, the estimated cost of this contract and, if this contract is incrementally funded, the funds allotted for the performance of this contract, shall not be increased or considered to be increased except by specific written modification of the contract indicating the new contract estimated cost and, if this contract is incrementally funded, the new amount allotted to the contract. Until this modification is made, MDC shall not be obligated to continue performance or incur costs beyond the point established in the Limitation of Cost or Limitation of Funds Clause of this Contract. Article 17 - Amendments Neither this Contract, nor any term or condition thereof, shall be amended or changed in any manner except by an instrument in writing hereto, executed by both parties acting through their duly authorized representatives. Article 18 - Stop Work Orders SHI may, at any time, by written order to MDC, require MDC to stop all, or any part, of the work called for by this contract for a period of up to 90 days after the order is delivered to MDC, and for any further period to which the parties may agree. The order shall be specifically identified as a stop-work order issued under this clause. Upon receipt of the order, MDC shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Article 19 - Notices A. Except as herein specifically provided otherwise, all notices, reports, and other communications hereunder shall be given in writing either by personal delivery, by first class mail, or by electronic transmission, addressed to the respective parties as specified herein below. B. The date upon which any such communication is personally delivered or, if such communication is transmitted by mail or by electronic transmission, the date upon which it is received by the addressee, shall be deemed to be the effective date of such communication. C. Each party shall promptly advise the other in the event of any change in their respective addresses. D. The SHI personnel authorized to issue written orders, in accordance with the Changes Clause, are M.E. Grayson, W.S.Dawson, or Nelda Wilbanks. The SHI personnel authorized to give technical direction are J. M. Lounge, SDM Program Manager and Clark Thompson, Director, Product Development. 6 10 E. The addresses of SHI and MDC, for the purpose of Paragraph A above, are as follows: FOR COMMUNICATION TO SPACEHAB, INC. SPACEHAB, Inc. 1595 Spring Hill Road, Suite 360 Vienna, VA 22182 Attention: Nelda Wilbanks with copies to J.M. Lounge. When transmitted by mail: Same as above When transmitted by electronic transmission: Fax Number: (703) 821-3070 FOR COMMUNICATION TO MDC McDonnell Douglas Aerospace - Huntsville, AL 689 Discovery Drive Huntsville, AL 35806 Attention: Contract Administrator with copy to SPACEHAB Program Manager When transmitted by mail: Same as above When transmitted by electronic transmission: Fax Number: (205) 922-7600 Article 20 - Key Personnel The personnel listed below are considered essential to the work being performed under this contract. Before removing, replacing, or diverting any of the listed personnel, MDA shall notify SHI in advance, and shall provide rationale including identification and qualifications of candidate replacement, and shall not remove, replace or divert such personnel without SHI's written consent, which shall not be unreasonably withheld. In such event, the list of personnel shall then be amended accordingly. Key Personnel Title/Position - ------------- -------------- J. H. James Director, SPACEHAB Program E. L. Streams Senior Manager, SPACEHAB Product Engineering J. N. Fowler Manager, SPACEHAB SDM Mechanical Hardware Development T. C. Tripp Manager, SPACEHAB SDM Environmental Control & Avionics Hardware Development W. H. Turner Senior Manager, SPACEHAB Ground Operations Article 21 - Termination A. SHI may terminate this Contract at any time by written notice, in whole or in part, if SPACEHAB, in its sole discretion, determines that a termination is in its own best interest. SHI shall terminate by delivering to the Contractor a Notice of Termination specifying the extent of termination and the effective date. 7 11 B. In the event of a termination, SHI will reimburse MDC for all costs incurred, including applicable fee and termination costs. For purposes of the Termination Clause, incurred costs includes all outstanding commitments not yet paid and for delivery of all hardware, software and services, whether complete or incomplete, identified herein, to SHI. Termination costs are those actual and reasonable costs incurred in terminating the Contract including usual and customary severance pay and other labor costs in the ordinary course of business or as otherwise required by law, storage and protection costs, and costs of settlement and termination of subcontracts. C. SHI may terminate this contract if MDC fails to deliver the goods or perform the services required by this contract within the time specified and any extension thereto granted by SHI. Article 22 - Governing Law This agreement shall be governed by and interpreted in accordance with the law of the State of Delaware. Article 23 - Arbitration/Disputes Disputes arising out of the interpretation or execution of this contract which cannot be resolved by negotiation shall, at the request of either Party, (after giving 30 days notice to the other Party) be submitted to arbitration. The arbitration tribunal shall sit in Huntsville, AL. Disputes shall be finally settled in accordance with the Rules of Conciliation and Arbitration of the American Arbitration Association by one or more arbitrators designated in conformity with those Rules. The decision to submit a dispute shall not excuse either party from the timely performance of its obligations hereunder which are not the subject matter of the dispute. Further, if the lack of resolution of the matter in dispute will adversely impact the timely completion of preparation for launch activities, MDC and SHI will perform the matter in dispute in the manner determined by SHI, within the framework of this Contract and without prejudice to the final resolution of the matter in dispute. Article 24 - Audit A. MDC will maintain accurate records of labor hours expended, subcontract billings and travel costs incurred by Cost Charge Number. Such records shall be made available for inspection by an independent certified public account retained by SHI during normal business hours for a period of three (3) years after completion of this Contract. B. MDC's books, records, documents and other supporting data shall be made available to an independent certified public accountant retained by SHI for inspection and audit as reasonably required in conjunction with the negotiation of any changes hereunder, including termination claims. C. In case of any dispute, the parties agree to continue Contract performance pending resolution. Article 25 - Indemnity Against Patent Infringement A. MDC shall indemnify SHI against any liabilities or losses which SHI may be required to pay in the case of any actual or alleged infringement of any United States patent or any negotiation or litigation based thereon, with respect to any products purchased pursuant to the terms of this Contract unless such products are made to a specific and detail design furnished by SHI which is not a modification of a MDC design. Such liabilities or losses (i) include: (a) counsel fees, (b) cost of replacing any infringing product with a suitable non-infringing substitute or of otherwise 8 12 curing any infringement, but (ii) do not include any losses by SHI due to loss of use, at any time, of equipment or component utilizing any of said products which are the subject of any actual or alleged infringement. B. With respect to any such actual or alleged patent infringement for which MDC is obligated to indemnify SHI: (i) MDC shall, as soon as practicable, report to SHI promptly an din reasonable written detail, each notice of claim against MDC of patent infringement; and (ii) SHI will notify MDC as soon as practicable after receipt by SHI of appropriate notice of any charge of infringement or commencement of any suit or action for infringement against SHI in either case, MDC shall have the option to (a) conduct negotiations with the party or parties charging infringement or (b) assume, conduct and control the defense of any suit or action of infringement against MDC or SHI. In the event MDC does not pursue either option, then SHI shall have the option to conduct such negotiations and defense without expense or liability to SHI as provided under Paragraph A above. Article 26 - Limitation of Liability In no event, shall MDC be liable under any legal or equitable theory (including but not limited to contract, tort, negligence, or strict liability) for any incidental or consequential damages, including but not limited to damages for lost profits, lost sales, or loss of use of property. Article 27 - Insurance and Indemnification Upon delivery and final acceptance by SHI of a SPACEHAB module, SHI shall indemnify and save harmless MDC, its subcontractors and any officers, directors, employees, and agents of any of them form any liability and expense on account of loss of damage to the property of third parties (including the US Government) or bodily injury to any persons, including death, caused by or resulting from the use of the goods furnished hereunder and/or arising from the provision of services under this Contract excepting only such loss, damage, or injury caused by the indemnities willful misconduct, and SHI shall defend any suits or other proceedings brought against MDC and its subcontractors and the officers, directors, employees, and agents of any of them on account thereof an shall pay all expenses and satisfy all judgments which may be incurred or rendered against them or any of them in connection therewith. MDC shall give SHI prompt written notice of any claim of such loss, damage, or injury and shall cooperate with SHI and its insurers in every reasonable way in defending against such claim. SHI shall obtain insurance, naming MDC as an additional named insured, against such liabilities to third parties as are referred to in this paragraph. MDC shall indemnify SHI against any liability, loss, claim, and/or proceeding in respect of personal injury to and/or death of any person, or loss or damage to property, arising out of the performance of the Contract; but only if the same is due to the negligent acts or omission of MDC, its employees or agents; or any subcontractor, its employees or agents. Article 28 - MDC Employee Injury MDC shall indemnify and hold harmless SHI, its officers, agents, and employees from any liability, loss or damage they may suffer as a result of death or injury to any MDC employees connected with or related to the performance of Contract work SHI's premises, and which results from the negligence of MDC, its officers, agents, or employees. 9 13 Article 29 - Warranty A. MDC hereby warrants to SHI that all deliverables furnished under this contract shall be free from defects in workmanship for a period of one (1) year form the date of their acceptance. The cost of and associated fees for remedies of any defects shall be paid pursuant to the payment provisions of this contract. SHI shall notify MDC in writing, via fax or any equivalent means within 48 hours of any defects found after acceptance of the products. MDC's liability under this clause shall not extend: 1. to defects arising form the misuse of the items after acceptance. 2. to defects in materials, assemblies or other supplies issued by SHI for incorporation therein, provided always that MDC shall have properly exercised its duties as custodian of such issues and shall have incorporated them in accordance with the requirements of the contract. B. MDC's warranty shall not extend to compensation for damage resulting from the use of articles covered by the contract after acceptance. Consequently, SHI and/or SHI customers shall have no claim against MDC for damage suffered by it. C. Where defects in items are remedied by repair under this warranty, the repaired item shall be warranted for the remainder of the unexpired warranty. Where defective items are replace by new ones the full guarantee period stipulated in the Contract shall apply to such replacement items form the date of their acceptance. D. EXCEPT AS PROVIDED IN THIS ARTICLE, MDC MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Article 30 - Relationship of Parties This Contract is not intended by the parties to constitute or create a joint venture, partnership or formal business organization of any kind. The rights and obligations of the parties shall be only those expressly set forth herein. The relationship established by this Contract is exclusively that of seller and buyer. Article 31 - Manned Space Flight Item MDC shall include the following statement in all subcontracts and purchase orders placed by it in support of this Contract, without exception as to amount or subcontractual level: For use in manned space flight; materials, manufacturing, and workmanship of highest quality standards are essential to astronaut safety. If you are able to supply the desired item with a higher quality than that of the items specified or proposed, you are requested to bring this fact to the immediate attention of the purchaser. Article 32 - Order of Precedence In the event of any conflict between Contract, Statement of Work MDC 97W5614 and the Contract End Item Specifications, the order of precedence is as follows: (1) Contract, (2) Statement of Work MDC 97W5614, and (3) Contract End Item Specifications. 10 14 Article 33 - Technical Data All technical data produced, of whatever type or kind, under this Contract shall be the "joint" property of SHI and MDC, and SHI and MDC shall each have a "royalty-free" right or license to use such data for any purpose including performance under this Contract. Article 34 - Patent Rights All discovery, inventions and know-how of whatever type or kind first made and/or reduced to practice in connection with or related to the performance of this Contract are the "joint" property of SHI and MDC, and SHI and MDC (and any of the parties' present or future employees, agents, consultants or subcontractors at any time, if applicable) shall each have a royalty-free right or license therein. IN WITNESS WHEREOF, the parties have caused their duly authorized representative to execute this Contract in triplicate. MCDONNELL DOUGLAS CORPORATION SPACEHAB, INC. MCDONNELL DOUGLAS AEROSPACE - HUNTSVILLE By: By: /s/ Nelda Wilbanks --------------------------- ----------------------------- Name: Name: Nelda Wilbanks ------------------------ --------------------------- Title: Title: Contracts Administrator ----------------------- -------------------------- Date: Date: 31 July 1997 ------------------------ --------------------------- 11 EX-10.50 6 AMENDMENT TO EQUITABLE LIFE LEASE AGREEMENT. 1 EXHIBIT 10.50 LEASE AGREEMENT between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES and SPACEHAB, INC. 2 DATA SHEET This Data Sheet is an integral part of this Lease and all of the terms hereof are incorporated into this Lease in all respects. In addition to the other provisions which are elsewhere in this Lease, the following, whenever used in this Lease, shall have the meanings set forth in this Data Sheet. (a) Premises Suite No. 360 in the Building, generally outlined on the floor plan attached hereto as Exhibit A (Section l(n)). (b) Area of Premises Approximately 7,757 rentable square feet on the third and New Premises (3rd) floor of the West Building (Exhibit A and Section l(n)), and, on Substantial Completion, an additional 1,955 rentable square feet also on the third (3rd) floor of the West Building. (c) Building The Concourse, located at 1593-95 Spring Hill Road, Vienna, Virginia (section l(e)). (d) Basic Rental for S20.50 per rentable square foot per year payable in Premises equal monthly installments of $13,251.54, subject to adjustment as herein provided (Sections l(b) and 3). (e) Annual Basic Rental $159,018.so (Section 3). For Premises (f) Annual Basic Rental Three percent (3%) of the escalated Basic Rental Escalation then in effect (Section 4). (g) Additional Rent See Section 41. (h) Lease Term Five (5) years and zero (O) months, commencing on the Commencement Date (Sections l(k) and 2). (i) Commencement Date See Section 1(f). (j) Building Operation Monday through Friday, 8:00 a.m. to 6:00 p.m. and Hours Saturday, 8:00 a.m. to 6:00 p.m. (k) Permitted Use Any general business office purposes and for no other purpose (Sections l(m) and 9). (l) Tenant's Proportionate 2.26% (See Section l(u)), to be adjusted to 2.83% on Share of Basic Cost Substantial Completion of the New Premises. & Real Estate Taxes (m) Tenant's Proportionate 27 spaces, calculated at 3.5 per 1000 rentable square Share of Parking feet (section 47), with Tenant receiving an additional 7 Spaces on Substantial Completion of the New Premises. (n) Brokers Involved Compass Management and Leasing, Inc. and The Carey Winston Company (o) Security Deposit See Section l(p) and 5. (p) Notices If to Landlords: The Equitable Life Assurance society of the United States c/o compass Management and Leasing, Inc. 1595 Spring Hill Road, Suite 110 Vienna, Virginia 22182 if to Tenants: At the Premises.
3 LEASE AGREEMENT THIS LEASE AGREEMENT is entered into the 30 day of November, 1995, between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (hereinafter called "Landlord"), whose address for purposes hereof is 1595 Spring Hill Road, Suite 110, Vienna, Virginia 22182 and SPACEHAB, INC., a corporation (hereinafter called "Tenant"), whose address for purposes hereof is the Premises. 1. DEFINITIONS. (a) "Basic Costs" The actual costs incurred by the Landlord in operating and maintaining the Building and the Land during each calendar year of the Lease Term for which Landlord has not been reimbursed by insurance proceeds, condemnation awards or otherwise. Such costs shall include, by way of example rather than of limitation, (i) real property, front-foot benefit, metropolitan and other similar taxes, including any taxes imposed on lessen or income generated thereon (exclusive of federal and state income and franchise taxes) or public or private assessments, general or special, ordinary or extraordinary, foreseen or unforeseen (other than Lease Taxes) levied against the Building or the Land, (ii) charges or fees for, and taxes on, the furnishing of electricity, water, sewer service, gas, fuel, or other utility services to the Building and the Land) (111) costs of providing elevator, Janitorial and trash removal service, restriping, resurfacing, maintaining and repairing all walkways, roadways and parking arena on the Land, security costs, and Cost of maintaining grounds, common areas and mechanical systems of the Building and the Land; (iv) all other costs of maintaining and repairing any or all of the Building or Land' (v) all costs reasonably allocated by Landlord to the common arena of the Building and the Land in a multi-Building development; (vi) charges or fees for any necessary governmental permits and licenses' (vii) management fees, overhead and expenses reasonably related to management of the Building (including salaries for personnel directly responsible for management of the Building)' (viii) premiums for hazard, liability, workmen's compensation or similar insurance upon any or all of the Building and the Land' (ix) costs arising under service contracts with independent contractors) and (x) the Cost of any other items which, under generally accepted accounting principles consistently applied from year to year with respect to the Building or the Land, constitute operating or maintenance costs attributable to any or all of the Building or the Land. Such costs shall not include (i) the expense of principal and interest payments made by the Landlord pursuant to the provisions of any mortgage or deed of trust covering the Building or the Land' (ii) any deduction for depreciation of the Building taken on the landlords income tax returns' (iii) salaries or other compensation of any personnel whose salaries are covered by a management fee (except that the Building Engineer salary shall be a Basic Cost and shall not be covered by the management fee)) (iv) ground rent payments and any other charges or payments arising under any ground lease, (v) legal foes for negotiating leases or enforcing the lease obligations of other tenants in the Building' (vi) any costs for capital items used for the common areas, except as otherwise provided in this Section; (vii) real estate brokerage fees and commissions, or (viii) the Cost of capital improvements made to the Building, other than capital improvements, modifications or equipment required by federal, state or local ordinance, rule, regulation or law or determined by Landlord in good faith to result in savings or reductions in Basic Cost generally, in which case the Cost thereof shall be included in Basic Cost for the calendar year in which the Cost shall have been incurred and in subsequent calendar years, on a straight line basis, such items will be amortized over an appropriate period, in accordance with Generally Accepted Accounting Principles, and with an appropriate reasonable interest factor selected in good faith by Landlord. If Landlord shall have leased any such items of capital equipment designed to result in savings or reductions in Basic Cost, then the rental and other costs paid pursuant to such leasing shall be included in Basic Cost for each calendar year in which they shall have been incurred. In determining Basic Cost, where less than 95% of the Building's rentable square footage is occupied during all or any part of a year, those items of the Basic Cost which vary according to occupancy, such as electricity and janitorial services, shall be increased to that amount which would have been incurred had the Building been 95% occupied during the entire year. (b) "Basic Rental": $20.50 per rentable square foot per year payable in equal monthly installments of $13,251.54, subject to adjustment as herein provided. (c) "Base Real Estate Taxes": The Real Estate Taxes for the Building and the Land, payable in the calendar year 1996. (d) "Base Year Stops" The Basic Cost incurred during the calendar year 1996 divided by the number of rentable square feet in the Building. 4 (e) "Building" The office building which has been constructed on land located at 1593-1595 Spring Hill Road, Vienna, Virginia, and known as the Concourse. (f) "Commencement Date" The earlier off (i) the date of Substantial Completion or (ii) the date the Tenant or any one claiming under or through the Tenant first occupies the Premises or any portion thereof. The Anticipated Commencement Date for the Premises is February 1, 1996, and for the New Premises is November 1, 1996. (g) "Event of Default": As defined in Section 20 of this Lease. (h) "Excess" Is defined in Section 8 of this Lease. (i) "Land": The entire tract of land on which the Building la located and upon which other buildings are located which have shared common facilities, and subject from time to time, to (1) increase through the acquisition of adjoining properties, and (ii) reduction through the sale or transfer by Landlord or the reservations of any such property from the development of which the Building is a part. The term Land shall also include any property that must be maintained by Landlord due to the existence of any public or private easement. (j) "landlord's Contractor" Is defined in Section 7(d) of this lease. (k) "Lease Term" The period commencing on the Commencement Date and continuing for five (5) years and zero (0) months thereafter' provided, however, if the term of this Lease commences on a date other than the first day of a calendar month, the Lease Term shall consist of, in addition to the number of years and months provided above, the remainder of the calendar month during which this Lease is deemed to have commenced. (l) "New Premises" 1,955 rentable square feet of apace adjoining the Premises, which Tenant will Lease from Landlord upon Substantial Completion of such space, all as more specifically outlined in Section 49 herein. (m) "Permitted Use" General business office purposes and for no other purpose, subject to the provisions of Section 9. (n) "Premises" Suite No. ***** in the Building, generally outlined on the floor plan attached hereto as exhibit A and containing of approximately 7,757 rentable square feet. The Premises shall be measured in accordance with the Washington, D.C. Association of Realtors Standard Method of Measurement for Office Buildings, and may be confirmed by Tenant's architect, at Tenant's expense. Upon Substantial Completion of the New Premises, the Premises shall be deemed to include the New Premises. (o) "Rules and Regulations" The Landlord's rules and regulations sent to Tenant in writing from time to time, as amended or substituted for from time to time, the current form of which is attached hereto as Exhibit C. (p) Security Deposits $53,006.16. (q) "Special Tenant Works Is defined in Section 7(d) of this lease. (r) "Standard Tenant Works Is defined in Section 7(d) of this lease. (s) "Substantial Completion": The date when the work to be performed by Landlord in the Premises, or New Premises as applicable, In accordance with this Lease shall have been substantially completed, notwithstanding that certain details of construction, mechanical adjustment or decoration remain to be performed, the noncompletion of which would not materially interfere with the Tenant's use of the Premises or the New Premises. For purposes of determining the date of Substantial Completion, in the event off (i) changes in the work to be completed by Landlord in readying the Premises or New Premises for Tenant's occupancy, which changes have been requested by Tenant after the approval by Landlord and Tenant of the Tenant Plane, (ii) delays, not caused by Landlord, in furnishing materials or procuring labor required by Tenant for installations or work in the Premises or New Premises which are not encompassed within Standard Tenant Work' (iii) any failure by Tenant, to furnish any required plan, information, approval or 5 consent (including, without limitation, the Tenant Plans) within the required period of time, or any failure to cooperate with Landlord in the preparation of the Tenant Plans, or (iv) the performance of any work or activity in the Premise or New Premises by Tenant or any of its employees, agents or contractors, the Premises or New Premises, as applicable, shall be deemed to be Substantially Complete as of the date the Premises or New Promises would otherwise have been Substantially Complete absent such delay. The decision of Landlord's architect shall be finally determinative of the date of Substantial Completion. (t) "Tenant Plans": As defined in Section 7(a) of this Lease. (u) "Tenant's Proportionate Share for Basic Costs 2.26~. Such percentage is equal to a fraction, the numerator of which equals the number of rentable square feet within the Premises and the denominator of which equals the total number of rentable square feet in the Building. Tenant's Proportionate Share for 8Islc Cost shall increase to 2.83% on Substantial Completion of the New Premises. (v) "Tenant's proportionate Share for Real Estate Taxes 2.62%. Such percentage is equal to a fraction, the numerator of which equals the number of rentable square feet within the Premises and the denominator of which equals the total number of rentable square feet in the Building. Tenant's Proportionate Share for Real Estate Taxes shall increase to 2.83% on Substantial Completion of the New Premises. 2. LEASE TERM (a) Landlord, in consideration of the rent to be paid and the other covenants and agreements to be performed by Tenant and upon the terms hereinafter stated, does hereby lease, demise and let unto Tenant the Premises, as defined herein and generally outlined on the floor plan attached hereto as exhibit A, commencing on the Commencement Date and ending, without the necessity of notice from either party to the other, such notice being expressly waived, on the last day of the Lease Term, unless sooner terminated as herein provided. (b) If the Landlord shall be unable to tender possession of the Premises on the Anticipated Commencement Date, the Landlord shall not be liable for any damage caused thereby, nor shall this Lease be void or voidable by Tenant, but in such event, unless the delay results (i) from failure of Tenant to provide plans or otherwise perform in accordance with the requirements of the Lease or (ii) from any delay in Landlord's ability to tender possession of the Premises caused by Tenant, no rental shall be payable by Tenant prior to actual tender to Tenant of possession of the Premises. (c) By occupying the Premises, Tenant shall be deemed to have accepted the same as suitable for the purpose herein intended and to have acknowledged that the Premises comply fully with Landlord's obligations, with the exception of any latent structural defects or "punch list. type items in the Tenant Plans which may not have been completed. Tenant agrees that its failure to deliver to Landlord such a written "punch list" within five (5) days of occupancy shall be conclusive proof that no such items exist. Within five (5) business days of delivery to Tenant by Landlord, Tenant agrees to execute and return to Landlord a letter prepared by Landlord confirming the Commencement Date, a copy of which la attached hereto as Exhibit B. certifying that Tenant has accepted delivery of the Premises and that the condition of the Premises complies with Landlord's obligations hereunder, subject to any "punch list" items in the Tenant plans which may not have been completed. 3. BASIC RENTAL. (a) Tenant promises and agrees to pay Landlord the Basic Rental (subject to adjustment as hereinafter provided) without demand, notice, deduction, recoupment, counterclaim or set-off, for each month of the entire Lease Term. The first monthly installment shall be due and payable upon execution of this Lease. The Basic Rental for each subsequent month shall be paid in advance beginning on the first day of the calendar month following the expiration of the first calendar month of the Lease Term and continuing thereafter on or before the first day of each succeeding calendar month during the term hereof, provided, however, that Basic Rental for the second calendar month shall be prorated based on one-three hundred sixtieth (1/360th) of the current annual Basic Rental for each day of the first partial month, if any, this Lease is in effect and shall be due and payable as aforesaid. 6 (b) In the event any installment of the Basic Rental, or any other sums which became owing by Tenant to Landlord under the provisions hereof, are not received within five (5) business days after the due date thereof (without in any way implying Landlord's consent to such late payment), Tenant shall pay, in addition to such installment of the Basic Rental or such other sums owed, and not as a penalty, additional rent in the form of a late payment charge equal to five percent (5%) of such monthly installment of the Basic Rental or such other sums owed for each month or part thereof such payment la overdue. Notwithstanding the foregoing, the foregoing late charges shall not apply to any sums which may have been advanced by Landlord to or for the benefit of Tenant pursuant to the provisions of this Lease, it being understood that such sums shall bear interest from the date of the advance until paid in full, which Tenant hereby agrees to pay to Landlord, at the rate of fourteen percent (14%) per annum or the highest rate permitted by law, whichever is less. 4. BASIC RENTAL ESCALATION. The Basic Rental shall be increased annually, effective on each anniversary of the first (1st) day of the first full month after the Commencement Date during the term hereof if the Commencement Date la on a day other than the first (let) day of the month, or on the anniversary of the Commencement Date if the Commencement Date la on the first (let) day of the month, by an amount equal to three percent (3%) of the escalated Basic Rental then in effect, payable as follows:
Year Annualized Rent Monthly Rent ---------------------------------------------------- 1 $159,018.50 $13,251.54 2 $163,798.05 $13,649.09 3 $168,702.73 $14,058.56 4 $173,763.81 $14,480.32 5 $178,976.72 $14,914.73
5. SECURITY DEPOSIT. The Security Deposit, which shall be paid upon execution of this Lease, shall be held by Landlord in a federally insured banking or investment institution, as security for the performance by Tenant of Tenant's covenants and obligations under the Lease. The Security Deposit shall accrue interest, for Tenant's benefit, at the passbook rate of interest paid by such institution from time to time during the term of the Lease. The Security Deposit shall not be considered an advance payment of rental or a measure of Landlord's damages in case of default by Tenant. Upon the occurrence of any event of Default by Tenant, and such Event of Default continues for fifteen (15) days after written notice from Landlord (which notice may be given simultaneously with any other notice to which Tenant is entitled under the Lease), Landlord may, from time to time in its sole discretion, without prejudice to any other remedy, use and apply the Security Deposit to the extent necessary to make good any arrearages of rent and any other damage, injury, expense or liability suffered by Landlord by such Event of Default. Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand as additional rent the amount so applied in order to restore Security Deposit to its original amount. If Tenant is not then in default hereunder, any remaining balance of the Security Deposit, together with any interest accrued thereon, shall be returned by Landlord to Tenant within a reasonable period of time after the termination of the Lease and (1) Tenant shall have surrendered the entire Premises to Landlord, (ii) Landlord shall have inspected the Premises after such vacation, and (ill) Tenant shall have complied with all of the terms, conditions and covenants in the Lease. If Landlord transfers its interest in the Premises during the Lease Term, Landlord may assign the Security Deposit to the transferee and thereafter shall have no further liability for the return of such Security Deposit. 6. LANDLORD'S OBLIGATIONS. (a) Subject to the limitations hereinafter set forth, Landlord agrees, while Tenant la occupying the Premises and provided an Event of Default by Tenant has not occurred, to furnish to Tenant' (1) facilities to provide water at those points of supply both within the Premises and those provided for general use of tenants of the Building; (ii) facilities to provide a supply of electrical current reasonably necessary for general business office use and occupancy of the Premises and electric lighting and a supply of electrical current to the common areas of the 8ullding' (iii) heating and refrigerated air conditioning in season, and (iv) elevator and janitorial service to the Premises, all such services to be provided in scope, quality and frequency to those services being customarily provided by landlords in comparable office Buildings in the surrounding area. Heating, ventilation and air conditioning requirements and standards under this Lease shall be subject, however, to such regulations as the Department of Energy or 7 other local, State or federal governmental agency, Board or commission shall adopt from time to time. In addition, Landlord agrees to maintain the public and common areas of the Building, such as lobbies, stairs, corridors and restrooms, in reasonably good order and condition' provided, however, that Tenant shall reimburse Landlord, upon demand, for all repairs and additional maintenance resulting from damages to such public or common arena caused by Tenant, or its employees, agents or invitees. Landlord reserves the right, exercisable without notice and without liability to Tenant for damage or injury to property, persons or business and without effecting an eviction, constructive or actual, or disturbance of Tenant's use or possession of the Premises, or giving rise to any claim by Tenant for setoff or abatement of rent, to decorate and to make repairs, alterations, additions, modifications, changes or improvements, whether structural or otherwise, in and about the Building, or any part thereof, and for such purposes to enter upon the Premises and, during the continuance of any such work, to temporarily close doors, entryways, public apace and corridors in the Building and to interrupt or temporarily suspend Building services and facilities. Landlord shall use reasonable efforts not to materially interfere with the operation of Tenant's business while decorating or making such repairs pursuant to this subsection. (b) If Landlord, to any extent, fails to make available any of the services to be provided by Landlord expressly set forth above or if any slowdown, stoppage or interruption of, or any change in the quantity, character or availability of, the services to be provided by Landlord expressly set forth above occurs, such failure or occurrence shall not render Landlord liable in any respect for damages to either person, property or business, nor be construed as an eviction of Tenant or work an abatement of rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof. Should any equipment or machinery furnished by Landlord break down or for any cause beyond Landlord's reasonable control cease to function properly, Landlord shall use reasonable diligence to repair same promptly, but Tenant shall have no claim for abatement of rent or damages on account of any interruptions in service occasioned thereby or resulting therefrom' provided, however, that if (1) any such services are not furnished to the Premises for ten (10) or more consecutive days after Landlord receives notice from Tenant, (11) the Premises are thereby rendered untenable, and (111) the Landlord la not diligently pursuing a cure of such interruption, then commencing with the eleventh (11th) day after Landlord receives such notice, the Basic Rental shall be abated until the Premises are again tenable. 7.IMPROVEMENT OF THE PREMISES. (a) Landlord and Tenant agree to comply with the following schedule in buildout of the Premises (i) Landlord has prepared, and Tenant has approved a Space Plan for the Premises dated November 1, 1995. Any modifications to the Space Plan made after such date shall be made at Tenant's expense and, if delay in occupancy occurs as a result of such modifications, Tenant shall be liable to Landlord for Basic Rental attributable to each day beyond the Anticipated Commencement Date that delivery of the Premises is delayed. (ii) Landlord shall prepare and deliver to Tenant detailed floor plan layouts, together with working drawings and written instructions sufficiently detailed to enable Landlord to let firm contracts (herein called "Tenant Planes) with respect to and reflecting the partitions and improvements in the Premises. Tenant shall fully and completely cooperate with Landlord in the preparation of the Tenant Plans, shall promptly respond to Landlord's requests for information and approvals within three (3) business days after Inquiry, and shall use it's best efforts to zealot Landlord to complete the Tenant Plans as soon as possible. Tenant agrees to deliver to Landlord, not later than three (3) business days after delivery of the Tenant Plans to Tenant, an original executed copy of the Tenant Plans approved by Tenant, provided, however, if Tenant, in good faith, reasonably objects to any aspect of the Tenant Plans submitted by Landlord, Tenant shall specify in detail any objection to such Tenant Plans as submitted to Tenant in a written notice to Landlord within such 3-day period. Landlord shall, if applicable, modify such Tenant Plans to address Tenant's written objections, and submit new Tenant Plans to Tenant for approvals. Notwithstanding the foregoing, the Tenant Plans shall remain subject to Landlord's review and 8 approval, which approval shall not be unreasonably withheld, and shall be deemed modified to take account of any changes reasonably required by Landlord. If Tenant fails to timely deliver the Tenant Plans as required herein or makes modifications to the Tenant Plans after the deadlines provided in this subsection, Tenant shall (1) pay to Landlord all reasonable expenses incurred by Landlord due to Tenant's modifications and/or delay in delivering the Tenant Plans' and (2) pay to Landlord as additional rent a per diem Basic Rental charge for each day beyond the Anticipated Commencement Date that occupancy is delayed due to Tenant's failure to timely comply with the requirements in this Section. (iii) Time is of the essence as to all dates provided in this subsection. (b) Any changes to any approved Tenant Plans desired by Tenant shall be submitted in writing and in detail to Landlord and shall be subject to Landlord's consent, which consent shall not be unreasonably withheld. (c) Landlord shall, in a good and workmanlike manner, diligently cause the Premises to be improved and completed in accordance with the Tenant Plans by "landlord 'e Contractor. (as hereinafter defined). Landlord reserves the right however, (1) to make substitutions of material of equivalent grade and quality when and if any specified material shall not be readily and reasonably available, and (11) to make changes necessitated by conditions met in the course of construction, provided that Tenant's approval of any substantial change shall first be obtained (which approval shall not be unreasonably withheld or delayed so long as there shall be general conformity with Tenant Plans). (d) In the completion and preparation of the Premises in accordance with the Tenant Plans, Landlord agrees to perform at its own expense those items of work eat forth on the schedules attached hereto as Exhibit D Building Standard Materials and Exhibit A - Tenant Space Plan (herein collectively referred to as Standard Tenant Work), to the extent required by Tenant Plans. All work requested by or as a result of actions of Tenant to be performed by Landlord in addition to or in substitution for Standard Tenant Work la hereinafter referred to as "Special Tenant Work." All Special Tenant Work shall be furnished, installed and performed by Landlord, utilizing a general contractor or construction manager (Landlord's Contractor.) selected by Landlord (which may be an affiliate of Landlord or a partner in Landlord or an affiliate of a partner in Landlord) for and on behalf of Tenant and at Tenant's sole expense, based on Landlord's out-of-pocket contract or purchase price for materials, labor and service, including, without limit, any reasonable contractor 'e fee for the contractors overhead and profit and charges for cutting, patching, cleaning up and removal of waste and debris, plus architect' and engineer' fees, plus the product obtained by multiplying all of the foregoing (as reduced by appropriate credits for substituted Standard Tenant Work) by fifteen percent (15%) for Landlord's expenses and profit in handling the substitution. (e) Tenant shall pay Landlord as additional rent for all Special Tenant Work from time to time during the progress of the work, within five (5) days after Landlord shall have given Tenant an invoice or invoices therefor, in amounts representing Landlord's Cost of such Special Tenant Work performed (including, for this purpose, material for Special Tenant Work purchased and delivered to the Building to the date of the invoice), lease the amounts paid by Tenant on account. 8. OPERATING EXPENSES. (a) During the term of this Lease, Tenant shall pay as additional rent an amount (per each square foot within the Premises) equal to the excess ("Excess") from time to time by which the per square foot Basic Cost (which shall be calculated by dividing the Basic Cost by the total rentable square feet in the Building) exceeds the Base Year stop. Landlord, at its option, may collect such additional rent for each calendar year in a lump sum, to be due and payable within thirty (30) days after Landlord furnishes to Tenant a statement of actual Basic Cost for the previous year, or, beginning with the first day of the thirteenth month following the Commencement Date, and on each January 1, thereafter, Landlord shall also have the option to make a good faith estimate of the Excess for each upcoming calendar year and may require the monthly payment of such additional rent equal to one-twelfth (1/12) of such estimate. (b) By May 1 of each calendar year during Tenant Ma occupancy and the calendar year following termination of this Lease, or as soon thereafter as practical, Landlord shall furnish to Tenant a statement of Landlord's actual Basic Cost for the previous year. If for any calendar year additional rent collected for the prior year as a result of Landlord's estimate of Basic Cost is (1) in excess of the additional rent actually due during such prior year, then Landlord shall either credit such overpayment towards Tenant's estimated share of operating expenses for the next year or refund to Tenant any overpayment, or (ii) less than 9 the additional rent actually due during such prior year, then Tenant shall pay to Landlord, on demand, any underpayment with respect to the prior year. (c) Each statement furnished by Landlord to Tenant shall be conclusive and binding upon Tenant unless, within sixty (60) days after receipt of such statement, Tenant delivers to Landlord a written notice specifying the particular details for which such statement is claimed to be incorrect. Pending the determination of such dispute, Tenant shall pay without delay the full amount of the additional rent payable by Tenant in accordance with each such statement that Tenant is disputing. Without limiting the preceding sentence, Tenant, or a certified public accountant acting as Tenant's agent, shall have the right, during Landlord's normal business hours and after reasonable notice, to inspect the books and records of Landlord applicable to the determination of any statement of any additional rent payable by Tenant for the purpose of verifying in good faith the information contained in such statement for a period of up to one year after the receipt of such statement by Tenant. In the event that Tenant's inspection discloses that Landlord's billings to Tenant for increased Operating Expenses exceeded by five percent (5%) the actual operating expenses attributable to Tenant, then Landlord shall refund the difference as noted in subsection (b) and will pay Tenant for the reasonable expense incurred for an independent third-party in performing such inspection, but in any event not more than 61,000.00. (d) Should Tenant require any additional work or service, including but not limited to heating, ventilation and sir conditioning ("HVAC") furnished outside Landlord's normal operating hours of 8:00 a.m. to 6:00 p.m., Monday through Friday, 8:00 a.m. to WOO p.m., Saturday, excluding holidays, Landlord may, upon reasonable advance notice by Tenant, furnish such additional services at a charge of $50.00 per hour, subject to upward adjustment due to increases in utilities and wage expenses, it being agreed that the Cost to the Landlord of such additional services shall not be considered or treated as Basic Cost. (e) Landlord may, at any time in its sole discretion, require separate metering for gas, electric power or for any other utility service required by Tenant if such service la deemed by Landlord to be in exceed of Building standard usage or for any other reason, in which case the Cost of such metering shall be at Tenant's sole cost and expense, due and payable upon demand by Landlord, and in which event Tenant shall pay for all such utility service in excess of its normal and customary usage, as metered. For any utility services that are separately metered as prescribed herein, the amount of amid services which had been included in the calculation of the Base Year Stop or the calculation of Basic Cost shall be excluded therefrom. (f) Notwithstanding any expiration or termination of this Lease prior to the end of the Lease Term, Tenant's obligations to pay any and all additional rent pursuant to this Lease shall continue and shall cover all periods up to the expiration or termination date of this Lease. Tenant's obligation to pay any and all additional rent or other sums owing by Tenant to Landlord under this Lease shall survive any expiration or termination of this Lease. 9. USE. Tenant shall use the Premises only for the Permitted Use. Tenant will not occupy or use the Premises, or permit any portion of the Premises to be occupied or used, for any business or purpose other than the Permitted Use or for any use or purpose which is unlawful, in part or in whole, disreputable in any manner, or extra hazardous, nor will Tenant permit anything to be done which shall in any way cause substantial noise, vibrations or fumes, or increase the rate of insurance on the Building or contents or cause any cancellation of any insurance policy covering the Building or any portion of its contents. In the event that there shall be any increase in the rate of insurance on the Building or contents created by Tenant's acts, omissions or conduct of business, Tenant hereby agrees to pay to Landlord the amount of such increase on demand. Tenant will conduct its business and control its agents, employees and invitees in such a manner as not to create any nuisance, nor interfere with or disturb the privacy of other tenants or Landlord in the management of the Building. Tenant shall not, without the prior written consent of Landlord, paint, install lighting or decorations, which consent shall not be unreasonably withheld, or install any signs, window or door lettering or advertising media of any type on or about the Premises or any part thereof. 10. TENANT'S REPAIRS AND ALTERATIONS. Tenant shall not in any manner deface or injure or make unapproved modifications of the Premises or the Building and will pay the Cost of repairing any damage or injury done to the Premises or the Building or any 10 part thereof by Tenant or Tenant's agents, employees or invitees. Tenant shall throughout the Lease Term take good care of the Premises and keep them free from waste and nuisance of any kind. Tenant agrees, at Tenant's sole Cost and expense, to keep the Premises, including, without limitation, all fixtures installed by Tenant and any plate glass and special store fronts, in good condition and make all necessary non-structural repairs and replacements except those canard by fire, casualty, Landlord's willful misconduct or negligence, or acts of cod covered by Landlord's fire insurance policy covering the Building. Such repairs and replacements shall be in quality equal to the original work and installation. If Tenant fails to make such repairs within fifteen (15) days after the occurrence of the damage or injury, Landlord may, at its sole option, make such repair, and Tenant shall, upon demand therefor, pay Landlord for Landlords cost thereof plus fifteen percent (15%) for overhead costs. Notwithstanding anything in the Lease to the contrary, Tenant will not make or allow to be made any alterations or physical additions in or to the Premises, including changes in locks on doors, plumbing, lighting, wiring or partition, without the prior written consent of Landlord, such consent not to be unreasonably withheld or delayed, as long as the alterations or additions do not affect underlying life safety systems or common Building operating systems. All maintenance, repairs, alterations, additions or Improvements shall be conducted only by contractors or subcontractors approved in advance in writing by Landlord, it being understood that Tenant shall procure and maintain, and shall cause such contractors and subcontractors engaged by or on behalf of Tenant to procure and maintain, insurance coverage against such claims, in such amounts and with such companies as Landlord may require in connection with any such maintenance, repair, alteration, addition or improvement. At the end or other termination of this Lease, Tenant shall deliver up the Premises with all improvements located therein in good repair and condition, reasonable wear and tear, fire, casualty and damage caused by Landlord's willful misconduct or negligence excepted, and shall deliver to Landlord all keys to the Premises. All alterations, additions or improvements (whether temporary or permanent in character) made in or upon the Premises by Landlord or Tenant shall be Landlord's property upon termination of this Lease and shall remain on the Premises without compensation to Tenant, provided, however, that if Landlord elects to have Tenant remove any alteration, addition, improvement or partition, Landlord shall make such election upon giving consent to such alteration, addition, improvement or partition. Tenant shall then remove such alteration, addition, improvement or partition whether erected by Landlord or Tenant, and shall restore the Premises to its original condition by the date of termination of this Lease or upon earlier vacating of the Premises, except as provided herein. Landlord hereby elects to have any and all computer and/or telephone cables installed by Tenant or which may in the future be installed by Tenant, removed upon the termination of the Lease or upon Tenant's earlier vacating of the Premises. If Tenant falls to restore the Premises upon Landlord's request, Landlord shall have the right to perform such restoration and Tenant shall be liable for all Costs and expenses incurred by Landlord therefor. 11. ASSIGNMENT AND SUBLETTING. (a) Landlord's Prior Consent Required. Neither Tenant nor Tenant's representatives, successors and assigns nor any subtenant or Assignee will assign, transfer, mortgage or otherwise encumber this Lease or sublet or rent (or permit the occupancy or use of) the Premises, or any part thereof, without obtaining the prior written consent of Landlord. Landlord's consent to assign this Lease or sublet the Premises will not be unreasonably withheld, provided Tenant justified all applicable provisions of subsection (b) below, nor shall any Assignment or transfer of this Lease or the right of occupancy hereunder be effectuated by operation of law or otherwise without the prior written consent of Landlord. Any reasonable expenses incurred by Landlord with respect to the review and consent or denial of consent of the foregoing shall be paid by Tenant to Landlord as additional rent, and shall be due and payable with the monthly installment of rent when billed. (b) Qualification of Assignee or Subtenant. Subject to the provisions of Section 11(c) hereof, Landlord shall not unreasonably withhold its consent hereunder to any assignment or sublease by Tenant, provided that (x) in the event of a sublease Tenant shall satisfy each of the following conditions prior to any such sublease becoming effective) and (y) in the event of an Assignment, Tenant shall satisfy the conditions of subsections (i), (ii), (iv), (v) and (vi) prior to any such assignment becoming effective. (i) Tenant must first notify Landlord, in writing, of any proposed assignment or sublease, at least thirty (30) days prior to the 11 effective date of such proposed Assignment or sublease. The notice to Landlord must include a copy of the proposed assignment or subleasee and a copy of the proposed assignee's or subtenant's financial statement for its most recent fiscal year, prepared in accordance with generally accepted accounting principles and certified by a public accountant or an executive officer of the proposed assignee or subtenant. (ii) The assignee or subtenant moat have a credit rating which is better than or equal to that of Tenant, as reasonably determined by Landlord. (iii) The subleasee must (A) be expressly subject and subordinate to this Lease, (B) require that any subtenant comply with and abide by all of the terms of the Lease, and (c) provide that any termination of this Lease shall extinguish the sublease as well. (iv) The Assignee or subtenant may not propose to change the use of the premises to a purpose other than as stated in Section 9 hereof, may not be a place of public accommodation as defined under the Americana with Disabilities Act, nor conduct its business in a manner which, in Landlord's reasonable judgment, is not appropriate for comparable office buildings in the metropolitan Washington, D.C. area. (v) The assignee or subtenant may not be a tenant, subtenant, or other occupant of any part of the 8uilding, unless Landlord is unable to offer such occupant comparable space elsewhere in the Building. (vi) The Tenant may not be in default under this Lease. (vii) The sublease shall contain the following claims: "Underlying Lease Agreement." This Sublease and subtenant's rights under this Sublease shall at all times be subject and subordinate to the underlying Lease identified in Paragraph hereof, and Subtenant shall perform all obligations of Tenant under said Lease, with respect to the Sublease Premises. Subtenant acknowledges that any termination of the underlying Lease shall extinguish this Sublease. Landlord's consent to this Sublease shall not make Landlord a party to this Sublease, shall not create any privily of contract between Landlord and Subtenant or other contractual liability or duty on the part of the Landlord to the Subtenant, shall not constitute its consent or waiver of consent to any subsequent sublease or sub-sublease, and shall not in any manner increase, decrease or otherwise affect the rights and obligations of Landlord and Tenant under the underlying Lease, in respect of the Sublease Premises. Subtenant shall have no right to assign this Sublease or further sublet the Premises without the prior written consent of Landlord. Any term of this Sublease that in any way conflicts with or alters the provisions of the underlying Lease shall be of no effect as to Landlord and Landlord shall not assume any obligations as landlord under the Sublease and Tenant shall not acquire any rights under the Sublease directly assertable against Landlord under the underlying Lease. Tenant hereby collaterally assigns to Landlord this Sublease and any and all payments due to Tenant from Subtenant as additional security for Tenant's performance of all of its covenants and obligations under the underlying Lease, and authorizes Landlord to collect the same directly from Subtenant and otherwise administer the provisions of this Sublease, at the option of Landlord. Subtenant hereby consents to such collateral assignment of this Sublease to Landlord and agrees to observe its obligations created hereby.. (c) Landlord's Consent. Tenant shall have the right to Assign the Lease or sublet the Premises or a portion thereof after first obtaining the written consent of Landlord as provided in Section II (a) above. Upon receipt of Landlord's consent to such assignment or sublease, Tenant shall pay Landlord, within ten (10) days of receipt, one-half (1/2) of the amount of rent payable under such assignment or sublease in excess of the amount of rent payable by Tenant hereunder with respect to the Premises or, in the event of a sublease, that portion of the Premises sublet, offset by any direct expenses incurred by Tenant actually incurred in assigning the Lease or subleasing such portion of the Premises (amortized in equal monthly payments over the remaining term of the Lease, if assigned, or, if applicable, over the initial term of such subleased. Tenant covenants and agrees to provide Landlord with semi-annual statements, prepared and verified by a certified public accountant or executive officer of Tenant, stating the amount of rent or other consideration received by Tenant from its assignee or subtenant(s) during such semi-annual period. If such statement shows Tenant failed to make the full payment to Landlord required herein, a late charge equal to ten percent (10%) of the amount due shall be paid by Tenant to Landlord as additional rent, and shall be due and payable by the assignee or Tenant with the monthly installment of rent next becoming due. 12 (d) No Waiver or Release. The consent by Landlord to any assignment or subletting shall not be construed as a waiver or release of Tenant from the terms of any covenant or obligation under this Lease, nor shall the collection or acceptance of rent from any such assignee, subtenant or occupant constitute a waiver or release of Tenant of any covenant or obligation contained in this Lease, nor shall any such assignment or subletting be construed to relieve Tenant from obtaining the consent in writing of Landlord to any further assignment or subletting. Tenant hereby Assigns to Landlord the rent cue from any subtenant of Tenant and hereby authorizes each such subtenant to pay said rent directly to Landlord, at Landlord's option, in the event of any default by Tenant under the terms of this Lease. (e) Subsidiary or Affiliate. Provided Tenant delivers notice to Landlord not less than thirty (30) days prior to any such Assignment or sublease, Tenant may assign this Lease, or sublease all or part of the Premises, without the consent of Landlord, to: (i) any corporation that has the power to direct Tenant's management and operation with a net worth comparable to Tenant's, or any corporation whose management and operation is controlled by Tenant with a net worth comparable to Tenant's or by Tenant, or (ii) any corporation a majority of whose voting stock is owned. (iii) any corporation in which or with which Tenant, its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations, so long as (A) the liabilities of the corporations participating in such merger or consolidation are assumed by the corporation surviving such merger or created by such consolidation and (B) the successor can demonstrate by balance sheets and other financial documentation submitted to Landlord that it is capable of servicing all of Tenant's financial obligations under this Lease. 12. INDEMNITY. (a) Landlord shall not be liable for, and Tenant shall indemnify and save harmless Landlord, ground lease, if any, and Landlord's managing agent, if any, from and against and from all fines, damages, cults, claims, demands, leans and actions (including reasonable attorneys' fees) for any injury to person (including death) or damage to or loss of property on or about the Premises caused by Tenant, its employees, contractors, subtenants, invitees or by any other person entering the Premises or the Building under the express or implied invitation of Tenant, or arising out of Tenant's use of the Premises. Landlord shall not be liable or responsible for any lose or damage to any property or death or injury to any person (including Tenant, its agents, employees or invitees) occasioned by theft, fire, act of God, public enemy, criminal conduct of third parties, injunction, riot, strike, insurrection, war, court order, requisition or other governmental body or authority, by other tenants of the Building or any other matter beyond the reasonable control of Landlord, or for any injury or damage or inconvenience to Tenant which may arise through repair or alteration of any part of the Building, or failure to make repairs, or from any cause whatever except Landlord's negligence or willful misconduct. (b) Landlord hereby agrees to make no claim against Tenant, and will indemnify and save Tenant, its agents, employees and invitees harmless from any injury, damage or claim which shall be made against Tenant by any agent, employee, licensee or invites of Landlord or by others claiming the right to be on or about the common areas for any injury, lose or damage to person or property occurring upon the common areas, unless due to Tenant's negligence or willful malconduct. 13. SUBORDINATION. This Lease and all rights of Tenant hereunder shall be and are subject and subordinate at all times to any deeds of trust, mortgages, installment sale agreements and other instruments or encumbrances, as well as to any ground leases or primary leases, that now or hereafter cover all or any part of the Building, the Land or an interest of Landlord therein, and to any and all advances made on the security thereof, and to any and all increases, renewals, modifications, consolidations, replacements and extensions of any of such deeds of trust, mortgagee, installment sale agreements, instruments, encumbrances or leases, as well as any substitutions therefor, all automatically and without the necessity of any further action on the part of Tenant to effectuate such subordination. Tenant shall, however, upon demand at any time or times execute, acknowledge and deliver to Landlord any and all instrument and certificates that in the reasonable 13 Judgment of Landlord may be necessary or proper to confirm or evidence such subordination. Notwithstanding the foregoing, if any mortgagee, trust beneficiary or ground lessor shall elect to have this Lease treated as if it became effective and Tenant had taken possession prior to the lien of its mortgage or deed of trust or prior to its ground Lease, and shall give notice thereof to Tenant, this Lease shall be deemed to have become effective and Tenant's right to possession shall be considered prior to such mortgage, deed of trust, or prior to its ground lease whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof. In the event any mortgage or deed of trust to which this Lease is subordinate is foreclosed or a deed in lieu of foreclosure is given to the mortgagee or beneficiary, Tenant shall attain to the purchaser at the foreclosure sale or to the grantee under the deed in lieu of foreclosure; in the event any ground lease to which this Lease is subordinate is terminated, Tenant shall attain to the ground lessor. Tenant shall upon demand at any time execute, acknowledge and deliver to Landlord's mortgagee (including the beneficiary under any deed of trust) or other holder any and all instruments and certificates that in the Judgment of Landlord's mortgagee may be necessary or proper to confirm or evidence such attainment. Notwithstanding the foregoing, Landlord shall make reasonable efforts to obtain a non-disturbance agreement from all mortgagees and beneficiaries of any deeds of trust now or hereafter placed on the Building, provided that the same can be obtained at no Cost, expense, or liability to Landlord. Landlord shall, however, have no liability to Tenant as a result of its failure to obtain any non-disturbance agreement, provided that Landlord endeavored in good faith to obtain such an agreement. 14. RULES AND REGULATIONS. Tenant and Tenant's agents, contractors, employees and invitees will comply fully with all requirements of the Rules and Regulations of the Building and related facilities, as specified in the Rules and Regulations now or hereafter sent by Landlord to Tenant. Landlord shall at all times have the right to change such rules and regulations to promulgate other Rules and Regulations in such manner as Landlord may deem advisable, in its reasonable discretion, for safety, care or cleanliness of the Building and related facilities or the Premises, and for preservation of good order therein, all of which Rules and Regulations, changes and amendments will be forwarded to Tenant in writing and shall be carried out and observed by Tenant. Any such promulgated Rules and Regulations shall be nondiscriminatory and shall apply fairly to all tenants of the Building. Tenant shall be responsible for compliance therewith by the agents, contractors, employees and invitees of Tenant. 15. Inspection. Landlord or its officers, agents and representatives, and any ground lessor or mortgagee thereof, shall have the right to enter into and upon any and all parts of the Premises at all reasonable hours upon reasonable advance notice (or, in any emergency or for the purpose of performing routine maintenance, at any hour and without advance notice) to (a) inspect the Premises at any time (including the right to perform periodic environmental studies, audits and reports) (Landlord shall use retainable efforts not to materially interfere with the operation of Tenant's business during any such inspections and shall use reasonable efforts to notify Tenant, except in emergency situations, of such inspections) (b) clean or make repairs or alterations or additions as Landlord may deem necessary (but without any obligation to do so, except as expressly provided for herein), or (c) show the Premises to prospective tenants, purchasers or lenders and Tenant shall not be entitled to any abatement or reduction of rent by reason thereof, nor shall such be doomed to be an actual or constructive eviction. 16. CONDEMNATION. If the whole or, as determined by Landlord in its sole discretion, any substantial part of the Land or the Building should be taken for any public or quasi-public use under governmental law, ordinance or regulation, or by right of eminent domain, or by private purchase in lieu thereof and the taking would prevent or materially interfere with the use of the Premises for the purpose for which they are being used, as determined by Landlord, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease, effective when the physical taking of said Land or the Building shall occur. If part of the Land or Building shall be taken for any public or quasi-public use under any governmental law, ordinance or regulation, or by right of eminent domain, or by private purchase in lieu thereof, and this Lease is not terminated as provided in the sentence above, this Lease shall not terminate but too rent payable hereunder during the unexpired portion of this Lease shall be adjusted to reflect Tenant's new proportionate share of the Building. In the event of any such taking or 14 private purchase in lieu thereof, Landlord and Tenant shall each be entitled to all remedies provided by law' provided, however, that any award paid to Tenant shall not detract from any award which Landlord is entitled to receive; and if Landlord's award is reduced to any extent as a result of any award to Tenant, then Tenant shall assign and pay over to Landlord the amount by which Landlord's award wee so reduced. 17. FIRES AND OTHER CASUALTY. In the event of damage to or destruction of the Premises or the Building, or the entrances and other common faculties necessary to provide normal access to the Premises, caused by fire or other casualty, Tenant shall provide immediate notice thereof to Landlord, and Landlord shall make repairs and restorations as hereafter expressly provided, unless this Lease shall be terminated by Landlord or unless any mortgagee which la entitled to receive casualty insurance proceeds fails to make available to Landlord a sufficient amount of such proceeds to cover the Cost of such repairs and restoration. If (i) the damage is of such nature or extent, in the judgment of Landlord's architect, that more than two hundred ten (210) consecutive days, after commencement of the work, would be required (with normal work crews and hours) to repair and restore the part of the Premises or Building which has been damaged, or (ii) a substantial portion of the Premises or the Building is so damaged that, in Landlord's sole judgment, it is uneconomic to restore or repair the Premises or the Building, as the case may be, Landlord shall so advise Tenant promptly and Landlord or Tenant, for a period of ten (10) days thereafter, shall have the right to terminate this Lease by written notice to the other, as of the date specified in such notice, which termination date shall be no later than thirty (30) days after the date of such notice. In the event of such fire or other casualty, if this Lease is not terminated pursuant to the terms of this Section 17, and if (i) sufficient casualty insurance proceeds are available for use for such restoration or repair, and (ii) this Lease is then in full force and effect, Landlord shall proceed promptly and diligently to restore the Premises to its substantially similar condition prior to the occurrence of the damage, provided that Landlord shall not be obligated to repair or restore any alterations, additions or fixtures which Tenant or any other tenant may have installed unless Tenant, in a manner satisfactory to Landlord, assures payment in full of all Costs which may be incurred by Landlord in connection therewith. Landlord shall not insure any improvements or alterations to the Premises in excess of Standard Tenant Work (unless such improvements or alterations become fixtures), equipment or other property of Tenant. Tenant shall, at its sole expense, insure the value of its leasehold improvements, fixtures, equipment or other property located in the Premises, for the purpose of providing funds to Landlord to repair and restore the Premises to its substantially similar condition prior to occurrence of the damage. If there be any such alteration, fixtures or additions and Tenant done not manure or agree to issue payment of the Cost or restoration or repair as aforesaid, Landlord shall have the right to determine the manner in which the Premises shall be restored so as to be substantially the same as the Premises existed prior to the damage occurring, as if such alterations, additions or fixtures had not been made or installed. The validity and effect of this Lease shall not be impaired in any way by, and Landlord shall have no liability as a result of, the failure of Landlord to complete repairs and restoration of the Premises or of the Building within two hundred ten (210) consecutive days after commencement of work, even if Landlord had in good faith notified Tenant that it estimated that the repair and restoration would be completed within such period, provided that Landlord proceeds diligently with such repair and restoration. In the case of damage to the Premises not caused by the negligence or willful misconduct of the Tenant or any of its agents, employees or invitees, and which la of a nature or extent that Tenant is continued occupancy is substantially impaired, the rent otherwise payable by Tenant hereunder shall be equitably abated or adjusted for the duration of such impairment as determined by Landlord. In no event, however, shall any damages be payable by Landlord to Tenant in respect of business interruption resulting from any fire or other casualty on the Premises or Building. Tenant shall be responsible to insure and/or repair all of Tenant to leasehold improvements and all equipment, fixtures and personal property located in the Premises. 18. HOLDING OVER. Tenant shall, at the termination of this Lease by lapse of time or otherwise, yield up immediate possession to Landlord. If Tenant holds over after the expiration or termination of this Lease, all of the other terms and provisions of this Lease shall be applicable during such period, except that Tenant shall pay Landlord from time to time upon demand, as partial damages for the period of any holdover, an amount equal to one hundred fifty percent (1501) of the Basic Rental in effect on the termination date, computed on a 15 dally basis for each day of the holdover period. No holding over by Tenant shall attempt to extend this Lease except as otherwise expressly provided in this Lease. The foregoing notwithstanding, Landlord, in addition to accepting the dally damages during the period of such holding over, shall be entitled to pursue all remedies at law or equity, including, without limitation, rights to ejectment and damages. 19. TAXES. (a) During each calendar year or portion thereof included in the Lease Term, and any renewal thereof, Tenant shall pay to Landlord as additional rent, Tenant's Proportionate Share of Real Estate Taxes which exceed the Base Real Estate Taxes. Real Estate Taxes shall mean (i) all real estate taxes, including general and special assessments, if any, which are imposed upon Landlord or assessed against the Building and/or the Land during any calendar year, and (11) any other present or future taxes or governmental charges that are imposed upon Landlord or assessed against the Building and/or the Land during any calendar year which are in the nature of, in addition to or in substitutions for real estate taxes, including, without limitation, any license fees, tax measured by or imposed upon rents, or other tax or charge upon Landlord's business of leasing the Building, but shall not include any capital stock tax, excess profits tax, transfer tax, or federal, state or local corporate income tax. Real Estate Taxes shall also include all expenses incurred by Landlord in obtaining or attempting to obtain a reduction of Real Estate Taxes, including but not limited to, legal fees. (b) Commencing on January 1, 1997, and on each January let thereafter, Landlord may deliver to Tenant a statement of Landlord's estimate of any increase in the annual Real Estate Taxes for the then current calendar year over the Base Real Estate Taxes and Tenant's percentage thereof, such statement to be delivered on or before April 1st of said calendar year, or as soon thereafter as possible. Within thirty (30) days after delivery of such statement (including any statement delivered after the expiration or termination of this Lease), Tenant shall pay to Landlord with each month 'e Basic Rental, as additional rent, one-twelfth (1/12) of Tenant's aforesaid percentage share of such estimated increase in the annual Real Estate Taxes, except that Tenant's first payment shall include the (l/12th) monthly shares for the months from January let through the month in which Landlord submitted the estimate of the increase in the annual Real Estate Taxes for the then current calendar year. (c) Commencing on January 1, 1998, Landlord shall deliver to Tenant a statement (including therewith a copy of the Real Estate Tax Bill) showing the determination of the increase in the annual Real Estate Taxes for the preceding calendar year and Tenant's total percentage thereof, such statement to be delivered on or before April let of the than current calendar year, or as Boon thereafter as reasonably practicable. If such statement shows that Tenant's payments, if any, of the estimated monthly increase in the annual Real Estate Taxes for said preceding calendar year exceeded Tenant's actual increases for said year, then Tenant may deduct such overpayment from its next payment or payments of monthly rent. If such statement shows that Tenant's percentage share of Landlord's actual increases in the annual Real Estate Taxes exceeded Tenants payments, if any, of the estimated monthly increase in the annual Real Estate Taxes for said preceding calendar year, then Tenant shall pay the total amount due to Landlord, which amount shall constitute additional rent hereunder due and payable with the first monthly installment of rent due after delivery of said statement. (d) In the event that the expiration date or other date of termination of this Lease is not December 31st, the increase to be paid by Tenant or any refund to which Tenant la entitled from Landlord for the calendar year in which the expiration date occurs shall be determined by multiplying the amount of Tenant's share thereof for the full calendar year by a fraction with the number of days during such calendar year prior to the expiration date as the numerator, and with 365 as the denominator. The termination of this Lease shall not affect the obligations of Landlord and Tenant pursuant to this Section to be performed after such termination. (e) Tenant shall be liable for all taxes levied or assessed against personal property, furniture or fixtures placed by Tenant in the Premises, and if any such taxes for which Tenant la liable are in any way levied or assessed against Landlord, Tenant shall pay the Landlord upon demand that part of such taxes for which Tenant la primarily liable hereunder. Should Landlord receive a tax credit or abatement by virtue of its ownership of the Building, Operating Expenses and Tenant's Proportionate Share of Real Estate Taxes shall be adjusted to reflect the benefit of such credit or abatement. 20. EVENTS OF DEFAULT. The occurrence of any of the following events shall be deemed to be an event of default ("Event of Default") by Tenant under this Lease: (a) Tenant shall fall to pay when due any rental or other sums payable by Tenant hereunder (or under any other lease now or hereafter executed by Tenant in connection with space in the Building), and same is not cured within five (5) business days after Landlords written notice thereof to Tenant. 16 (b) Tenant shall fall to comply with or observe any other provision of this Lease (or any other lease now or hereafter executed by Tenant in connection with apace in the Building), and same la not cured within fifteen (15) days after Landlord's written notice thereof to Tenant. Notwithstanding the foregoing, if (i) the default is of such a nature that fifteen (15) days is an unreasonably abort period of time in which to cure the default' (ii) Tenant has commenced curing the default within the fifteen (15) day period; and (iii) Tenant. is continuing to diligently pursue a cure of such default, then Tenant shall have an additional thirty (30) days in which to complete the cure of said default. (c) Tenant abandons the Premises, or removes or attempts to remove Tenant's goods or property therefrom other than in the ordinary course of business or dose not operate or hold the Premises open for business for more than 10 consecutive days or for more than 30 non-consecutive days during any three-month period, without regard to whether Tenant has paid to Landlord in full all rent and charges that may have become due. (d) Tenant or any partner or guarantor of Tenant, as the case may be, shall apply for or consent to the appointment of a receiver, trustee or liquidator of itself or himself or any of its or his property, admit in writing its or 0a inability to pay its or his debts as they mature, make a general assignment for the benefit of creditors, be adjudicated a bankrupt, insolvent or file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it or him in any proceeding under any such law, or if action shall be taken by Tenant or any partner or guarantor of Tenant for the purposes of effecting any of the foregoing. (e) Any court of competent jurisdiction shall enter an order, judgment or decree approving a petition seeking reorganization of Tenant or all or a substantial part of the assets of Tenant or any partner or guarantor of Tenant, or appointing a receivor, sequestrator, trustee or liquidator of Tenant or any partner or guarantor of Tenant or any of its or his property, and such 17 order, judgment or decree shall continue unpayed and in effect for any period of at least thirty (30) days. 21. REMEDIES. Upon the occurrence of any Event of Default specified in this Lease, Landlord shall have the option to pursue any one or more of the following remedial without any notice or demand whatsoever. (a) Distrain, collect or bring an action for such rent as may be in arrears, and request entry of judgment therefor as provided for in case of rent in arrears, or file a proof of claim in any bankruptcy or insolvency proceeding for such rent, or institute any other proceedings, whether similar or dissimilar to the foregoing, to enforce payment thereof. (b) Declare due and payable and are for and recover, all unpaid rent for the unexpired period of the Lease Term (and also all additional rent as the amounts thereof can be determined or reasonably estimated) as if by the terms of this Lease the same were payable in advance, together with all legal fees and other expenses incurred by Landlord in connection with the enforcement of any of Landlord's rights and remedies hereunder. (c) Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord; and if Tenant falls to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for premises or any claim for damages therefor, and Tenant agrees to pay to Landlord on demand the amount of all lose and damage which Landlord may suffer by reason of such termination, whether through liability to relet the Premises on satisfactory terms or otherwise, including the lose of rental for the remainder of the Lease Term. (d) Without termination of the Lease, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for premises or any claim or damages therefor, and if Landlord so elects, relet the Premises on behalf of the Tenant on such terms as Landlord shall deem advisable and receive the rent therefor, and Tenant agrees to pay to Landlord on demand any deficiency that may arise by reason of such reletting for the remainder of the Lease Term. (e) Without termination of the Lease, enter upon the Premises, by force if necessary, without being liable for trespass or any claim for damages therefor, and do whatever Tenant is obligated to do under the terms of this Lease' and Tenant agrees to reimburse Landlord on demand for any expanses which Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease, and Tenant further agrees that Landlord shall not be liable for any damages resulting to the Tenant from such action. (f) If Tenant fails to perform any covenant or observe any condition to be performed or observed by Tenant hereunder or acts in violation of any covenant or condition hereof, Landlord may, but shall not be required to on behalf of Tenant, perform such covenant and/or take such steps, including entering upon the Premises, as may be necessary or appropriate, if Landlord shall have given Tenant at least three (3) business days prior written notice of Landlord's intention to do so, unless an emergency situation exists, in which case Landlord shall have the right to proceed immediately and all costs and expenses incurred by Landlord in so doing, including reasonable legal fees, shall be paid by Tenant to Landlord upon demand, plus interest at the overdue interest rate sat forth herein from the date of expenditure(a) by Landlord, as additional rent. Landlord's proceeding under the rights reserved to Landlord under this Section shall not in any way prejudice or waive any rights Landlord might otherwise have against Tenant by reason of Tenant's default. (g) Exercise any other rights and remedies available to Landlord at law or in equity. No reentry or taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease, unless a written notice of such intention be given to Tenant. Neither pursuit of any of the foregoing remedial provided nor any other remedies provided herein or by law shall constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained. Landlord's acceptance of rent following an Event of Default hereunder shall not be construed as Landlord's waiver of such Event of Default. No waiver by Landlord of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other violation or Event of Default. The lose or damage that Landlord may suffer by reason of termination of this Lease or the deficiency from any reletting as provided for above shall include the expense of repossession and any repairs or 18 remodeling undertaken by Landlord following possession. Should Landlord at any time terminate this Lease for any Event of Default, Tenant shall not be relieved of its liabilities and obligations hereunder and, in addition to any other remedy Landlord may have, Landlord may recover from Tenant all damages Landlord may incur by reason of such Event of Default, including the cost of recovering the Premises and the loss of rental for the remainder of the Lease Term. Tenant's obligations and liability under this Lease shall also survive repossession and reletting of the Premises by Landlord pursuant to the foregoing provisions of this Section 21. Notwithstanding anything to the contrary contained in this Section, in computing the amount due Landlord as a result of any Event of Default by Tenant, Tenant shall not be entitled to receive any credit, upon reletting by Landlord after Tenant's default, for any rent or other sums received by Landlord in excess of those for which Tenant is otherwise obligated herein. (h) The abatement of Basic Rental, if any, and other concessions of the Landlord (which may Include among other items' (i) brokerage break (ii) moving allowances, (iii) Tenant improvements, (iv) Lease Assumptions, (v) unamortised portions of the buildout and (vi) any other cash allowances or payments) are subject to the condition that, throughout the Lease Term, Tenant will perform and comply with all of the terms, covenants and conditions of this Lease to be performed or complied with by Tenant. If, after the occurrence of an Event of Default, landlord terminates this Lease or reenters and takes possessions of the Premises without such a termination, the abatement of Basic Rental and other Landlord concessions shall cease to apply and Tenant shall be obligated, within 10 days after demand, to pay to Landlord the Basic Rental abated and the VALUE of all Landlord's concessions. Landlord' a right to recover the Basic Rental abated and the value of all Landlord's concessions shall be in addition to any other remedies available to Landlord as a result of such termination or reentry. (i) All rights and remedies of Landlord and Tenant herein enumerated shall be cumulative, and none shall exclude any other right or remedy allowed by law. (j) In addition to any other rights and remedial provided in this Lease, and with or without terminating this Lease, Landlord may with force of law, re-enter, terminate Tenant's right of possession and take possession of the Premises, the provisions of this Section 21 operating as a notice to quit, any other notice to quit or of Landlord's intention to re-enter the Premises being hereby expressly waived. (k) Notwithstanding any of the provisions of this Section 21, Landlord shall not seize any legally confidential information of Tenant, of any of Tenants licensees or of the United States Government. 22. SURRENDER OF PREMISES. No act done and no failure to act by Landlord or its agents during the term hereby granted shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless the same be made in writing and signed by Landlord. 23. ATTORNEYS' FEES. In case it should be necessary or proper for Landlord to bring any action under this Lease concerning a default of Tenant hereunder, irrespective of whether such default is later cured, then Tenant shall pay any and all reasonable attorney's fees, court costs and expenses of Landlord incurred in connection with such enforcement. 24. INTENTIONALLY OMITTED. 25. MECHANICS' LIENS. Tenant shall not permit any mechanical lien or other liens to be placed upon the Premises or the Building or improvements thereon during the Lease Term, canned by or resulting from any work performed, materials furnished or obligation incurred by or at the request of Tenant. In the case of the filing of any such lien Tenant will promptly, and in any event within thirty (30) days after the filing thereof, satisfy or release such lien by means of payment thereof, bonding Landlord against any lose occasioned thereby (in which case Tenant shall have the right in due diligence to contest and dispute such lien so long as such bond remains in place), or take such other action as may be otherwise acceptable to Landlord. 26. WAIVER OF SUBROGATION; INSURANCE. (a) Landlord and Tenant hereby release the other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation or otherwise for any lose or damage 19 to property, but only to the extent that such lose or damage la covered by the greater of any insurance then in force or required to be carried hereunder, even if such fire or other casualty shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible provided, however, that such release shall be applicable and in force and effect only with respect to any lose or damage occurring during such time as the policy or policies of insurance covering said loss shall contain a clause or endorsement to the effect that this release shall not adversely affect or impair said insurance or prejudice the right of the insured to recover thereunder. (b) Tenant shall maintain throughout the Lease Term, at Tenant's sole cost and expense, insurance against loss or liability in connection with bodily injury, death, property damage and destruction, in or upon the Premises or the remainder of the Land, and arising out of the use of all or any portion of the same by Tenant or its agents, employees, officers, invitees, visitors and guests, under policies of comprehensive general public liability insurance having such limits as to each as may be reasonably required by Landlord from time to time, but in any event of not lease than One Million Dollars ($1,000,000) per occurrence for death or injury and One Million Dollars ($1,000,000) per occurrence for property damage or destruction and personal injury. Such policies shall name Landlord and Tenant, (and, at Landlord's or such mortgagee's or paramount Lessor's or installment seller's request) any mortgagee of all or any portion of the Buildings and any landlord of, or installment seller to, Landlord as additional insured portion, shall provide that they shall not be modified or canceled without at least thirty (30) days prior written notice to Landlord and any other party designated as aforesaid and shall be issued by insurers of recognized responsibility licensed to do business in the Jurisdiction in which the Building is located and acceptable to Landlord. Copies of all such policies certified by the insurers to be true and complete shall be supplied to Landlord and such mortgagees, paramount lessors and installment sellers at all times. (c) Landlord shall maintain throughout the Lease Term insurance coverage in such amounts as are carried by owners of other comparable office buildings in the same general area of the Building, including, without limitation, comprehensive general liability insurance and insurance on the Building and the structural improvements therein. 27. INTENTIONALLY OMITTED. 28. BROKERAGE. Tenant warrants that it has had no dealings with any broker or agent other than Compass Management and Leasing, Inc. and The Carey Winston Company in connection with the negotiation or execution of this Lease, and Tenant agrees to indemnify Landlord against all coats, expenses, attorneys' fees or other liability for commissions or other compensation or charges claimed by any other broker or agent claiming the same by, through or under Tenant. 29. ESTOPPEL CERTIFICATES. Tenant shall from time to time, within ton (10) days after Landlord shall have requested the same of Tenant, execute, acknowledge and deliver to Landlord a written instrument in recordable form and otherwise in such form as required by Landlord (i) certifying that this Lease is in full force and effect and has not boon modified, supplemented or amended in any way (or, if shore have boon modifications, supplements or amendments thereto, that it is in full force and effect as modified, supplemented or amended and stating such modifications, supplements and amendments); and (ii) stating any other fact or certifying any other condition reasonably requested by Landlord or requested by any mortgagee or prospective mortgagee or purchaser of the Property or of any Interest therein. In the event that Tenant shall fail to return a fully executed copy of such certificate to Landlord within the foregoing ten (10) day period, than Tenant shall be deemed to have approved and confirmed all of the forms, certifications and representations contained in such certificate, and Tenant irrevocably authorizes and appoints Landlord as its attorney-in-fact to execute such certificate on behalf of Tenant. 30. NOTICES. Each provision of this Lease or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the Bonding, mailing or delivery of any notice or the making of any payment by Landlord to Tenant or with reference to the vending, mailing or delivery or the making of any payment by Tenant to Landlord shall be deemed to be complied with when and if the following steps are taken (a) All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address for Landlord set forth below or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant's obligation to pay rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such rent or other amounts have been actually received by Landlord. 20 (b) All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address sot forth below, or at such other address within the continental United States as Tenant may specify from time to time by written notice delivered in accordance herewith. (c) With the exception of subsection (a) above, any notice or document required or permitted to be delivered hereunder shall be deemed to be delivered (i) when delivered personally or (ii) whether actually received or not, when deposited in the United States Mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the parties hereto at the respective addresses set out below, or at such other address as they have previously specified by written notice delivered in accordance herewith. If to Landlord, at: Compass Management and Leasing, Inc. 1595 Spring Hill Road, Suite 110 Vienna, Virginia 22182 If to Tenant, at: The Premises. If and when included within the term Landlord., as used in this instrument, there are more than one person, firm or corporation, all shall Jointly arrange among themselves for their Joint execution of such notice specifying some individual at the specific address for the receipt of notices and payments to Landlord' if and when included within the term Tenant, as used in this instrument, there are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such notice specifying some individual at some specific address within the continental United States for the receipt of notices and payment to Tenant. All parties included within the terms "Landlord" and "Tenant", respectively, shall be bound by notices given in accordance with the provisions of this paragraph to the same effect as if each had received such notice. 31. FORCE MAJEURE. Whenever a period of time is herein proscribed for action to be taken by Landlord or Tenant or whenever Landlord or Tenant is otherwise obligated to perform hereunder, neither Landlord nor Tenant shall be liable or responsible for, and shore shall be excluded from the computation for any such period of time, any delays or failures to perform duo to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations or restrictions or any other causes of any kind whatsoever which are beyond the retainable control of that party' provided, however, that the failure to pay any rent or additional rent hereunder, for any reason, shall not be considered to be beyond the reasonable control of Tenant. 32. SEVERABILITY. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the Lease Term, then and in that event, the remainder of this Lease shall not be affected thereby. 33. AMENDMENTS WAIVER: BINDING EFFECT. The provisions of this Lease may not be waived, altered, changed or amended, except by instrument in writing signed by both parties hereto, and such instrument may be subject to the approval of any mortgagees, and ground lessors of record. The acceptance of Basic Rental, additional rent or other payments by Landlord, or the endorsement or statement on any chock, any letter accompanying any check or other tender of Basic Rental, additional rent or other payment shall not be deemed an accord and satisfaction or a waiver of any obligation of Tenant, regardless of whether Landlord had knowledge of any breach of such obligation. The terms and conditions contained in this Lasso shall apply to, inure to the benefit of, and be binding upon the parties hereto, and upon their respective successors in interest and legal representative, except as otherwise heroin expressly provided. 34. QUIET ENJOYMENT. Provided Tenant has performed all of the terms and conditions of this Lease, including the payment of rent, to be performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the Premises for the Lease Term, without hindrance from Landlord or others claiming through Landlord, subject to the terms and conditions of this Lease and to all mortgagee, ground Leases and other encumbrances to which this Lease is subject and subordinate. 35. LIABILITY OF TENANT. If there is more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several. If there is a guarantor of Tenant's 21 obligations hereunder, the obligations hereunder imposed upon Tenant shall be the joint and several obligations of Tenant and such guarantor, and Landlord need not first proceed against Tenant before proceeding against such guarantor nor shall any such guarantor be released from its guaranty for any reason whatsoever, including without limitation any extensions or renewals hereof, any amendments hereto, any waivers hereof or failure to give such guarantor any notices hereunder. 36. LANDLORD LIABILITY. The liability of Landlord and all officers, employees, shareholders, venturers or partners (general or limited) of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be non-recourse and limited to the interest of Landlord in the Building, and Landlord or any officer, employee, shareholder, venturer or partner (general or limited) of Landlord shall have the right to sell or transfer all or any portion of the Land or the Building to any third party, and upon any such sale or other transfer of all of the Building or the Land, and the corresponding assignment of this Lease, the previous Landlord shall have no further liability or obligation to Tenant hereunder or otherwise. 37. CERTAIN RIGHTS RESERVED BY LANDLORD. Landlord shall have the following rights, exercisable without notice, except as provided herein, and without liability to Tenant for damage or injury to property, persons or business and without effecting an eviction, constructive or actual, or disturbance of Tenant's use or possession or giving rise to any claim or setoff or abatement of rent or affecting any of Tenant's obligations hereunder' (a) To change the name by which the Building is designated upon four (4) months written notice to Tenant. (b) To decorate and to make repairs, alterations, additions, changes or improvements, whether structural or otherwise, in and about the Building, or any part thereof, and for such purposes to enter upon the Premises and, during the continuance of any such work, to temporarily close doors, entry ways, public apace and corridors in the Building, to interrupt or temporarily suspend Building services and facilities and to change the arrangement and location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets, or other public parts of the Building, so long as the Premises are reasonably accessible. (c) To grant to anyone the exclusive right to conduct any business or render any service in or to the Building, provided such exclusive right shall not operate to exclude Tenant from the use expressly permitted herein. (d) To take all such reasonable measures as Landlord may deem advisable for the security of the Building and its occupants, including without limitation, the search of all persons entering or leaving the Building, the evacuation of the Building for cause, suspected cause, or for drill purposes, the temporary denial of access to the Building, and the closing of the Building after normal business hours and on Saturdays, Sundays and holidays' subject, however, to Tenant's right to admittance when the Building is closed after normal business hours under such reasonable regulations as Landlord may prescribe from time to time which may include, by way of example but not of limitation, that person entering or leaving the Building, whether or not during normal business hours, identify themselves to a security officer by registration or otherwise and that such persons establish their right to enter or leave the Building. Notwithstanding the foregoing, Landlord agrees to use reasonable efforts while exercising the above rights, not to materially interfere with the operation of Tenant's business. 38. FINANCIAL STATEMENTS. Tenant agrees to provide to Landlord within 14 days of request by Landlord but no more than once per year, the most recent audited annual financial statements of Tenant, including balance sheets, income statements, and financial notes ("Statements.). Tenant consents that Landlord may release the Statements to Landlord's subsidiaries, affiliates, lenders, advisors, joint venture partners, or potential purchasers of the property for the purposes of evaluating Tenant's financial condition with respect to performance under the Lease. Landlord agrees to keep the Statements confidential and to not release the Statements to third parties except as set forth herein. Landlord further agrees to make reasonable efforts to obtain a confidentiality agreement from independent third parties reviewing the Statements. 39. NOTICE TO LENDER. If the Premises or the Building or any part thereof are at any time subject to a mortgage or a deed of 22 trust or other similar instrument and the Lease or the rentals are assigned to such mortgagee, trustee or beneficiary and the Tenant is given written notice thereof, including the post office address of such assignee, then Tenant shall not terminate this Lease or abate rentals for any default on the part of Landlord without first giving written notice by certified or registered mail, return receipt requested, to such mortgagee, trustee, beneficiary and assignee, specifying the default in reasonable detail, and affording such mortgagee, trustee, beneficiary and assignee a reasonable opportunity to make performance, at its election, for and on behalf of the Landlord. 40. MISCELLANEOUS. (a) Any approval by Landlord and Landlord's architects and/or engineers of any of Tenants drawings, plane and specification which are prepared in connection with any construction of improvements in the Premises shall not in any way be construed or operate to bind Landlord or to constitute a representation or warranty of Landlord as to the adequacy or sufficiency of such drawings, plans and specifications, or the improvements to which they relate, or any use, purpose, or condition, but such approval shall merely be the consent of Landlord as may be required hereunder in connection with Tenant's construction of improvements in the Premises in accordance with such drawings, plans and specifications. (b) Each and every covenant and agreement contained in this Lease is, and shall be construed to be, a separate and independent covenant and agreement. (c) Neither Landlord nor Landlord's agents or brokers have made any representations or promises with respect to the Premises, the Building or the Land except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this Lease. (d) Time is of the essence as to all provisions of this Lease applicable to Tenant's obligations hereunder. (e) The submission of this Lease to Tenant shall not be construed as an offer, nor shall Tenant have any rights with respect thereto unless and until Landlord shall, or shall cause its managing agent to, execute a copy of this Lease and deliver the same to Tenant. (f) The terms of this Lease shall be construed in accordance with the laws of the jurisdiction in which the Building is located 41. ADDITIONAL RENT. The Tenant shall pay as additional rent any money required to be paid pursuant to the provisions of this Lease whether or not the same be designated "additional rent". If such amounts or charges are not paid at the time provided in this Lease, they shall nevertheless, if not paid when due, be collectable as additional rent with the next installment of rent thereafter falling due hereunder, but nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any other remedy of the Landlord. 42. ENTIRE AGREEMENT. The Lease contains all covenants and agreements between Landlord and Tenant relating in any manner to the rent, use and occupancy of Premises and Tenant's use of the Building and other matters set forth in this Lease. No prior agreement or understanding pertaining to the same shall be valid or of any force or effect and the covenants and agreements of this Lease shall not be altered, modified or added to except in writing signed by Landlord and Tenant. 43. LEGAL PROCEEDINGS. Landlord and Tenant hereby waive the right to a jury trial in any action, proceeding or counterclaim between Tenant and Landlord or their successors arising out of this Lease or Tenant's occupancy of the Premises or Tenant's right to occupy the same. 44. LAWS AND REGULATIONS. Tenant agrees at Tenant's expense to comply with all applicable laws, ordinances, rules, and regulations, whether now in effect or hereafter enacted or promulgated, of any governmental entity or agency having jurisdiction of the Premises. 45. AMERICANS WITH DISABILITIES ACT ("ADA"). (a) Tenant hereby represents that it is not a public accommodation, as defined in the ADA. 23 (b) The Landlord shall take whatever steps are necessary to cause the common areas of the building to meet the requirements of Title III of the ADA. (c) Except for the initial buildout of the Premises, which shall be Landlord's responsibility, Tenant at its sole coat and expense shall be solely responsible for taking any and all measures which are required to comply with the requirements of Title I and/or Title III of the ADA within the Premises and, if the measures required outside of the Premises are attributable to Tenant's alterations to the Premises, outside of the Premises as well. Any Alterations to the Premises made by Tenant for the purpose of complying with the ADA or which otherwise require compliance with the ADA shall be done in accordance with this Lease, provided, however, that Landlord's consent to such Alterations shall not constitute either Landlord's assumption, in whole or in part, of Tenant's representation or confirmation by Landlord that such Alterations comply with the provisions of the ADA. (d) Tenant shall indemnify the Landlord for all claims, damages, judgments, penalties, fines, administrative proceedings, coats, expenses and liability arising from Tenant's failure to comply with any of the requirements of Title I and/or Title III of the ADA within the Premises. (e) Landlord shall indemnify the Tenant for all claims, damages, judgments, penalties, fines, administrative proceedings, cost, expenses and Liability arising from Landlord's failure to comply with Title III of the ADA within the common areas. 46. ENVIRONMENTAL PROTECTIONS. (a) Notwithstanding the generality of Section 9 above, Tenant shall conduct all activity in compliance with all federal, state, and local laws, statutes, ordinances, rules, regulations, orders and requirements of common law concerning protection of the environment or human health ("Environmental Laws"). Tenant shall also cause its subtenants (if subtenants are permitted by this Lease or are hereafter approved by Landlord), Licensee, invitees, agents, contractors, subcontractors and employees to comply with all Environmental Laws. Tenant and its permitted subtenants, licensees, invitees, agents, contractors, and subcontractors shall obtain, maintain, and comply with all necessary environmental permits, approvals, registrations and licensee. In addition to and not in limitation of the foregoing, Tenant, its permitted subtenants, licensees, invitees, agents, contractors, subcontractors and employees shall not generate, refine, produce, transfer, process or transport Hazardous Materials on, above, beneath or near the Premises, the Building or the Land. As used herein, the term Hazardous Materials shall include, without limitation, all of the followings (l) hazardous substances, as such term is defined in the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 (14), as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (Oct. 17, 1986) ("SARA"), t2) regulated substances, within the meaning of Title I of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6991-6991(i), as amended by SARA' (3) any element, compound or material which can pose a threat to the public health or the environment when released into the environment' (4) hazardous waste as defined in the Virginia Waste Management Act, Title 10.1, Chapter 14 of the Code of Virginias (5) petroleum and petroleum byproducts) (6) an object or material which is contaminated with any of the foregoing' (7) any other substance designated by any of the Environmental Laws or a federal, abate or local agency as detrimental to public health, safety and the environment. Tenant shall be permitted to store reasonable quantities of cleaning and office supplies, provided, however, that such supplies are not Hazardous Materials. (b) Tenant shall protect, indemnify and save Landlord harmless from and against any and all liability, loss, damage, cost or expense (including reasonable attorneys' fees) that Landlord may suffer or incur as a result of any claims, demands, damages, losses, liabilities, costs, charges, suits, orders, judgments or adjudications asserted, assessed, filed, or entered against Landlord or any of the Building or the Land, by any third party, including, without limitation, any governmental authority, arising from Tenant's breach of Environmental Laws or otherwise arising from the alleged generation, refining, production, storage, handling, use, transfer, processing, transportation, release, spilling, pumping, pouring, emission, emptying, dumping, discharge or escape of Hazardous Materials by Tenant, its agents, employees or invitees, on, from or affecting the Premises, the Building or the Land, including, without limitation, liability for costs and expenses of abatement, correction, clean-up or other remedy, fines, damages, response (including death) and property damage. (c) Tenant, its permitted subtenants, licensees, invitees, agents, contractors, subcontractors and employees shall not release, spill, pump, pour, emit, empty, dump or otherwise discharge or allow to escape Hazardous Materials onto the Land or Building, and Tenant shall take all action necessary to remedy the results of any such release, spilling, pumping, 24 pouring, emission, emptying, dumping, discharge, or escape. (d) Tenant shall within 48 hours of receipt deliver to Landlord copies of any written communication relating to the Building or the Land between Tenant and any governmental agency or instrumentality concerning or relating to Environmental Laws. (e) Tenant's obligations under this Section shall survive the termination or other expiration of this Lease. (f) Landlord warrants that, to its actual knowledge as of the execution date of this Lease, no asbestos or Hazardous Materials are present in the Premises. 47. PARKING. Tenant, its permitted subtenants, licensees, invitees, agents, contractors, subcontractors and employees shall not use parking spaces on the Land or Building in excess of that number set out on the attached Data Sheet, which shall be provided to Tenant at no cost and which has been reasonably determined by Landlord to be Tenant's proportionate share of the total parking spaces available on the Building and Land. Notwithstanding anything contained herein, if any governmental regulation or ordinance is enacted or amended after the effective date of this Lease so as to allow or require a modification in Tenant's number of parking spaces, Landlord reserves the right to make such modification without modifying in any way the rent due hereunder or any other obligations of Tenant. 48. TENANT ACCESS. Subject to Landlord's reasonable regulations, Tenant shall have access to the Premises 24 hours per day, 365 days per year, except in the case an emergency or when the Building may be closed by governmental authorities. Landlord shall provide Tenant with a restricted entry access system for after-hours access to the Building. 49. THE NEW PREMISES. Upon Substantial Completion of the improvements to be constructed by Landlord in accordance with the Space Plan referenced as Exhibit F. Tenant shall lease from Landlord an additional 1,955 rentable square feet of apace in the Building, the outline of which is included on exhibit A (the "New Premises"). Tenant shall lease the New Premises from Landlord on the following terms and conditions: (a) Tenant shall pay Landlord as Basic Rental for the New Premises at a rate of $19.75 per rentable square foot per year, with the initial monthly installment being $3,217.60, such amount to be paid in addition to the Basic Rental otherwise paid to Landlord for the Premises. (b) The Basic Rental for the New Premises shall be increased annually, effective on each anniversary of Substantial completion of the New Premises, by an amount equal to three percent (3%) of the escalated Basic Rental then in effect for the New Premises, payable as follows
Year Annual Rental Monthly Rental - ---- ------------- -------------- 11/96-11/97 $38,611.25 $3,217.60 11/97-11/98 $39,769.59 $3,314.13 11/98-11/99 $40,962.65 $3,413.56 11/99-11/00 $42,191.56 $3,515.96 11/00 $43,457.30 $3,621.44
(c) Landlord shall construct improvements to the New Premises in accordance with the Space Plan for the New Premises, a copy of which is attached hereto as Exhibit F. and in accordance with the provisions of Section 7. Notwithstanding the foregoing, Landlord shall contribute up to $19,750.00 (the "Tenant Allowance") towards the completion of the buildout of the New Premises, which Tenant Allowance shall include the cost of preparation of the Space Plan and the Tenant Plans. Any coats in excess of the Tenant Allowance shall be paid solely by Tenant and shall be considered additional rent under the terms of the Lease. (d) Upon Substantial Completion of the New Premises, Tenant's Proportionate Share of Basic Cost shall be limited to 2.83% with all Excess (as defined in Section 8) being paid by Tenant to Landlord as additional rent in accordance with the provisions of Section 8. (e) Except where inconsistent with the terms of this Section, all other terms of the Lease shall apply to the New Premises, including the Lease termination date. 50. FIRST RIGHT OF OFFER. 25 After the Commencement Date, Tenant shall have a one-time first right to lease space contiguous to the Premises and the New Premises (the "Additional Space") in the Building, provided: (a) This right of first offer is subordinate to the rights of (i) the current tenant in the Additional Space to renew, extend or otherwise negotiate a new lease for the Additional Space, (ii) all future tenants in such apace, to renew or extend their leanest and (iii) existing tenants to the Additional Space as of the date of execution of this Lease, (b) Tenant is not in default under this Lease, either at the time the Additional Space becomes available or at the time Tenant is to take occupancy of the Additional Space; (c) Landlord has made a good faith determination that Tenant remains creditworthy, (d) Tenant must lease all of the Additional Space offered; (e) Tenant exercises its option as provided in this Section by delivering to Landlord written notice of its intention within three (3) business days after Landlord has notified Tenant that the Additional Space is available; (f) All terms of the lease of the Additional Space shall be upon those terms and conditions as are negotiated in good faith between the parties; and (g) Tenant executes an addendum or a new lease for the Additional Space within twenty (20) days after Landlord's receipt of Tenant's notice to lease the Additional Space; and If Tenant fails to comply with each of the above conditions within the time specified, then this right of first offer will lapse and be of no further force and effect, and Landlord shall have the right to lease all or any part of the Additional Space to a third party under the same or any other forms and conditions, whether or not such terms and conditions are more or less favorable than those offered to Tenant. This right of first offer to lease the Additional Space is personal to Tenant and is non-transferable 51. THE EXHIBITS. 26 (i) Exhibit A - Outline of Premises (ii) Exhibit B - Tenant Acceptance Letter (iii) Exhibit C - Rules and Regulations (iv) Exhibit D - Building Standard Materials (v) Exhibit E - Tenant Space Plan (vi) Exhibit F - Space Plan for New Premises IN WITNESS WHEREOF, the parties hereto have executed this Lease and affixed their seals as of the date fires above written. Tenant: WITNESS/ATTEST: SPACEHAB, INC. /s/ William Murray By: /s/ Nelda Wilbanks (SEAL) Name: Nelda Wilbanks Title: Secretary Landlord: THE EQUITABLE LIFE ASSURANCE WITNESS/ATTEST: SOCIETY OF THE UNITED STATES /s/ Lynn E. Ruckhaidt By: /s/ R. Paul Mehlman (SEAL) Name: R. Paul Mehlman Title: Investment Officer 27 INSERT GRAPHIC OF SUITE 360 FLOOR PLAN 28 The Equitable Life Assurance Society of the United States c/o Compass Management and Leasing, Inc. 1595 Spring Hill Road Suite 110 Vienna, Virginia 22182 The undersigned, by the execution of this letter, hereby confirms that the Commencement Date of the Lease Term of that certain lease agreement (the "Lease Agreement") by and between Concourse Associates Limited Partnership (the "Landlord") and the undersigned (the "Tenant") is , 1996, and Tenant hereby accepts delivery of the Premise" and recognizes that the Landlord has fulfilled all obligations regarding the delivery of the Premises subject to any "punch list" items in the Tenant Plans which may not have been completed. All capitalized term not defined herein shall have the meanings assigned to them in the Lease Agreement. ACCEPTED AND AGREED to this _______ day of _______________, 1996. TENANT: SPACEHAB, INC. By: Title: 29 EXHIBIT C THE CONCOURSE BUILDING RULES AND REGULATIONS 1. The sidewalks, entries, passages, court corridors, stairways and elevators shall not be obstructed by any of the Tenants, their employees or agents, or used by them for purposes other than ingress and egress to and from their respective suites. All safes or other heavy articles shall be carried up or into the premises only at such times and in such manner as shall be prescribed by the Landlord and the Landlord shall in all cases have the right to specify the proper weight and position of any such safe or other heavy article prior to its being brought into the Building by Tenant. Any damage done to the Building by taking in or removing any such equipment or from overloading any floor in any way shall be paid by Tenant. Defacing or injuring in any way any part of the Building by the Tenant, his agents or employees, shall be paid for by the Tenant. 2. Tenant shall refer all contractors, contractors' representative and installation technicians rendering any service to the premises for Tenant to Landlord for Landlord's approval and supervision before performance of any contractual service. This provision shall apply to all installations and improvements performed in the Building of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any other physical portion of the Building. Such approval, if given, shall in no way make Landlord or Owner, a party to any contract between Tenant and any such contractor, and Landlord and Owner shall have no liability therefor. 3. No sign, advertisement or notice shall be inscribed, painted or affixed on any part of the inside or outside of the said Building unless of such color, else and style and in such place upon in sand Building as shall first be designated by Landlord; there shall be no obligation or duty on Landlord to allow any sign, advertisement or notice to be inscribed, painted or affixed on any part of the inside or outside of said Building. Signs on doors will be arranged for the Tenant by a sign company approved by the Landlord, the cost of the signage to be paid by the Tenant unless the Building Standard signage listed in Exhibit C is chosen. A directory, in a conspicuous place, with the names of the Tenant, will be provided by Landlord, any necessary revision in this will be made by Landlord within a reasonable time after notice from the Tenant of the error or change making the revision necessary. No furniture shall be placed in front of the Building or in any lobby or corridors without written consent of Landlord. Landlord shall have the right to remove all other signs and furniture, without notice to Tenant at the expense of Tenant. 4. Tenant shall have the non-exclusive use in common with the Landlord, other tenants, their guests and invitees, of the automobile parking arena, driveways and footways, subject to rules and regulations for the use thereof as prescribed from time to time by Landlord. Landlord shall have the right to designate parking arena for the use of the building tenants and their employees, and the tenants and their employees shall not park in parking arena not so designated, specifically including driveways, fire lanes, loading/unloading areas, walkways and building entrances. Tenant agreed that upon written notice from Landlord, it will furnish to Landlord, within five (5) days from receipt of such notice, the state automobile license numbers assigned to the automobiles of the Tenant and its employees, owner and Landlord shall not be liable for any vehicle of the Tenant or its employees that the Landlord shall have towed from the premises when illegally or improperly parked. Owner and Landlord will not be liable for damage to vehicles in the parking arena or for theft of vehicles, personal property from vehicles, or equipment of vehicles, except in the case of willful misconduct or gross negligence on the part of Owner or Landlord. 5. Tenant shall have the non-exclusive use in common with the Landlord, other tenants, and others approved by Landlord, of the use of the Building's common arena, recreational arena, conference center, and designated exterior ground arena. Tenant shall abide by any and all rules, regulations, restrictions, requirements and procedures Landlord has imposed or may impose in the future for use of these arena. Failure to abide by these rules by Tenant, Tenant's employees, Tenant's visitors, and Tenants guests may result in Tenant's forfeiture of Tenant's use of those facilities and will be a default under the terms of the Lease Agreement. 6. No Tenant shall do or permit anything to be done in said premises or bring or keep anything therein, which will in any way increase the rate of fire insurance on said Building, or on property kept therein, or obstruct or interfere with the rights of other tenants, or in any way injure or annoy them or conflict with the laws relating to fire, or with any regulations of the fire department, or with any insurance policy upon said Building or any part thereof, or conflict with any rules and ordinances of the local Board of Health or any governing bodies. 7. The janitor of the Building may at all times keep a pass key to non-restricted arena and he and other agents of the Landlord shall at scheduled times be allowed admittance to acid Demised Premises. 8. No additional looks shall be placed upon any doors without the written consent of the Landlord. All keys to the Demised Premises and Building security card keys shall be furnished by Landlord at the rate of 1.75 keys per 1000 rentable square feet. Additional keys or Building Security Card Keys will be furnished at Tenant's cost. Upon termination of this Lease, all keys and Building Security Card Keys shall be 30 surrendered, and the Tenant shall then give the Landlord or his agents explanation of the combination of all locks upon the doors of vaults. 9. No windows or other openings that reflect or admit light into the corridors or passageways, or to any other place in said Building, shall be covered or obstructed by any of the Tenants with the exception of Building Approved drapery or Venetian blind installations. 10. No person shall disturb the occupants of the Building by the use of any musical instruments, the making of unseemly noises or odors, or any unreasonable use. No dogs or other animals or pets of any kind will be allowed in the Building. 11. The water closets and other water fixtures shall not be used for any purpose other than those for which they were constructed, and any damage resulting to them from misuse, or the defacing or injury of any part of the Building, shall be borne by the person who shall occasion it. 12. No bicycles or similar vehicles will be allowed in the Building. 13. Nothing shall be thrown out the windows of the Building or down the stairways or other passages. 14. Tenant shall not be permitted to use or to keep in the Building any kerosene, camphene, burning fluid or other illuminating materials. 15. If any tenant desires, at it's cost, telegraphic, telephonic or other electric connections, Landlord or its agents will direct the electricians as to where and how the wires may be introduced, and without such directions, no boring or cutting for wires will be permitted. 16. If Tenant desires, at it's cost, shades, draperies, or awnings they moat be of such shape, color, materials and make as shall be prescribed by Landlord. Any outside awning proposed may be prohibited by Landlord. Landlord or its agents shall have the right to enter the premises to examine the same or to make such repairs, alterations or additions as Landlord shall deem necessary for the safety, preservation or improvement of the Building, and the Landlord or its agents may show acid premises at scheduled times and may place on the windows or doors thereof, or upon the bulletin board, a notice "For Rent" for one month prior to the expiration of the Lease. 17. No portion of the Building shall be used for the purpose of lodging rooms or for any immoral or unlawful purposes. 18. All glass, locks and trimmings in or about the doors and windows and all electric fixtures belonging to the Building shall be kept whole, and whenever broken by Tenant shall be immediately replaced or repaired and put in order at Tenant's expense under the direction and to the satisfaction of Landlord, and on removal shall be left whole and in good order. 19. Landlord reserves the right at any time to temporarily take one elevator out of service to Tenants for exclusive use by the Building Management in servicing the Building. 31 EXHIBIT D THE CONCOURSE BUILDING STANDARD MATERIALS --------------------------- NOTE: References made herein to ratios of certain improvements "per square foot" shall be interpreted as meaning "per square foot of rentable area." LANDLORD SHALL PROVIDE TO THE PREMISES THE FOLLOWING: A. FLOORING: Carpet to Building Standard" or Building Standard tile. B. BLINDS: To Building Standards (horizontal mini-blinds). C. OFFICE PARTITIONS: Landlord will provide the Premises with eight foot (8') high Building Standard partitions to a maximum of one (1) linear foot of partition per each twelve (12) square feet of space. Partitioning will be constructed of 2-1/2 inch steel studs, 24 inches on center; 1/2 inch sheet rock on each side, taped, speckled and painted with two costs of paint. All Building Standard partitions shall be insulated. D. INTERIOR DOORS: To a maximum of one door per each two hundred fifty (250) square feet of space, to be equipped with Building Standard hardware and finish. Building Standard interior oak doors shall be 7'0" x 3'0" with a solid core. E. SUITE ENTRY DOORS: One suite entry door is provided for each five thousand (5,000) square feet of space, to be equipped with Building Standard hardware and finish. Building Standard suite entry doors are oak, full height, 7'10" x 3'0" with a solid core. Hardware for suite door shall include mortise lock with lever handle, door close and ball bearing hinges. F. CEILINGS: Building Standard 2'x 2' regular acoustical tile in suspended grid. G. LIGHTING: Fluorescent parabolic light fixtures to a maximum of one fixture per eighty (80) square feet of space. H. LIGHT SWITCHES: Building Standard single-pole, single-throw to a maximum of one (l) switch for each 200 square feet. I. ELECTRICAL POWER FACILITIES: Power outlets (standard duplex convenience receptacles) to a maximum ratio of one outlet per one hundred fifty (150) square feet will be mounted on partitions as may be appropriate. Dedicated circuits will be provided at Tenant's expense. J. TELEPHONE FACILITIES: Standard unwired telephone outlets, SUITABLE for standard telephone instruments, to a maximum of one (1) outlet per two hundred (200) square feet will be mounted on partitions as may be appropriate. Conduit can be provided by Landlord at Tenant's expense. K. SPRINKLER HEADS: Landlord will provide a sprinkler fire protection system in the Building including a maximum of one (1) sprinkler head per one hundred fifty (150) square feet. Additional sprinkler heads and relocations or additions to sprinkler heads due to Tenant change orders made subsequent L. WALL FINISH: Painted to Building Standard. M. SIGNAGE: Building Standard door sign. 32 N. ARCHITECTURAL SERVICES: Consultation with Landlord's architect and preparation of Tenant's plans for all Building Standard items at Landlord's expense. O. GENERAL: All of the items and finishes above listed in this "Building Standard Materials" sheet to be Supplied by Landlord will be to the Building Standard "specifications, color and quality; no credits will be allowed for any unused portion thereof. Designs of the basic building risers for the mechanical and electrical systems is such that Tenant's requirements for additional power, additional lighting, and various mechanical facilities can be made available at Tenant's expense prior to construction by arrangement with Landlord. The costs of modifications and changes from Building Standard for any item shall include the cost of architectural and engineering design. Any contractors and/or subcontractors engaged by Tenant shall comply with all REASONABLE regulations established by Landlord and General Contractor to promote safety and quality of construction and much contractors "hall coordinate their efforts to ensure timely completion of all work. All design, construction and installation shall conform to the requirements of applicable Building, Plumbing and Electrical Codes and the requirements of any authority having jurisdiction over or with respect to such work. For purposes of measuring Tenant's linear footage of partitioning, exterior building walls will not be included. Demising partitioning separating adjacent tenants will be calculated at fifty percent of the total amount. Tenant's portion of corridor partitioning excluding interior core walls (i.e., elevator shafts, electric and telephone closets and restroom facilities), will be included in total linear measurement. P. If Landlord shall be unable to give possession of the Premises on the date of commencement of the term hereof as a result of the delivery and/or construction of any nonrelated tenant special items, any delay in completing the Premises shall not in any manner affect the commencement date of this Lease or the Tenant's liability for the payment of rent from such commencement date, and under such circumstances Landlord agrees to make the Premises ready for Tenant's occupancy as soon as delivery and construction conditions within the Landlord's control will allow. 33 INSERT GRAPHIC OF Architect's FLOOR PLAN DRAWING FOR 3rd FLOOR 34 INSERT GRAPHIC OF Architect's FLOOR PLAN DRAWING FOR SUITE 360 EX-10.51 7 BARRIOS TECHNOLOGY SUBLEASE AGREEMENT. 1 EXHIBIT 10.51 [CB COMMERCIAL REAL ESTATE GROUP, INC. LETTERHEAD] SUBLEASE 1. PARTIES. This Sublease, dated February 26, 1996. is made between Barrios Technology, Inc. a Texas Corporation ("Sublandlord"), and SPACEHAB, Inc. ("Subtenant"). 2. MASTER LEASE. Sublandlord is the tenant under a written lease date August 21, 1991 and amended October 9, 1992, October 7; 1993, February 7, 1994, and January 6, 1995 wherein Puget of Texas (successor to Aetna Life Insurance Company) ("Lessor") leased to Sublandlord the real property located in the City of Houston, County of Harris, State of Texas, described as 1331 Gemini. Said lease and amendments are herein collectively referred to as the "Master Lease" and are attached hereto as Exhibit "A". 3. PREMISES. Sublandlord hereby subleases to Subtenant on the terms and conditions et forth in this Sublease the following portion of the Master Premises ("Premises"): 4,525 rentable square feet indicated on the attached floor plan as Exhibit "B". 4. WARRANTY BY SUBLANDLORD. Sublandlord warrants and represents to Subtenant that the Master Lease has not been amended or modified except as expressly set forth herein, that Sublandlord is not now, and as of the commencement of the Term hereof will not be, in default or breach of any of the provisions of the Master Lease, and that Sublandlord has no knowledge of any claim by Landlord that Sublandlord is in default or breach of any of the provisions of the Master Lease. 5. TERM. The Term of this Sublease shall commence on March 22, 1996 ("Commencement Date"), or when Landlord consents to this Sublease (if such consent is required under the Master Lease), whichever shall last occur, and end on February 28, 1998 ("Termination Date"), unless otherwise sooner terminated in accordance with the provisions of this Sublease. In the event the Term commences on a date other than the Commencement Date, Sublandlord and Subtenant shall execute a memorandum setting forth the actual date of commencement of the Term. Possession of the Premises ("Possession") shall be delivered to Subtenant on the commencement of the Term. If for any reason Sublandlord does not deliver Possession to Subtenant on the commencement of the Term, Sublandlord shall not be subject to any liability for such failure, the Termination Date shall not be extended by the delay, and the validity of this Sublease shall not be impaired, but rent shall abate until delivery of Possession. Notwithstanding the foregoing, if Sublandlord has not delivered Possession to Subtenant within eighteen (18) days after the Commencement Date, then at any time thereafter and before delivery of Possession, Subtenant may give written notice to Sublandlord of Subtenant's intention to cancel this Sublease. Said notice shall set forth an effective date for such cancellation which shall be at least ten (10) days after delivery of said notice to Sublandlord. If Sublandlord fails to deliver Possession to Subtenant on or before such effective date, this Sublease shall be canceled, in which case all consideration previously paid by Subtenant to Sublandlord on account of this Sublease shall be returned to Subtenant, this Sublease shall thereafter be of no further force or effect, and Sublandlord shall have no further liability to Subtenant on account of such delay or cancellation. If Sublandlord permits Subtenant to take Possession prior to the commencement of the Term, such early Possession shall not advance the Termination Date and shall be subject to the provisions of this Sublease, including without limitation the payment of rent. 6. RENT. Minimum Rent. Subtenant shall pay to Sublandlord as minimum rent, without deduction, setoff, notice, or demand, at 1331 Gemini, Suite 300, Houston, Texas 77058 Thirty three hundred and forty nine and 80/100 Dollars ($3,349.80) for months one (1) and two (2) and Four thousand seventy-two and 50/100 Dollars ($4,072.50) per month for the remainder of the sublease term, in advance on the first (1st) day of each month of the Term. Subtenant shall pay to Sublandlord upon execution of this Sublease the sum of Thirty three hundred forty nine and 80/100 Dollars ($3,349.80) as rent for month one (1). If the Term begins or ends on a day other than the first or last day of a month, the rent for the partial months shall be prorated on a per diem basis, except for payment of Base Rental as defined herein, Subtenant shall not be liable for any economic requirements of Sublandlord, including but not limited to, operating expenses, parking fees, maintenance, etc. 1 2 7. USE OF PREMISES. The Premises shall be used and occupied only for general office use, and for no other use or purpose. 8. ASSIGNMENT AND SUBLETTING. Subtenant shall not assign this Sublease or further sublet all or any part of the Premises without the prior written consent of Sublandlord (and the consent of Landlord, if such is required under the terms of the Master Lease). 9. OTHER PROVISIONS OF SUBLEASE. All applicable terms and conditions of the Master Lease are incorporated into and made a part of this Sublease as if Sublandlord were the landlord thereunder, Subtenant the lessee thereunder, and the Premises the Master Premises, except for the following: (1) Sublandlord shall provide Subtenant with nine (9) keys and nine (9) card-keys. (2) At no cost to Subtenant, Subtenant shall be provided one (1) strip on the outside monument sign, one (1) strip on the lobby directory, and building standard graphics on Subtenant's front entry, with directional graphics. (3) Sublandlord shall install a second exit and demising wall in the areas indicated on Exhibit "C". (4) Subtenant shall have an ongoing right of first refusal on approximately 3,196 rentable square feet of space indicated on Exhibit "C". If a third party tenant wishes to lease said space, Subtenant shall have five (5) business days to accept or reject the refusal space upon the said terms and conditions of the third party offer. (5) Sublandlord shall donate all furniture listed in Exhibit "D" to Subtenant. (6) The cost for use of HVAC beyond the normal business hours stated in the Lease is $25.00 per hour. Subtenant assumes and agrees to perform the landlord's obligations under the Master Lease during the Term to the extent that such obligations are applicable to the Premises, except that the obligation to pay rent to Landlord under the Master Lease shall be considered performed by Subtenant to the extent and in the amount rent is paid to Sublandlord in accordance with Section 6 of this Sublease. Subtenant shall not commit or suffer any act or omission that will violate any of the provisions of the Master Lease. Sublandlord shall exercise due diligence in attempting to cause Lessor to perform its obligations under the Master Lease for the benefit of Subtenant. If the Master Lease terminates, this Sublease shall terminate and the parties shall be relieved of any further liability or obligation under this Sublease, provided however, that if the Master Lease terminates as a result of a default or breach by Sublandlord or Subtenant under this Sublease and/or the Master Lease, then the defaulting party shall be liable to the nondefaulting party for the damage suffered as a result of such termination. Notwithstanding the foregoing, if the Master Lease gives Sublandlord any right to terminate the Master Lease in the event of the partial or total damage, destruction, or condemnation of the Master Premises or the building or project of which the master Premises are a part, the exercise of such right by Sublandlord shall not constitute a default or breach hereunder, and the subtenant shall be relieved of any further obligation under this sublease. 10. ATTORNEYS' FEES. If Sublandlord, Subtenant, or Broker shall commence an action against the other arising out of or in connection with this Sublease, the prevailing party shall be entitled to recover its costs of suit and reasonable attorney's fees. 11. AGENCY DISCLOSURE: Sublandlord and Subtenant each warrant that they have dealt with no other real estate broker in connection with this transaction except: CB COMMERCIAL REAL ESTATE GROUP, INC., who represents Barrios Technology, Inc. and The Cole Gross Company, who represents SPACEHAB, Inc. 12. COMMISSION. Upon execution of this Sublease, and consent thereto by Landlord (if such consent is required under the terms of the Master Lease), Sublandlord shall pay Broker a real estate brokerage commission in accordance with Sublandlord's contract with Broker for the subleasing of the Premises, for services rendered in effecting this Sublease. Broker is hereby made a third party beneficiary of this Sublease for the purpose of enforcing its right to said commission. 13. NOTICES. All notices and demands which may or are to be required or permitted to be given by either party on the other hereunder shall be in writing. All notices and demands by the Sublandlord to Subtenant shall be sent by United States Mail, postage prepaid, addressed to the Subtenant at the Premises, and to the address hereinbelow, or to such other place as Subtenant may from time to time designate in a notice to the Sublandlord. All notices and demands by the Subtenant to Sublandlord shall be sent by United States Mail, postage prepaid, addressed to the Sublandlord at the address set forth herein, and to such other person or place as the Sublandlord may from time to time designate in a notice to the Subtenant. To Sublandlord: Barrios Technology, 1331 Gemini, Suite 300, Houston, Texas 77058 To Subtenant: SPACEHAB, Inc., 1331 Gemini, Suite , Houston, Texas 77058 9. (7) Requirements upon Tenant of Section 13 of Master Lease shall not flow down to Subtenant. 2 3 14. CONSENT BY LANDLORD. THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO BY LESSOR WITHIN 10 DAYS AFTER EXECUTION HEREOF, IF SUCH CONSENT IS REQUIRED UNDER THE TERMS OF THE MASTER LEASE. 15. COMPLIANCE. The parties hereto agree to comply with all applicable federal, state and local laws, regulations, codes, ordinances and administrative orders having jurisdiction over the parties, property or the subject matter of this Agreement, including, but not limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive Environmental Response Compensation and Liability Act, and The Americans With Disabilities Act. Sublandlord: Barrios Technology, Inc. Subtenant: SPACEHAB, Inc. --------------------------- -------------------------- By: By: /s/ Nelda Wilbanks ------------------------------------ --------------------------------- Title: Contracts Administrator Title: Corporate Secretary --------------------------------- ------------------------------ By: By: ------------------------------------ --------------------------------- Title: Title: --------------------------------- ------------------------------ Date: Date: ---------------------------------- ------------------------------- Accepted: LANDLORD'S CONSENT TO SUBLEASE The undersigned ("Landlord"), landlord under the Master Lease, hereby consents to the foregoing Sublease without waiver of any restriction in the Master Lease concerning further assignment or subletting. Landlord certifies that, as of the date of Landlord's execution hereof, Sublandlord is not in default or breach of any of the provisions of the Master Lease, and that the Master Lease has not been amended or modified except as expressly set forth in the foregoing Sublease. Landlord: Puget of Texas ------------------------------ By: Bob Blume ------------------------------------ Title: --------------------------------- By: ------------------------------------ Title: --------------------------------- Date: ---------------------------------- 3 4 BARRIOS TECHNOLOGY BUILDING 1331 Gemini Avenue Third Floor Sublease Area GRAPHIC OF FLOOR PLAN Exhibit "B" 5 BARRIOS TECHNOLOGY BUILDING 1331 Gemini Avenue Third Floor Sublease Area ARCHITECT'S DRAWINGS OF SUITE Exhibit "C" 6 Exhibit A to "Sublease" LEASE CONTRACT This Lease contract thereinafter called the "Lease"), entered into by and between AETNA LIFE INSURANCE COMPANY, (hereinafter called "Landlord"), and BARRIOS TECHNOLOGY, INC., a Texas corporation (hereinafter called "Tenant"). WITNESSETH: PREMISES 1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord Thirty-two Thousand Five Hundred Sixty (32,560) square feet of "Rentable Area" (as hereinafter defined) in the Gemini Development Office Building (such building whether called by such name of by any other name being hereinafter called "the Building") located on Gemini Street in Clear Lake City, Harris County, Texas, and being more particularly described in Exhibit "A-1", subject to adjustment as provided in Paragraph 3.B. The areas hereby leased by Tenant in the Building shall be called "Leased Premises" and are shown outlined and crosshatched on the floor plan drawings designated Exhibits "A-2" through "A-4" which are attached hereto and made a part hereof and signed or initialed by the parties for identification. Landlord shall have the right at any time and from time to time to change the Building name. The term "Rentable Area", as used herein with respect to each floor of the Building on which the entire rentable space is or will be leased to one tenant (hereinafter called "Single Tenant Floor"), shall be the entire floor area measured from the inside surface of the outer glass line excluding the area contained within Building stairs, vertical ducts, elevator shafts, flues, vents, stacks and pipe shafts, plus a pro rata portion of certain public areas of the Building. All the area on any Single Tenant Floor that is used for elevator lobbies, corridors, special tenant stairways, restrooms, mechanical rooms, electrical rooms, and telephone closets situated on such floor, and all vertical penetrations that are included for special use by Tenant, and columns and other structural portions of the Building shall be included within the Rentable Area of such floor. On each floor of the Building on which space is or will be leased by more than one Tenant, the term "Rentable Area" shall be the total of (i) the entire floor area included within the leased premises covered by such lease, being the floor area bounded by the inside surface of the exterior glass lines enclosing the leased premises, the exterior of all walls separating such leased premises from any public corridors or other public areas on such floor and the centerline of all demising walls separating such leased premises from other areas leased or to be leased to other tenants on such floors, (ii) a pro rata portion of the floor area covered by the elevator lobbies, corridors, restrooms, mechanical rooms, electrical rooms, and telephone closets situated on such floor, and (iii) a pro rata portion of certain public areas of the Building (which public areas may or may not be located on such floors). The Rentable Area for the entire Building shall be deemed to be fifty-nine thousand eight hundred thirty-three (59,833) square feet for the purposes of this Lease. Tenant shall have no option, right of refusal or other right to lease other space in the Building now or hereafter from Landlord, except as otherwise provided in this Lease. TERM 2. The term of this Lease shall be for a period beginning on the date of execution hereof (such commencement date, being hereinafter called the "Commencement Date"), and ending on the 30th day of November, 1994. LEASE CONTRACT - Page 1 7 3. A. Except as noted in Paragraph 27, as rental for the lease and use of the Leased Premises during the term hereof (hereinafter called "Base Rental"), Tenant will pay Landlord of Landlord's assigns, at the Building office or at such other location designated by Landlord, without demand and without deduction, abatement or setoff (except as otherwise expressly provided for herein) the sum Of Thirty Six Thousand Six Hundred Thirty and No/100 Dollars ($36,630.00) per month on the first day of each calendar month, monthly in advance, for each and every month in the term of this Lease, in lawful money of the United States, such amount subject to adjustment as provided in Subparagraph 8, below. If the lease term does not commence on the first day of a calendar month or end on the last day of a calendar month, Tenant will pay in advance a pro rata part of such monthly amount as rental for such first or last partial month. Furthermore, for each occasion on which Tenant fails to pay within five (5) days when due the Base Rental, or any other amount required to be paid under this Lease, Tenant shall pay Landlord a late fee equal to five percent (5%) of such Base Rental or other amount due. B. The monthly rent is subject to adjustment based on the actual number of square feet in the Rentable Area of the Leased Premises, multiplied by the rate of $13.50 per square foot per year. Landlord's architect shall compute the floor area and certify such information in writing to both Landlord and Tenant prior to the Commencement Date. Measurements shall be calculated as set forth in Paragraph 1. USE 4. Tenant will use the Leased Premises solely for the purpose of office space in which Tenant will conduct its regular and customary business affairs, and for no other purpose without the prior written consent of Landlord. SERVICES TO BE PROVIDED BY LANDLORD 5. A. Subject to the rules and regulations hereinafter referred to, Landlord shall furnish Tenant, at Landlord's expense, the following services during the lease term: (1) Air conditioning and heating in season, at such times as Landlord normally furnishes these services to other tenants in the Building, and at such temperatures and in such amounts as are considered by Landlord to be standard, but such service on Saturday afternoons, Sundays and holidays to be furnished only upon the request of Tenant, who shall bear the cost thereof. (2) Hot and cold water at those points of general supply provided on the floor on which the Leased Premises are located. (3) Janitor service in and about the Building and the Leased Premises five (5) days per week and periodic window washing; provided, however, Tenant shall pay the additional costs attributable to the cleaning of improvements within the Leased Premises other than building standard improvements. LEASE CONTRACT - Page 2 8 (4) Building elevators for access to and access from the Leased Premises twenty-four (24) hours a day, seven (7) days a week. (5) Proper facilities so as to enable the appropriate utility company to furnish sufficient electrical power for building standard lighting, typewriters, dictating equipment, calculating machines and other machines of similar low electrical consumption, but not including any item of electrical equipment which singly consumes more than 0.25 kilowatts per hour at rated capacity or requires a voltage other than 120 volts single phase, including without limitation, electronic date processing equipment and special lighting in excess of building standard. Tenant shall pay to Landlord, monthly as billed, such charges as may be separately metered (the cost of any such meter and its installation to be borne by Tenant) or as Landlord's engineer may compute for any electrical service in excess of that stated above. See Addendum to Lease, Paragraph 3, Tenant Electricity. (6) Replacement of fluorescent lamps and ballasts in building standard ceiling mounted fixtures installed by Landlord and incandescent bulb replacement in all public areas. B. No interruption or malfunction of any of such services (including, without limitation, reduction in Landlord's capability, or Landlord's inability, to provide such services as a result of the enactment or promulgation, regardless of the ultimate validity or enforceability thereof, of any federal, state or local law, ordinance, decree, order, guideline, or regulation now or hereafter enacted or promulgated by any governmental, quasigovernmental, regulatory or executive authority shall constitute an eviction or disturbance of Tenant's use and possession of the Leased Premises or Building or a breach by Landlord of any of its obligations hereunder or render Landlord liable for damages or entitle Tenant to be relieved from any of its obligations hereunder(including the obligation to pay rent) or grant Tenant any right of setoff or recoupment or abatement. In the event of any such interruption, however, Landlord shall use reasonable diligence during normal business hours to restore such service in any circumstances in which such restoration is within the reasonable control of Landlord. C. Should Tenant desire any additional services beyond those described in Subparagraph A of this Paragraph 5 or rendition of any of such services outside the normal times of Landlord for providing such service, Landlord may (at Landlord's option), upon reasonable advance notice from Tenant to Landlord, furnish such services and Tenant agrees to pay Landlord such charges as may be agreed an between Landlord and Tenant, but in no event at a charge less than Landlord's actual cost plus overhead for the additional services provided, it being agreed that the cast to Landlord of such additional services shall be excluded from the "Basic Cast", as defined in Paragraph 13.B of this Lease. REPAIR AND MAINTENANCE 6. A. Landlord will, at its own cost and expense, except as may be provided elsewhere herein, make necessary repairs of damage to the Building corridors, lobby, structural members of the Building, and equipment used to provide LEASE CONTRACTS - page 3 9 the services referred to in Paragraph 5, unless any such damage is caused by acts or omissions of tenant, its agents, customers, employees or invitees, in which event Tenant will bear the cost of such repairs. Tenant will promptly give Landlord written notice of any damage requiring repair by Landlord, as aforesaid. B. Tenant will not injure the Leased Premises or the Building but will maintain the Leased Premises in a clean, attractive condition and in good repair, except as to damage to be repaired by Landlord, as provided above. Upon termination of this Lease, Tenant will surrender and deliver up the Leased Premises to Landlord in good condition, excepting only ordinary wear and tear and damage arising from any cause not required to be repaired by Tenant. C. This Paragraph 6 shall not apply in the case of damage of destruction by fire of other casualty which is covered by insurance maintained by Landlord on the Building (as to which Paragraph 7 hereof shall apply)' or damage resulting from an imminent domain (as to which Paragraph 14 shall apply). FIRE OR OTHER CASUALTY 7. A. If at any time during the term of this Lease, the Leased Premises or any portion of the Building shall be damaged or destroyed by fire or other casualty, so as to render the Building premises untenantable for over 60 days, then Landlord shall have the option to terminate this Lease or to repair and reconstruct the Leased Premises and Building to the condition in which they existed immediately prior to such damage or destruction and Landlord shall give Tenant notice of its election within sixty (60) days from the date of such damage or destruction. B. If any of the aforesaid circumstances, rental shall abate proportionately during the period and to the extent that the Leased Premises are unfit for use by Tenant in the ordinary conduct of its business. If Landlord has elected to repair and restore the Leased Premises, this Lease shall continue in full force and effect and such repairs will be made within a reasonable time thereafter, subject to delays arising from shortages of labor or material, acts of God, war or other conditions beyond Landlord's reasonable control. In the event that this Lease is terminated as herein permitted, Landlord shall refund to Tenant any prepaid rent (unaccrued as of the date of damage of destruction) less any sum then owing Landlord by Tenant. COMPLIANCE WITH LAWS AND USAGE 8. Tenant, at its own expense, will comply with all federal, state, municipal and other laws, ordinances, rules and regulations applicable to the Leased Premises and the business conducted therein by Tenant (including, without limitation, any temperature control restrictions); will not engage in any activity which would cause Landlord's fire and extended coverage insurance to be cancelled or the rate therefor to be increased (or, at Landlord's option, will pay any such increase); will not commit any act which is a nuisance or annoyance to Landlord or to other tenants, or which might, in the exclusive judgment of Landlord, appreciably damage Landlord's goodwill or reputation, or tend to injure or depreciate the Building; will not commit or permit waste in the Leased Premises or Building; will comply with rules and regulations from time to time promulgated by Landlord, applicable to the Building; will not paint, erect or display any sign, advertisement, placard or lettering which is visible in the corridors or lobby of the Building or from the exterior of the Building without Landlord's prior written approval. LEASE CONTRACT - Page 4 10 LIABILITY AND INDEMNITY 9. A. Tenant agrees to indemnify and hold and save harmless Landlord and Landlord's partners, agents, employees, invitees and contractors from any and all claims, losses, costs, damages, or expenses (including but not limited to attorney's fees) resulting or arising or alleged to result or arise from any and all injuries to or death of any person or damage to or loss of any property caused by any act, omission, or neglect of Tenant or Tenant's partners, venturers, directors, officers, employees, agents, invitees or guests, or any parties contracting with Tenant relating to the Leased Premises, the Building, the Land on which the building is constructed, or by any breach, violation or non-performance of any covenant of Tenant under this Lease or by occurring in or about the Leased Premises. If any action or proceeding should be brought by or against Landlord in connection with any such liability or claim, Tenant, on notice from Landlord, shall defend such action or proceeding, at Tenant's expense, by or through attorneys reasonably satisfactory to Landlord. The provisions of this paragraph shall apply to all activities of Tenant, its partners, venturers, directors, officers, employees, agents, invitees, guests, personnel and contractors with respect to the Leased Premises, the Building, parking area, or the land on which the Building is constructed, whether accruing before or after the expiration or termination of this Lease. Tenant's obligations under this paragraph shall not be limited to the limits or coverage of insurance maintained or required to be maintained by Tenant under this Lease. Except in cases of gross negligence by Landlord, neither Landlord nor its agents and employees, shall be liable for any damage of any kind or for any damage to property, death or injury to persons by reason of the use and occupancy of the Leased Premises by Tenant. Except for structural defects in the Building and breaches of this Lease by Landlord (to the extent of actual damages, if any, only), Landlord shall not be liable to Tenant and Tenant hereby waives all claims against Landlord or Landlord's partners, contractors or agents for any damages, consequential damages, loss of profits or business opportunity, business interruption, and for any damage to property, death or injury to persons from any cause whatsoever including, without limitation, acts or omissions of other tenants or such other tenants' employees, agents, contractors, invitees or guests, vandalism, loss of trade secrets or other confidential information, and damage, loss or injury caused by a defect (other than structural) in the Leased Premises, the Building, parking area, pipes, air-conditioning, heating, plumbing or by water leakage of any kind from the roof, walls, windows, basement or other portion of the Leased Premises or the Building, or caused by electricity, gas, oil, fire, interruption of Landlord's services or any cause whatsoever in, on, or about the Leased Premises, the Building, the parking area, the land on which the Building is constructed, or any part thereof. Except as otherwise provided in the immediately preceding sentence, Tenant agrees to use and occupy the Leased Premises and other facilities of the Building, parking area, and land on which the Building is constructed at its own risk and hereby releases Landlord, its agent or employees, from all claims for any damage or injury to the full extent permitted by law. B. In the event that either Landlord or Tenant sustains a loss by reason of fire or other casualty which is a type of risk covered by such party's fire and extended LEASE CONTRACT - Page 5 11 coverage insurance policy and such fire or casualty is caused in whole or in part by acts or omissions of the other party, its agents, servants or employees, then the party sustaining such loss agrees that to the extent that the party sustaining such loss is compensated for such loss by its aforesaid insurance proceeds, the party sustaining such loss shall have no right of recovery against the other party, or the agents, servants or employees of the other party and expressly waives such right herein; and no third party shall have any right of recovery by way of subrogation or assignment or otherwise. ADDITIONS AND FIXTURES 10. A. Tenant will make no alteration, change, improvement, repair, replacement or addition to the Leased Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld. If such prior written consent of Landlord is granted, the work in such connection shall be at Tenant's expense but by workmen of Landlord or by workmen and contractors approved in advance in writing by Landlord and in a manner and upon terms and conditions and at tines satisfactory to and approved in advance in writing by Landlord. In any instance where Landlord grants such consent, Landlord may grant such consent contingent and conditioned upon Tenant's contractors, laborers, materialmen and others furnishing labor or materials for Tenant's job working in harmony and not interfering with any labor utilized by Landlord, Landlord's contractors or mechanics or by any other tenant or such other tenant's contractors or mechanics; and if at any time such entry by one or more persons furnishing labor or materials for Tenant's work shall cause disharmony or interference, the consent granted by Landlord to Tenant may be withdrawn immediately upon notice to Tenant. B. Tenant may remove its trade fixtures, supplies and movable office furniture and equipment not attached to the Building provided: (1) such removal is made prior to the termination of the term of the Lease; (2) Tenant is not in default of any obligation or covenant under this Lease at the time of such removal; and (3) Tenant promptly repairs all damage caused by such removal. All other property at the Leased Premises and any alteration or addition to the Leased Premises (including wall-to- wall carpeting, paneling or other wall covering) and any other article attached or affixed to the floor, wall or ceiling of the Leased Premises shall immediately upon such attaching or affixing become the property of Landlord and shall remain upon and be surrendered with the Leased Premises as part thereof at the termination of this Lease, Tenant hereby waiving all rights to any payment or compensation therefor. If, however, Landlord so requests in writing, Tenant will, prior to termination of this Lease, remove any and all alterations, additions, fixtures, equipment and property placed or installed by it in the Leased Premises and will repair any damage caused by such removal. C. Any property not belonging to Landlord remains at the Leased Premises for ten (10) days following the expiration of the term of this Lease, Tenant hereby authorizes Landlord to make such disposition of such property as Landlord may desire without liability for compensation of damages to Tenant in the event that such property is the property of Tenant; and in the event that such property is the property of someone other than Tenant, Tenant agrees to indemnity and hold Landlord LEASE CONTRACT - Page 6 12 harmless from all suits, actions, liability, loss, damages and expenses in connection with or incident to any removal, exercise or dominion over and/or disposition of such property by Landlord. ASSIGNMENT AND SUBLETTING 11. A. Neither Tenant nor Tenant's legal representatives or successors in interest by operation of law or otherwise shall assign this Lease or sublease the Leased Premises or any part thereof or mortgage, pledge or hypothecate its leasehold interest or grant any concession or license within the Leased Premises without the prior written permission of Landlord, and any attempt to do any of the foregoing without the prior express written permission of Landlord, shall be void and of no effect. In the event Tenant requests Landlord's permission as to any such assignment, sublease or other transaction, Landlord shall have the right and option, as of the requested effective date of such assignment, sublease or other transaction (but no obligation), to cancel and terminate this Lease as to the portion of the Leased Premises with respect to which Landlord has been requested to permit such assignment, sublease or other transaction; and if Landlord elects to cancel and terminate this Lease as to the aforesaid portion of the Leased Premises, than the rent and other charges payable hereunder shall thereafter be proportionately reduced. In the event of any such attempted assignment or attempted sublease or should Tenant, in any other nature of transaction, permit or attempt to permit anyone to occupy the Leased Premises (or any portion thereof) without the prior express written permission of Landlord, the same shall constitute a breach, and, among Landlord's other remedies for an Event of Default, Landlord shall thereupon have the right and option to cancel and terminate this Lease effective upon fifteen (15) days' notice to Tenant given by Landlord at any time thereafter either as to the entire Leased Premises or as to only the portion thereof which Tenant shall have attempted to assign or sublease or otherwise permitted some other party's occupancy without Landlord's prior express written permission; and if Landlord elects to cancel and terminate this Lease as to the aforesaid portion of the Leased Premises, then the rent and other charges payable hereunder shall thereafter be proportionately reduced. This prohibition against assigning or subletting shall be construed to include a prohibition against any assignment or subletting by operation of law. B. Notwithstanding that the prior express written permission of Landlord to any of the aforesaid transactions may have been obtained, the following shall apply: (1) In the event of an assignment, contemporaneously with the granting of Landlord's aforesaid consent, Tenant shall cause the assignee to expressly assume in writing and agree to perform all or the covenants, duties and obligations of Tenant hereunder and such assignee shall be jointly and severally liable therefor along with Tenant; Tenant shall further cause such assignee to grant Landlord an express first and prior contract lien and security interest in the manner hereinafter stated as applicable to Tenant; (2) A signed counterpart of all instruments relative thereto (executed by all parties to such transaction with the exception of Landlord) shall LEASE CONTRACT - Page 7 13 be submitted by Tenant to Landlord prior to or contemporaneously with the request for Landlord's written consent thereto (it being understood that no such instrument shall be effective without the written consent of Landlord); (3) Tenant shall subordinate to Landlord's statutory lien and Landlord's aforesaid contract lien and security interest any liens or other rights which Tenant may claim with respect to any fixtures, equipment, goods, wares, merchandise or other property owned by or leased to the proposed assignee or sublessee or other party intending to occupy the Leased Premises; (4) No usage of the Leased Premises different from the usage herein provided to be made by Tenant shall be permitted, and all other terms and provisions of this Lease shall continue to apply after any such assignment or subleasing; (5) In any case where Landlord consents to an assignment, sublease, grant of a concession or license or mortgage, pledge or hypothecation of the leasehold, the undersigned Tenant will nevertheless remain directly and primarily liable for the performance of all of the covenants, duties, and obligations of Tenant hereunder (including, without limitation, the obligation to pay all rent and other sums herein provided to be paid), and Landlord shall be permitted to enforce the provisions of this instrument against the undersigned Tenant and/or any assignee without demand upon or proceeding in any way against any other person; and (6) In the event that the rent due and payable by a sublessee under any such permitted sublease (or a combination of the rent payable under such sublease plus any bonus or other consideration therefor or incident thereto) exceeds the hereinabove provided rent payable under this Lease or if with respect to a permitted assignment, permitted license or other transfer by Tenant permitted by Landlord, the consideration payable to Tenant by the assignee, licensee or other transferee exceeds the rental payable under this Lease, then Tenant shall be bound and obligated to pay Landlord all such excess rental and other excess consideration within ten (10) days following receipt thereof by Tenant from such sublessee, assignee, licensee or other transferee, as the case might be. C If Tenant is a corporation, then any transfer of this Lease from Tenant by merger, consolidation or dissolution or any change of ownership or power to vote a majority of the voting stock in Tenant outstanding at the time of execution of this instrument shall constitute an assignment for the purpose of this Lease; provided, however, that acquisition of all stock of the corporate tenant by any corporation, the stock of which is registered pursuant to the Securities Act of 1933 or the merger of the corporate tenant into such a corporation, the stock of which is so registered shall not itself be deemed to be a violation of Paragraph 11.A hereof. In addition, should Tenant desire to assign this Lease to another to whom it is selling substantially all the assets of Tenant, or desires to sell a majority of the voting stock and such purchaser is not registered pursuant to the Securities Act of LEASE CONTRACT - Page 8 14 1933, Tenant shall first notify Landlord in writing sixty (60) days prior to the closing of the proposed sale to secure the prior written consent of Landlord to such assignment, which consent shall not be unreasonably withheld. In such event, Tenant shall also furnish to Landlord, with such notice, financial information and such other information as Landlord may request to review. Should Landlord consent, then such assignment shall be in compliance with the provisions of paragraph 11.B. For purposes of this Paragraph 11.C, the term "voting stock" shall refer to shares of stock regularly entitled to vote for the election of directors of the corporation involved. If Tenant is a general partnership having one or more corporations as partners or if Tenant is a limited partnership having one or more corporations as general partners, the provisions of the preceding paragraph shall apply to each of such corporations as if such corporation alone had been the Tenant hereunder. If Tenant is a general partnership (whether or not having any corporations as partners) or if Tenant is a limited partnership (whether or not having any corporations as general partners), the transfer of the partnership interest or interests constituting a majority shall constitute an assignment for the purpose of this Lease. D. Consent by Landlord to a particular assignment or sublease or other transaction shall not be deemed a consent to any other or subsequent transaction. If this Lease be assigned or if the Leased Premises be subleased (whether in whole or in part) or in the event of the mortgage, pledge or hypothecation of the Leased Premises without the prior express written permission of Landlord, or if the Leased Premises are occupied in whole or in part by anyone other than Tenant without the prior express written permission of Landlord, Landlord may nevertheless collect rent from the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest was hypothecated, concessionee or licensee or other occupant and apply the net amount collected to the rent payable hereunder, but no such transaction or collection of rent or application thereof by Landlord shall be deemed a waiver of these provisions or a release of Tenant from the further performance by Tenant of its covenants, duties and obligations hereunder. SUBORDINATION 12. Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust, or other lien, or other matters of record presently existing or hereafter placed upon the Leased Premises, and to any renewals and extension thereof; but Tenant agrees that any such mortgage and/or beneficiary of any deed of trust or other lien ("Landlord's Mortgagee") and/or Landlord shall have the right at any time to subordinate such mortgage, deed of trust, or other lien to this Lease on such terms and subject to such conditions as such Landlord's Mortgagee may deem appropriate in its discretion. Upon demand Tenant agrees to execute such further instruments subordinating this Lease, as Landlord may request, and such nondisturbance and attornment agreements, as any such Landlord's Mortgagee shall request, in a form satisfactory to Landlord's Mortgagee. ADJUSTMENT OF BASE RENTAL 13. A. The Base Rental provided for herein is based, in part, upon Landlord's estimate Basic Cost (as hereinafter defined) of repairing, maintaining and operating the LEASE CONTRACT - Page 9 15 building during each calendar year of the Lease term will be the total of such costs for the calendar year 1991 divided by the total Rentable Area of office space in the Building, such amount being hereinafter referred to as "Estimated Basic Cost". B. "Basic Cost" as said term is used herein shall consist of the operating expenses Of the Building, which shall be computed on the accrual basis. All operating expenses shall be determined in accordance with generally accepted accounting principles which shall be consistently applied. The term "operating expenses" as used herein shall mean all expenses, costs and disbursements (but not replacement of capital investment items, except as noted below, nor general office expense nor specific costs especially billed to and paid by specific tenants nor rental commissions) of every kind and nature which Landlord shall pay or become obligated to pay because of, or directly in connection with, the ownership and the sole and exclusive operation of the Building, including but not limited to, the following (directly applicable to the Building in which the Leased Premises is located and to the related common areas): (1) Wages and salaries of all employees engaged in operation and maintenance of the Building, including taxes, insurance and benefits relating thereto; (2) Management fees relating to the management of the Building; (3) Cost of all supplies and materials used in operation and maintenance of the Building; (4) Cost of water and power, heating, lighting, air conditioning and ventilating the Building; (5) Cost of all maintenance and service agreements on equipment, including window cleaning and elevator maintenance; (6) Cost of casualty and liability insurance applicable to the Building and Landlord's personal property used in connection with the operation and maintenance of the Building; (7) All taxes and assessments and other governmental charges whether federal, state, county or municipal and whether they be by taxing districts or authorities presently taxing the Leased Premises or by other subsequently created or otherwise, and any other taxes and improvement assessments attributable to the Building or its operation excluding, however, federal and state taxes on net income. It is agreed that Tenant will be responsible for ad valorem taxes on its personal property and on the value of leasehold improvements to the extent that the same exceed standard Building allowances; (8) Cost of repairs and general maintenance (excluding cost of major repairs to the roof, foundation and exterior walls of the Building constituting a replacement of a capital investment item, repairs paid by proceeds of insurance or by Tenant or other third parties, and alterations attributable solely to tenants of the Building other than Tenant). LEASE CONTRACT - Page 10 16 (9) Amortization of the cost of capital investment items and of the installation thereof (but only with respect to capital investment items which are installed after the substantial completion of the construction of the Building) which are primarily for the purpose of safety, saving energy or reducing operating costs or which may be required by governmental authority. All such costs shall be amortized over the reasonable life of the capital investment items, with the reasonable life and amortization schedule being determine in accordance with generally accepted accounting principles and in no event to extend beyond the reasonable life of the Building. C. In the event that the Basic Cost of Landlord's operation of the Building (calculated on a per square foot basis using the Rentable Area of the Building set forth in Paragraph 1 of this Lease) during any calendar year during the term of this Lease after calendar year 1991 shall exceed the Estimated Basic Cost set out in Paragraph 13.A, Tenant shall pay to Landlord, as additional rent, the increase in such Basic Cost for such year over the Estimated Basic Cost, determined by multiplying such increase (expressed in terms of dollars per square foot calculated as aforesaid) by the Rentable Area of the Leased Premises as set forth in Paragraph 1 of this Lease. The first amount which may be due under this Paragraph shall be due within ten (10) days after Landlord submits to Tenant a bill or invoice for the first amount due under this Paragraph; Landlord may thereafter submit to Tenant a bill or invoice each month for one-twelfth (1/12th) of said amount or one-twelfth (1/12th) of such greater amount as may be later estimated by Landlord in its good faith business judgment to be due by Tenant under this Paragraph. The amount of the first such bill or invoice shall be determined by multiplying the monthly amount due by the number of calendar months of the then current year which have commenced as of the date of the bill or invoice. In the event of such billing or invoicing procedure by landlord, then Tenant shall be bound and obligated to pay such indicated amount contemporaneously with required payment of rental hereunder on the first day of each calendar month, monthly in advance, for each and every month in the term of this Lease, in lawful money of the United States. Once each calendar year, Landlord shall perform such computations as are necessary to determine the amount properly payable by Tenant under this Paragraph 13.C, whereupon, if Tenant shall have overpaid, Landlord shall refund to Tenant the amount of the excess, but if Tenant shall have underpaid, Landlord shall invoice Tenant for the amount of the underpayment and such underpayment shall be due within thirty (30) days. Tenant shall have the right to audit and verify the prior year's Basic Cost calculations upon thirty (30) days prior written notice to Landlord requesting an audit. Such audit shall be conducted at Landlord's office and at the sole cost and expense of Tenant. EMINENT DOMAIN 14. If there shall be taken by exercise of the power of eminent domain during the term of this Lease any part of the Leased Premises or Building, Landlord may elect to terminate this Lease or to continue same in effect. If Landlord elects to continue the LEASE CONTRACT - Page 11 17 Lease, the rental shall be reduced in proportion to the area of the Leased Premises resulting from such taking. All sums awarded or agreed upon between Landlord and the condemning authority for the taking of the interest of Landlord or Tenant, whether as damages or as compensation, will be the property of Landlord without prejudice, however, to claims of Tenant against the condemning authority on account of the unamortized cost of leasehold improvements paid for by Tenant taken by the condemning authority. If this Lease should be terminated under any provisions of this Paragraph 14, rental shall be payable up to the date that possession is taken by the taking authority, and Landlord will refund to Tenant any prepaid unaccrued rent less any sum then owing by Tenant to Landlord. ACCESS BY LANDLORD 15. Landlord, its agents and employees shall have access to and the right to enter upon the Leased Premises at any reasonable time to examine the condition thereof, to make any repairs or alterations required to be made by Landlord hereunder, to show the Leased Premises to prospective purchasers or tenants and for any other purpose deemed reasonable by landlord. LANDLORD'S LIEN 16. To secure the payment of all rent due and to become due hereunder, and the faithful performance of all the other covenants of this Lease required by Tenant to be performed, Tenant hereby gives to Landlord an express contract lien on and security interest in all property, chattels or merchandise which may be placed in the Leased Premises and also upon all proceeds of any insurance which may accrue to Tenant by reason of damage to or destruction of any such property. All exemption laws are hereby waived by Tenant. This lien and security interest are given in addition to the Landlord's statutory lien(s) and shall be cumulative thereto. Upon request of Landlord, Tenant agrees to execute Uniform Commercial Code financing statements relating to the aforesaid security interest. Provided Tenant is not in default, Landlord agrees to subordinate its lien on Tenant's furniture, fixtures and equipment to that of a lender providing financing to Tenant or an equipment lessor leasing equipment to Tenant. Such subordination shall be in form and content reasonably satisfactory to Landlord and shall provide that such lender or equipment lessor shall repair all damage to the Leased Premises resulting from removal of such furniture, fixtures or equipment. REMEDIES 17. A. Each of the following acts or omissions of Tenant or occurrences shall constitute an "Event of Default": (1) Failure or refusal by Tenant to timely pay rent or other payments hereunder; (2) Failure to perform or observe any other covenant or condition of this Lease by Tenant to be performed or observed; provided, however, notwithstanding the occurrence of such Event of Default, Landlord shall not be entitled to exercise any of the remedies provided for in this Lease or by law unless such Event of Default continues beyond the expiration of ten (10) days following notice to Tenant thereof; (3) Abandonment or vacating of the Leased Premises or any significant portion thereof; (4) The entry of a decree or order for relief by a court having jurisdiction over Tenant or any guarantor of Tenant's obligations hereunder in an LEASE CONTRACT - Page 12 18 involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Tenant or any guarantor of Tenant's obligations hereunder or for any substantial part of said parties' property, or ordering the winding-up or liquidation of said parties' affairs; (5) The commencement by Tenant or any guarantor of Tenant's obligations hereunder of a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other similar law, or the consent by either of said parties to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Tenant or any guarantor of Tenant's obligations hereunder or for any substantial part of said parties' property, or the making by said parties of any assignment for the benefit of creditors, or the failure of Tenant or any guarantor of Tenant's obligations hereunder generally to pay its debts as such debts become due, or the taking of corporate action by any corporate Tenant or any corporate guarantor of Tenant's obligations hereunder in furtherance of any of the foregoing. B. This lease and the term and estate hereby granted and the demise hereby made are subject to the limitation that if and whenever any Event of Default shall occur, Landlord may, at its option, in addition to all other rights and remedies given hereunder or by law or equity, do any one or more of the following: (1) Terminate this Lease, in which event Tenant shall immediately surrender possession of the Leased Premises to Landlord. (2) Enter upon and take possession of the Leased Premises and expel or remove Tenant and any other occupant therefrom, with or without having terminated the Lease. (3) Alter locks and other security devices at the Leased Premises. C. Exercise by Landlord of any one or more remedies hereunder granted or otherwise available shall not be deemed to be an acceptance of surrender of the Leased Premises by Tenant, whether by agreement or by operation of law, it being understood that such surrender can be effected only by the written agreement of Landlord and Tenant. Receipt by Landlord of Tenant's keys to the Leased Premises shall not constitute an acceptance of surrender of the Leased Premises. No such allocation of security devices and no removal of other exercise of dominion by Landlord over the property of Tenant or others at the Leased Premises shall be deemed unauthorized or constitute a conversion, Tenant hereby consenting, after any Event of Default, to the aforesaid exercise of dominion over Tenant's property within the Building. All claims for damages by reason of such reentry and/or repossession and/or alternation of locks or other security devices are hereby waived, as are all claims for damages by reason of any distress warrant, forcible detainer proceedings, sequestration proceedings or other legal process. Tenant agrees that any reentry LEASE CONTRACT - Page 13 19 by Landlord may be pursuant to judgment obtained in forcible detainer proceedings of other legal proceedings or without the necessity for legal proceedings, as Landlord may elect, and Landlord shall not be liable in trespass or otherwise. D. In the event Landlord elects to terminate this Lease by reason of an Event of Default, Landlord may also elect, upon notice to Tenant, to accelerate the rent and other charges for the remainder of the term of the Lease which shall then become due in accordance with the terms of this Subparagraph D. In such event, Tenant shall be liable for (i) all rent and other charges which have accrued to the date of such termination and (ii) all rent and other charges for the remainder of the term of the Lease less the fair market value of the Lease on the date of determination, the difference discounted at the discount rate charged by the Federal Reserve Bank of Dallas plus five percent (5%). The "date of determination" shall be the date such matter is heard before a court of competent jurisdiction or such other date as the parties may agree upon. The "fair market value of the Lease" shall mean the rent (including the estimate of other charges due hereunder for the remaining term, including those under Paragraph 13) Landlord would receive from and after the date of termination, if leased to a third party, taking into account the market rentals for similar properties in the geographic area, less the cost of concessions (free rent, tenant improvements allowance, etc.), brokers fees and discounting for the reasonable period to relet the Leased Premises at such rental. E. In the event Landlord elects to terminate the Lease by reason of an Event of Default, or in the event Landlord elects to terminate Tenant's right to possession of the Leased Premises, Landlord may hold Tenant liable for all rent and other indebtedness accrued to the date of such termination, plus such rent and other indebtedness as would otherwise have been required to be paid by Tenant to Landlord during the period following termination of the lease term (or of Tenant's right to possession of the Leased Premises, as the case may be) measured from the date of such termination by Landlord until the date of expiration stated in Paragraph 2 (had Landlord not elected to terminate the Lease or Tenant's right of possession of the Leased Premises, on account of such Event of Default) diminished by any net sums thereafter received by Landlord through reletting the Leased Premises during said period (after deducting expenses incurred by Landlord as provided in Subparagraph E hereof). Actions to collect amounts due by Tenant provided for in this Subparagraph E may be brought from time to time by Landlord during the aforesaid period, on one or more occasions, without the necessity of Landlord's waiting until expiration of such period; and in no event shall Tenant be entitled to any excess of rent (or rent plus other sums) obtained by reletting over and above the rent provided for in this Lease F. In case of an Event of Default, Tenant shall also be liable for and shall pay to Landlord, in addition to any sum provided to be paid above; broker's fees incurred by Landlord in connection with reletting the whole or any part of the Leased Premises; the cost of removing and storing Tenant's or other occupant's property; the cost of repairing, altering, remodeling of otherwise putting the Leased Premises into condition acceptable to a new Tenant or tenants; and all other reasonable expenses incurred by Landlord in enforcing Landlord's remedies. LEASE CONTRACT - Page 14 20 G. Rent past due for five (5) days and other past due payments shall bear interest from date due until paid at the greatest applicable non-usurious interest rate permitted by law. If no usury statute shall apply as a limitation, then, past due rent and payments shall bear interest at eighteen percent (18%) per annum. H. In the event of termination or repossession of the Leased Premises for an Event of Default, Landlord shall not have any obligation to relet or attempt to relet the Leased Premises, or any portion thereof, or to collect rental after reletting; but Landlord shall have the option to relet or attempt to relet; and in the event of reletting, Landlord may relet the whole of any portion of the Leased Premises for any period, to any tenant, and for any use and purpose. I. If Tenant should fail to make any payment; or if Tenant should fail to cure any default hereunder within the time herein permitted; then Landlord, without being under any obligation to do so and without thereby waiving such default, may make such payment; and/or Landlord may remedy such other default for the account of Tenant (and enter the Leased Premises for such purpose); and thereupon Tenant shall be obligated to, and hereby agrees to, pay Landlord, upon demand, all costs, expenses and disbursements incurred by Landlord in taking such remedial action. J. In the event of any default by Landlord, Tenant's exclusive remedy shall be an action for damages (Tenant hereby waiving the benefit of any laws granting it a lien upon the property of Landlord and/or upon rent due Landlord), but prior to any such action Tenant will give Landlord written notice specifying such default with particularity, and Landlord shall thereupon have thirty (30) days (plus such additional reasonable period as may be required in the exercise by Landlord of due diligence) in which to cure any default. Unless and until Landlord fails to so cure any default after such notice. Tenant shall not have any remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be construed as covenants, not conditions; and all such obligations will be binding upon Landlord only during the period of its possession of the Building and not thereafter. K. Except as expressly set forth in the succeeding sentence, neither Landlord nor Tenant shall be entitled to any attorneys' fees incurred in connection with the institution of any action of proceeding in court to enforce any provision hereof or for damages by reason of any alleged breach or default of any provision of this Lease or for a declaration of either party's rights or obligations hereunder or for any other judicial remedy, at law or in equity. In the event, however, that Landlord institutes any action or proceeding to enforce payment of a monetary sum due hereunder, then, in such event, Tenant will pay to Landlord all reasonable costs incurred by Landlord in collecting such sum, including reasonable attorneys' fees. NONWAIVER 18. Neither acceptance of rent by Landlord nor failure by Landlord to complain of any action, nonaction or default of Tenant shall constitute a waiver of any of Landlord's rights hereunder. Waiver by Landlord of any right for any default of Tenant shall not constitute a waiver of any right for either a subsequent default of the same obligation or any other default. LEASE CONTRACT - Page 15 21 HOLDING OVER 19. If Tenant should remain in possession Of the Leased Premises after the expiration Of the term of this lease, without the execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to be occupying the Leased Premises as a tenant-at-sufferance, subject to all the covenants and obligations of this Lease and at a daily rental of two (2) times the per day rental provided hereunder, computed on the basis of a thirty (30) day month. NOTICE 20. Any notice which may or shall be given under the terms of this Lease shall be in writing and shall be either delivered by hand or sent by United States Registered or Certified Mail, postage prepaid, return receipt requested, if for Landlord, to c/o Aetna Realty Investors, Inc. , 1478S Preston Road, Suite 275, Dallas, Texas 75240; or if for Tenant, to the Leased Premises, Suite 100. Such addresses may be changed from time to time by either party by giving notice as provided above. Notice shall be deemed given when delivered (if delivered by hand) or when postmarked (if sent by mail). LANDLORD'S MORTGAGEE 21. If the Building and/or Leased Premises are at any time subject to a mortgage and/or mortgage and deed of trust, then in any instance in which Tenant gives notice to Landlord alleging default by Landlord hereunder, Tenant will also simultaneously give a copy of such notice to each Landlord's Mortgagee (provided Landlord or Landlord's Mortgagee shall have advised Tenant of the name and address of landlord's Mortgagee) and each Landlord's Mortgagee shall have the right (but no obligation) to cure of remedy such default during the period that is permitted to Landlord hereunder, plus an additional period of thirty (30) days, and Tenant will accept such curative of remedial action (if any) taken by Landlord's Mortgagee with the same effect as if such action had bean taken by Landlord Tenant will, at such time or times as Landlord any request, sign a certificate stating whether this Lease is in full force and effect; whether any amendments or modifications exist; whether there are any defaults hereunder; and such other information and agreements as may be reasonably requested PARKING 22. A. Landlord shall make available to Tenant up to a total of one hundred fifty (150) free unreserved and uncovered parking spaces and a minimum of five (5) visitor spaces, located in the front of the Building and marked for visitors, during the primary term of this Lease. If at the time Tenant exercises any option to renew this Lease or during any such renewal term, Landlord assesses a charge for parking, Tenant agrees to pay to Landlord on a monthly basis for the lease of each such parking space an amount equal to the reasonable charge which may be assessed by Landlord for parking. Landlord reserves the right to change the parking if required by governmental law or regulation. B. Landlord shall not be responsible for any loss or damage to any car or property therein or for injuries (fatal of nonfatal) to persons occurring within the parking areas. MISCELLANEOUS 23. A. Provided Tenant complies with its covenants, duties and obligations hereunder, Tenant shall quietly have, hold and enjoy the Leased Premises subject to the terms and provisions of this instrument. LEASE CONTRACT - Page 16 22 B. In any circumstances where Landlord is permitted to enter upon the Leased Premises during the lease term, whether for the purpose of curing any default of Tenant, repairing damage resulting from fire or other casualty of an eminent domain taking or is otherwise permitted hereunder or by law to go upon the Leased Premises, no such entry shall constitute an eviction or disturbance of tenant's use and possession of the Leased Premises or a breach by Landlord of any of its obligations hereunder or render Landlord liable for damages for loss or business or otherwise or entitle Tenant to be relieved from any of its obligations hereunder or grant Tenant any right of setoff of recoupment or other remedy; and in connection with any such entry incident to performance or repairs, replacements, maintenance or construction, all of the aforesaid provisions shall be applicable notwithstanding that Landlord may elect to take building materials in, to or upon the Leased Premises that may be required or utilized in connection with such entry by Landlord. C. Except with respect to those counterclaims or claims by Tenant which, under the laws of the State in which the Leased premises are situated, may only be asserted in the hereafter referred to proceedings brought by Landlord or be forever barred if not asserted in said proceedings, in the event Landlord commences any proceedings against Tenant for nonpayment of rent or any other sum due and payable by Tenant hereunder, Tenant will not interpose any counterclaim or other claim against Landlord of whatever nature or description in any such proceedings; and in the event Tenant interposes any such counterclaim or other claim against Landlord in such proceedings, Landlord and Tenant stipulate and agree that, in addition to any other lawful remedy of Landlord, upon notion by Landlord, such counterclaim or other claim asserted by Tenant shall be severed out of the proceedings instituted by Landlord and the proceedings instituted by Landlord may proceed to final judgment separately and apart from and without consolidate with or reference to the status of such counterclaim of any other claim asserted by Tenant. D. Landlord may restrain of enjoin any breach or threatened breach of any covenant, duty or obligation of Tenant herein contained without the necessity of proving the inadequacy of any legal remedy of irreparable harm. The remedies of Landlord hereunder shall be deemed cumulative and no remedy of Landlord, whether exercised by Landlord or not, shall be deemed to be in exclusion of any other. Except as may be otherwise herein expressly provided, in all circumstances under this Lease where prior consent of permission of one party ("first party") is required before the other party ("second party") is authorized to take any particular type of action, the matter of whether to grant such consent or permission shall be within the sole and exclusive judgment and discretion of the first party; and it shall not constitute any nature or breach by the first party hereunder or any defense to the performance of any covenant, duty of obligation of the second party hereunder that the first party delayed or withheld the granting of such consent or permission, whether or not the delay or withholding of such consent or permission was prudent or reasonable or based on good cause. E. In all instances where Tenant or Landlord is required hereunder to pay any sum or do any act at a particular indicated time or within an indicated period, it is understood that tine is of the essence. LEASE CONTRACT - Page 17 23 F. The obligation of Tenant to pay all rent and other sums hereunder provided to be paid by Tenant and the obligation of Tenant to perform Tenant's other covenants and duties hereunder constitute independent, unconditional obligations to be performed at all times provided for hereunder, save and except only when an abatement thereof or reduction therein is hereinabove expressly provided for and not otherwise. Tenant waives and relinquishes all rights which Tenant might have to claim any nature of lien against or withhold, or deduct from or offset against any rent and other sums provided hereunder to be paid Landlord by Tenant. Tenant waives and relinquishes any right to assert, either as a claim or as a defense, that Landlord is bound to perform or is liable for the nonperformance of any implied covenant or implied duty of Landlord not expressly herein set forth. G. Under no circumstance whatsoever shall Landlord ever be liable for consequential damages or special damages. H. All monetary obligations of Landlord and Tenant (including, without limitation, any monetary obligation of Landlord of Tenant for damages for any breach of the respective covenants, duties or obligations of Landlord of Tenant hereunder) are performable exclusively in Clear Lake City, Harris County, Texas. I. It any provision of this Lease shall ever be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of the Lease, but such other provisions shall continue in full force and effect. J. The term "Landlord" shall mean only the owner, for the time being of the Building, and in the event of the transfer by such owner of its interest in the Building, such owner shall thereupon be released and discharged from all covenants and obligations of the Landlord thereafter accruing, but such covenants and obligations shall be binding during the lease term upon each new owner for the duration of such owner's ownership. ENTIRE AGREEMENT AND BINDING EFFECT 24. This Lease and any contemporaneous workletter, addenda or exhibits signed by the parties and attached hereto constitute the entire agreements between Landlord and Tenant; no prior written or prior or contemporaneous oral promises or representations shall be binding. This Lease shall not be amended, changed of extended except by written instrument signed by both parties hereto. Paragraph captions herein are for convenience only, and neither limit nor amplify the provisions of this Lease. The provisions of this Lease shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties, but this provision shall in no way altar the restriction herein in connection with assignment and subletting by Tenant. The submission of this Lease Contract by Landlord For examination does not constitute a reservation of or option for the Leased Premises and this Lease shall become effective only upon execution by all parties hereto and delivery thereof by Landlord to Tenant. RULES AND REGULATIONS 25. Tenant shall perform and comply with the Rules and Regulations of the Building set out in Exhibit "B" hereto, as reasonably amended from time to time upon written notice to Tenant, and upon written notice thereof, all other reasonable rules and regulations with respect to safety, care, cleanliness, and preservation of good order, operation, and conduct in the LEASE CONTRACT - page 18 24 Building that may be established from time to time by Landlord for tenants of the Building. Landlord shall not have any liability to Tenant for any failure of any other tenants of the Building to comply with such Rules and Regulations. INSURANCE 26. Landlord shall maintain during the term of this Lease fire and extended insurance coverage insuring the Building and Leased Premises (excluding Tenant's goods, furniture, property placed in the Leased Premises and tenant improvements) against damage or loss from fire or other casualty normally insured against under the terms of standard policies of fire and extended coverage insurance. If the annual premiums to be paid by Landlord shall exceed the standard rates because of Tenant's use of the Leased Premises, Tenant shall (in addition to any payment under Paragraph 13) promptly pay the excess amount of the premium upon request by Landlord. Tenant shall provide, at Tenant's own expense, all insurance coverage necessary or desirable for the full protection against loss or damage from fire or other casualty of any tenant improvements and Tenant's goods, furniture or other property placed in the Leased Premises, and Tenant shall further maintain commercial general liability insurance to include coverage under this Lease for its business operations, independent contractors, contractual and products coverage, with limits for bodily injury liability of not less than $1,000,000.00 per occurrence and limits for property damage of not less than the greater of $500,000.00 or the full insurable value of Tenant's property, or such other limits as may reasonably be established from time to time by Landlord. Tenant shall cause Landlord to be named as an additional insured or loss payee under such liability and other policies, shall furnish Landlord with current certificates of all required insurance, which certificates shall provide for thirty (30) days advance written notice to Landlord of any cancellation thereof, and such policies shall be written on companies with an A.M. Best Rating of A/XII or better. Landlord shall not be obligated to insure any portion of the Leased Premises consisting of tenant improvements or any of Tenant's goods, fixtures, furniture or other property placed or incorporated in the Leased Premises. PRIOR LEASE CONTRACTS 27. Upon (and only upon) the execution of at least two (2) copies of this Lease by both Landlord and Tenant and the delivery of at least one (l) such executed copy to Landlord, this Lease shall supersede and take the place of that certain lease dated January 11, 1985 by and between Landlord (as successor in interest) and Tenant for the lease of its current space in the Building (except as otherwise noted herein) and all amendments to such prior lease. However, the rent and other charges under the prior lease shall be incorporated herein by reference and remain the rent and charges for this Lease for the period from execution through November 30, 1991, except with respect to the additional areas described in Paragraph 1 of the Addendum, attached hereto as Exhibit "C", the rent and charges for such space to be governed by Paragraph 1 of the Addendum. EXHIBITS 28. The following exhibits, attached hereto, and incorporated into this Lease by reference, as if set forth verbatim. Exhibit "A-1"-"A-4" Legal Description, Floor Plans Exhibit "B" Rules and Regulations Exhibit "C" Addendum to Lease Exhibit "D" Signage Exhibit "E" Cancellation Rights LEASE CONTRACT - Page 19 25 EXECUTED by Landlord and Tenant on the respective dates indicated below, the latter of which shall constitute the effective date hereof. LANDLORD: AETNA LIFE INSURANCE COMPANY, INC. By: /s/ Janice Y. Elwell ------------------------------------- Printed Name: Janice Y. Elwell --------------------------- Title: Director ---------------------------------- TENANT: BARRIOS TECHNOLOGY, INC., Attest: a Texas corporation /s/ H. R. Barrett 8/21/91 - ----------------------------- ----------------------------------------- 1070/125/d/1.8.14 LEASE CONTRACT - Page 20 26 EXHIBIT "C" ADDENDUM TO LEASE 1. ADDITIONS TO LEASED PREMISES. As part of the Leased Premises described in this Lease, Tenant agrees to lease two (2) additional areas, not previously leased by Tenant, in "As Is" condition on the first (1st) floor encompassing approximately Two Thousand Four Hundred Sixty-five (2,465) square feet of Rentable Area as per Exhibit "A-4" attached hereto. Tenant shall pay monthly rent on these two (2) additional areas at the rate of $5.50 per square foot of Rentable Area per year through November 30, 1991. Commencing December 1, 1991, base rent on these two (2) additional areas shall increase to $13.50 per square foot of Rentable Area per year with an expense stop equal to Estimated Basic Cost as set forth in Paragraph 13.A of the Lease. Landlord agrees to provide an allowance of up to $3.00 per usable square foot times the number of usable square feet within these two (2) additional areas for tenant improvements made by Tenant in accordance with plans and specifications agreed upon by Landlord and Tenant and attached to this Lease. The allowance is payable on December 1, 1991, based on copies of paid invoices furnished by Tenant to Landlord evidencing costs of improvements in these two (2) additional areas. 2. TENANT IMPROVEMENTS; ACCEPTANCE OF PREMISES. Tenant agrees to accept the Leased Premises in "As Is" condition. All improvements to the Leased Premises will be done by Tenant, at Tenant's sole cost and expense, and in accordance with the plans and specifications agreed upon by Landlord and Tenant and attached to this lease, with the exception that Landlord will provide Tenant with the following, at Landlord's cost: (a) Recarpet the third (3rd) floor lobby and all executive offices with building standard carpeting. (b) Repaint and/or touch up of paint in areas agreed to by Landlord and Tenant after an inspection tour made prior to execution of this Lease. (c) Clean carpet in high traffic areas agreed to by Landlord and Tenant. (d) Installation of four (4) additional light fixtures in third (3rd) floor lobby. Tenant agrees, with respect to tenant improvements made under Paragraphs 1 and 2 of the Addendum, that all such improvements shall be made in a good and workmanlike manner, with comparable materials to those presently used on the Leased Premises, Tenant shall pay all costs in a timely manner to prevent the imposition of any liens for labor or materials furnished or, if a lien is filed, Tenant shall immediately bond same. 3. TENANT ELECTRICITY. Landlord shall install at Landlord's sole cost and expense a separate meter in the designated HVAC area(s) of the Leased Premises, shown on plans and specifications, dated _________________, where separate HVAC units have been installed. The cost of electricity for operation of these units during the term of the Lease shall be at Tenant's sole cost and paid as additional rental pursuant to the terms and provisions of this Lease upon receipt of invoices from Landlord. In addition, Tenant shall Landlord's Initial J.Y.E. _____ Tenant's Initial H.R.B. _____ ADDENDUM TO LEASE - Page 1 27 be given an annual credit of $9,000.00 toward the electrical, operating costs of these units, such credit to be applied as charges for electrical operating costs of these units are billed to Tenant. 4. CANCELLATION. After the completion of one (l) full calendar year of occupancy from the Commencement Date and if the Tenant is not then in default, Tenant shall have the right to cancel this Lease as to any portion of the Leased Premises on the first (1st) and second (2nd) floors with six (6) months prior written notice to Landlord. Notwithstanding anything to the contrary, throughout the term of this Lease, Tenant shall remain liable for rent and charges for the entire third (3rd) floor. 5. SIGNAGE. Landlord reserves the right to change the exterior monument sign subject to the final approval of the Tenant, such approval not to be unreasonably withheld, and master plan developer. So long as Tenant occupies the largest Rentable Area of any tenant in the Building, Tenant shall be permitted to largest signage area on the monument sign. 6. BROKERS. Tenant represents and warrants to Landlord that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real estate broker other than Zann Commercial Brokerage, Inc., as Landlord's agent, and Alliance Commercial, Inc., as Tenant's agent, for the primary term of this Lease in the negotiating or making of this Lease, and Tenant agrees to indemnify and hold Landlord harmless from any claim or claims, as well as costs and expenses including attorneys' fees incurred by Landlord in conjunction with any such claim or claims, of Zann Commercial Brokerage, Inc. and Alliance Commercial, Inc. or any broker or brokers claiming to have interested Tenant in the Building or Premises or claiming to have caused Tenant to enter into this Lease. 7. LANDLORD'S LIABILITY. Notwithstanding anything in this Lease to the contrary, covenants, undertakings and agreements herein made on the part of Landlord are made and intended not for the purpose of binding Landlord personally or the assets of Landlord but are made and intended to bind only the Landlord's interest in the Leased Premises and Building, as the same may, from time to time, be encumbered and no personal liability shall at any time be asserted of enforceable against Landlord or its stockholders, officers or partners or their respective heirs, legal representatives, successors and assigns on account of the Lease or on account of any covenant, undertaking or agreement of Landlord in this Lease contained. 8. AUTHORITY OF TENANT. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation, and that this Lease is binding upon said corporation. 9. NO ACCORD OR SATISFACTION. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent and other sums due hereunder shall be deemed to be other than on account of the earliest rent or other sums due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or other sums or pursue any other remedy provided in this Lease. Landlord's Initial ____ Tenant's Initial ____ ADDENDUM TO LEASE - Page 2 28 10. HAZARDOUS WASTE. Tenant covenants not to introduce any hazardous or toxic materials onto the Leased Premises, Building or real property described in Exhibit "A-1" (collectively the "Property") without (a) first obtaining Landlord's written consent and (b) complying with all applicable federal, state, and local laws or ordinances pertaining to the transportation, storage, use or disposal of such materials, including but not limited to obtaining proper permits. If Tenant's transportation, storage, use or disposal of hazardous or toxic materials on the Property results in (1) contamination of the soil or surface or ground water or (2) loss or damage to person(s) or property, then Tenant agrees to respond in accordance with the following paragraph. Tenant agrees (i) to notify Landlord immediately of any contamination, claim of contamination, loss or damage, (ii) after contamination and approval by Landlord, to clean up the contamination in full compliance with all applicable statutes, regulations, and standards, and (iii) to indemnify, defend, and hold Landlord harmless from and against any claims, suits, causes of action, costs, and fees, including attorney's fees, arising from or connected with any such contamination, claim of contamination, loss or damage. This provision shall survive termination of this Lease. 11. NO ACCESS TO ROOF. Tenant shall have no right of access to the roof of the Premises or the Building and shall not install, repair, or replace any aerial, fan, air conditioner, or other device on the roof of the Premises or the Building without the prior written consent of Landlord. Any aerial, fan, air conditioner, or device installed without such consent shall be subject to removal, at Tenant's expense, without notice, at any time. 12. RENEWAL OPTION. If, at the end of the primary term of this Lease, Tenant is not in default of any of the terms, conditions, or covenants of the Lease, Tenant, but not any assignee or subtenant of Tenant, is hereby granted two (2) options to renew this Lease, each for an additional term of thirty-six (36) months, upon the same terms and conditions contained in this Lease with the following exceptions: (a) The last of the two (2) renewal terms will contain no further renewal options unless specifically granted by Landlord in writing; and (b) The rental rate for each renewal term will be based on the then prevailing rental rates for properties of equivalent quality, size, utility, and location in the Clear Lake area of Houston, Texas, with the length of the Lease term and credit standing of Tenant to be taken in account. If Tenant desires to renew this Lease, Tenant will notify Landlord in writing of its intention to renew no later than six (6) months prior to the expiration date of the primary term or renewal term of the Lease, as applicable; Landlord shall, within the next fifteen (15) days notify Tenant in writing of the proposed rental rate. Tenant shall, thereafter, have fifteen (15) days to accept or reject the proposed rental rate. If accepted, Tenant shall execute within the next fifteen (15) days after such acceptance a new Lease containing the same terms and conditions as the present Lease but specifying the new rental rate. If Tenant fails to execute the new lease timely, then this Lease shall terminate on the day and date of expiration of the primary term or renewal term, as applicable. Landlord's Initial ____ Tenant's Initial ____ ADDENDUM TO LEASE - Page 3 29 13. FIRST RIGHT OF REFUSAL. As available and provided Tenant is not in default of this Lease Agreement, Tenant, but not any assignee or sublessee of Tenant, is hereby granted a First Right of Refusal on all space within a given floor which is contiguous to space then leased by Tenant on the floor. Such option shall be at the rate and terms then offered by Landlord to a prospective tenant but, further, shall be subordinate to any pre-existing tenant having a First Right of Refusal for such space in the building. Upon written notice from landlord to Tenant that any such space is available and the terms to lease such space, Tenant agrees to respond within the next ten (10) days by written notice of Tenant's intention to accept or reject such space on the terms offered. Any failure of Tenant to respond in writing within the ten (10) day period shall be deemed as a waiver of Tenant's election to lease such space then being offered. Landlord's Initial ____ Tenant's Initial ____ 1070/125/d/add.8.14 ADDENDUM TO LEASE - Page 4 30 Abstract I: described as follows: Being 4.5170 acres (196,762 square feet) of land situated in the Sarah Deel League. Abstract 13, Harris County, Texas, and being out of Unrestricted Reserve "D" (Block 3) of Clear Lake City Industrial Park, Section "D-3", recorded in Volume 281, Page 29 of the Harris County Map Records: said 4.5170 acres (196,762 square feet) of land being more particularly described by metes and bounds as follows (all bearings referenced to the Texas Coordinate System, South Central Zone); BEGINNING: at a 5/8 inch iron rod found for the northwest corner of that certain 1.9735 acre tract of land conveyed to St. Johns Professional Joint Venture by instrument recorded under File Number J771777 and Film Code 099-84-0657 of the Harris County Official Public Records of Real Property and being the southwest corner of the herein described tract of land and also being in the east right-of-way line of Regents Park Drive, based on 60 feet in width; THENCE N 23-14-00 E 274.00 feet, with the east right-of-way line of said Regents Park Drive, to a 5/8 inch iron rod found for the beginning of a curve; THENCE 119.76 feet (called 119.74 feet), with the arc of a curve to the right in the east right-of-way line of said Regents Park Drive whose chord bears N 31-24-06 E 119.35 feet (called N 31-24-03 E 119.35 feet) and having a central angle of 16-20-13 (called 16-20-05) and a radius of 420.00 feet, to a 5/8 inch iron rod found for the end of the curve; THENCE N 39-34-13 E 28.82 feet, with the east right-of-way line if said Regents Park Drive, to a 5/8 inch iron rod set for the northwest corner of this tract; THENCE S 66-46-00 E 200.00 feet to a 5/8 inch iron rod set for a corner of this tract; THENCE N 23-14-00 E 140.00 feet to a 5/8 inch iron rod set for a corner of this tract; THENCE S 66-46-00 E 184.60 feet to a 5/8 inch iron rod set for the northwest corner of this tract and being in the west right-of-way line of Gemini Avenue, based on 80 feet in width; THENCE 32.52 feet, with the arc of a curve to the right in the west right-of- way line of said Gemini Avenue whose chord bears S 22-39-00 W 32.52 feet and having a central angle of 1-10-00 and a radius of 1597.02 feet, to a 5/8 inch iron rod found for the end of the curve; THENCE S 23-14-00 W 527.28 feet, with the west right-of-way line of said Gemini Avenue, to a 5/8 inch iron rod found for the southwest corner of this tract, same being the northeast corner of said 1.9735 acre tract; THENCE N 66-46-00 W 410.00 feet to the PLACE OF BEGINNING and containing 4.5170 acres (196,762 square feet) of land. 31 EXHIBIT "A-1" "Tract 2" described as follows: Being 0.3259 acres (35,978 square feet) of land situated in the Sarah Deed League, Abstract 13, Harris County, Texas and being out of Unrestricted Reserve "D" (Block 3) of Clear Lake City Industrial Park, Section "D-3", recorded in Volume 281, Page 29 of the Harris County Map Records and also being out of that certain 8.2552-acre tract of land conveyed to Gemini Development, LTD. By instrument recorded under File No. J-965546 and File Code No. ###-##-#### of the Harris County Official Public Records of Real Property; said 0.8259 acres (35,978 square feet) of land being more particularly described by metes and bounds as follows (all bearings referenced to the Texas Coordinate System, South Central Zone); BEGINNING at a 5/8 inch iron rod found for the Northwest corner of that certain 1.9735-acre tract of land conveyed to St. Johns Professional Joint Venture by instrument recorded under File No. J-771777 and File Code No.###-##-#### of the Harris County Official Public Records of Real Property and being the Southwest corner of the herein described tract of land and also being in the East right-of-way line of Regents Park Drive based on 60 feet in width; THENCE North 23" 14" 00" East 34.50 feet with the East right-of-way line said Regents Park Drive, to an "X" in concrete; THENCE South 66" 46" 00" East 68.00 feet to an "X" in concrete; THENCE South 23" 14" 00" East 30.50 feet to a 1/2 inch iron rod; THENCE South 64" 46" 00" East 56.00 feet to an "X" in concrete; THENCE North 23" 14" 00" East 57.00 feet to an "X" in concrete; THENCE South 66" 46" 00" East 230.00 feet to an "X" in concrete; THENCE South 23" 14" 00 West 87.50 feet to an "X" in concrete; THENCE South 66" 46" 00" East 56.00 feet to an "X" in concrete in the West right-of-way line said Gemini Avenue, to a 5/8 inch iron rod for the Southwest corner of the tract, same being the Northeast corner of said 1.9735 area tract; THENCE North 66" 46" 00" West 410.00 feet to the PLACE OF BEGINNING and containing 0.8259 acres (35,978 square feet) of land. 32 EXHIBIT "A-1" SQUARE FOOTAGE AREAS BY FLOOR
FLOOR SF/NRA 3rd 25,647 346,234.50 (28,852.88) 2nd 1,618 2,102 54,818.50 (4,984)87) 711 1st 2,482 33,507 (2,792.)25) ------------- 32,560 Total ------------- $439,560 Year
33 EXHIBIT "A-2" THIRD FLOOR PLAN 1331 Gemini 3rd FLOOR 25,647 SF NRA 34 EXHIBIT "A-3" FLOOR PLAN 35 EXHIBIT "A-3" FLOOR PLAN 36 EXHIBIT "A-3" FLOOR PLAN 37 EXHIBIT "A-4" FIRST FLOOR PLAN 1331 GEMINI 1st FLOOR 2,158 SF USABLE ) ) = 15% 2,482 SF NRA ) 38 Rules And Regulations HALLS AND PASSAGEWAYS 1. The sidewalks, halls, corridors, stairways and elevators in and around the Building shall not be obstructed by any Tenant or Tenant's invitees, employees or visitors or be used by them for any purpose other than for ingress and egress to and from the Leased Premises. HEAVY EQUIPMENT 2. All safes or similar heavy equipment or articles shall be brought into the Building at such time and in such a manner as Landlord shall designate; and Landlord shall have the right to determine or limit the weight, size and position of all safes and other heavy equipment brought into the Leased Premises. Landlord will not be responsible for loss of or damage to any such safe or property from any cause, and all damage done to the Building by moving or maintaining any such safe or property shall be repaired at the expense of Tenant. SIGNS/DIRECTORY 3. No sign, placard, picture, advertisement, name or notice shall be painted or affixed by Tenant to the interior or exterior of Building without the prior written consent of Landlord. Name plates on the entry door to the Leased Premises will be provided by Landlord. A building directory located in a prominent place and containing the names of the tenants will be provided by Landlord. Initial directory listings or name plates will be at the cost of the Landlord; however, any changes or revisions in the graphics provided for herein, will be at the expense of Tenant. Tenant will advise Landlord in writing as to the wording of the initial listing and/or the revised listing, should such become necessary Tenant will be permitted the use of his name and title on directory and name plate listings. FIRE PROTECTION 4. Tenant shall not do or permit to be done in the Leased Premises, or keep anything therein, which shall in any way increase the rate of fire insurance on the Building or on property kept therein, or obstruct or interfere with the rights of other tenants, or conflict with the laws relating to fire or any regulations of the Fire Department or with an insurance policy upon said Building. Landlord acknowledges Tenant's requirement for the use of torches and/or alcohol burners in the course of normal dental procedures and offers no objection to same provided due diligence is exercised by Tenant. It is understood that Landlord does not absolve Tenant of responsibility wherein negligence is committed. JANITOR 5. Landlord will maintain janitorial services on a five (5) day per week schedule, and the janitor or his agent shall be allowed admittance into the Leased Premises after 5:30 p.m., or at any other time, should it become necessary. Janitorial service shall include ordinary dusting and cleaning and vacuuming of carpet or rugs. Shampooing of carpets or rugs, moving of furniture, or other special services shall not be included. Tenant shall not cause any unnecessary labor expense by reason of carelessness or indifference in the preservation of good order and cleanliness. Landlord will exercise reasonable care and discretion in selecting janitorial services; however, Landlord shall not be responsible for any damage done to the effects of any Tenant by the janitor or any other person. Tenant shall ensure that the doors of the Leased Premises are closed and securely locked before leaving the Building. LOCKS 6. The Tenant shall not alter any lock nor install any new lock nor any additional locks or bolts on any door of the Leased Premises without the prior written consent of Landlord. If the Landlord gives its consent, the Tenant shall furnish the Landlord with two (2) keys for any such lock. Upon termination of tenancy, Tenant must return to the Landlord all keys to offices, Leased Premises and Building and in the event of loss of such keys, Tenant shall pay to Landlord the cost of replacing same or changing the lock or locks opened by such lost key. If Landlord deems it necessary to make such changes when Tenant takes occupancy of the Leased Premises two (2) suite keys per lock will be furnished by Landlord; all additional keys will be requested from Landlord in writing and will be provided at Tenant's expense. (Page 1 of 3) 39 BUILDING HOURS 7. On Sundays, holidays and between the hours of 6:00 p.m. and 7:00 a.m., access to the Building or halls, corridors or stairways may be refused unless the person seeking access is known to the person or employee in charge of the Building, or is otherwise properly identified. Landlord reserves the right to maintain a register requiring persons to sign same when requesting admittance after normal working hours. Landlord shall in no event be liable for damages for any error with regard to the admission to or exclusion from the building of any person seeking admittance. LIGHT AND PASSAGEWAYS 8. Doors, skylights and windows which reflect or admit light and air into the corridors and passageways or to any place in the Building shall not be obstructed or covered by Tenant. UTILITIES 9. The water closets, lavatories and other fixtures shall not be used for any purpose other than that for which they were designed and no foreign substance of any kind whatsoever shall be thrown therein. All damage resulting from any misuse of the utilities or fixtures shall be at the expense of the Tenant, his employees or visitors who cause same. Tenant shall not waste water or other utility services and shall observe strict care and caution that all water faucets, light and/or other apparatus are entirely shut off before Tenant or Tenant's employees leave the Building. PARKING 10. (a) All vehicles will be parked within designated areas; blocking of walkways, loading areas, entrances or driveways shall not be permitted. Tenant hereby agrees to comply with such parking rules and regulations as Landlord may establish. (b) Landlord reserves the right to remove motor vehicles which are in violation of the parking rules and regulations of Landlord. In the event the vehicle belongs to Tenant or Tenant's directors, officers, employees, agents invitees, or guests. Tenant shall defend and hold harmless Landlord, and/or Landlord's agents from any and all actions which might arise as a result of the motor vehicle's removal. EXCESS TRASH DISPOSAL 11. It will be Tenant's responsibility to dispose of excess trash such as crates, boxes, etc. which will not fit into office wastebaskets and all trash resulting from Tenant's moving in and out of the Leased Premises. Tenant will not set such items in the hallways or other areas of the Building, unless permission is obtained from Landlord or special arrangements are made for such disposal. If arrangements have been made with Landlord, or if Tenant does not abide by the terms and conditions of this paragraph, Landlord will, at Tenant's cost, dispose of any and all trash, waste, and debris and will invoice Tenant for payment on demand. HAND TRUCKS 12. Hand trucks or carts used in the delivery of furniture, merchandise or equipment for any Tenant must be equipped with rubber tires and side guards. CARPET AND/OR FLOOR DAMAGE 13. Tenant will be responsible for any damage or the correcting of any damage to carpeting and/or flooring as a result of rust, or mildew or water from plants, or casters or other objects. No floor coverings shall be affixed to the floor of the Leased Premises in any manner except by a material which may easily be removed with water, the use of cement or other similar adhesive material being expressly prohibited. The affixing, and/or method of affixing any such covering shall be subject to written approval of Landlord. The expense of repairing any damage from a violation of this rule shall be borne by Tenant. CARTAGE 14. Landlord shall have the right to approve Tenant's moving, furniture delivery, equipment delivery, or freight forwarding company (hereinafter referred to as cartage agent) and/or require a reasonable deposit to cover any damage to the real property or to Landlord's personal property. Landlord (Page 2 of 3) 40 shall require any cartage agent of Tenant to maintain liability insurance in the minimum amount of $500,000.00, workman's compensation insurance, and property damage insurance in the minimum amount of $100,000.00. Prior to the move, Tenant shall require the cartage agent to make available to Landlord a representative to coordinate activities and familiarize himself with the building rules, and, following the move, to inspect the Leased Premises and/or the Building for damages. Landlord shall have the right to limit the hours in which Tenant may either move in or out of the Building or Leased Premises. Additionally, Landlord shall have the right from time to time to make rules and regulations governing the protection of the real property and Landlord's personal property from damage as a result of the cartage agent's activities. Notwithstanding anything to the contrary contained herein, Tenant shall remain responsible for cartage agent's actions or failure to act while in or about the Leased Premises and Building. MISCELLANEOUS 15. (a) Where elevator service is available, Landlord shall not be liable for any damage resulting from stoppage or delays in connection with such service. (b) Tenant shall not bring into the Building any bicycles or similar vehicle. (c) No dogs or other animals are permitted in the Building. (d) Canvassing soliciting and peddling in the Building are prohibited, and each Tenant shall cooperate to prevent same. (e) Tenant shall not sweep or throw or permit to be swept or thrown from the Leased Premises into the corridors or stairways or elevators of the Building any dirt or debris or other substance; nor shall any Tenant use, keep or permit to be used any foul or noxious gas or substance in the Leased Premises which is or could be offensive or objectionable to the Landlord or other occupants of the Building by reason of odors, noise and/or vibrations. (f) All contractors and/or technicians performing work for Tenant within the Leased Premises or Building must be approved prior to commencing any work therein. (g) The Landlord reserves the right to make modifications hereto and add or delete such other rules and regulations as in its judgment may be required for the safety, care and cleanliness of the Leased Premises and Building. Tenant agrees to abide by all such rules and regulations. (h) Tenant shall notify Landlord in advance of proposed dates of occupancy, vacation, or moving of furniture or equipment into or out of the Building or Leased Premises. (i) Tenant will be solely responsible for abuse or harm to any plants provided by Landlord within the Leased Premises, Building lobby, or corridors; and will not permit his employees, agents, or invitees to water, prune, trim or disturb the plants in any manner whatsoever. (j) Tenant will be required to furnish plastic desk mats for chairs and other furniture to protect the carpet and other floor coverings. (Page 3 of 3) 41 EXHIBIT "D" SIGNAGE 42 EXHIBIT "F" LIST OF HOLIDAYS NEW YEAR'S DAY MEMORIAL DAY INDEPENDENCE DAY LABOR DAY THANKSGIVING DAY CHRISTMAS DAY 43 EXHIBIT "E" LIST OF GOVERNMENT CONTRACTS FOR CANCELLATION 44 FLOOR PLAN GEMINI AVENUE 45 FLOOR PLAN GEMINI AVENUE 46 LEASE CONTRACT, AMENDMENT ONE [BARRIOS TECHNOLOGY LETTERHEAD] October 9, 1992 Peter Mehlert President Sumar Enterprises 15720 JFK Boulevard, Suite 320 Houston, Texas 77032 Subject: Lease Contract Between Aetna Life Insurance Company and Barrios Technology, Inc. In accordance with the subject Lease Contract, Exhibit C, Section 4, Barrios Technology, Inc. (BTI) hereby provides written notification for the cancellation of the lease of space on the Second Floor at 1331 Gemini. This notice shall be effective November 1, 1992 and leased space shall be terminated April 30, 1993. All BTI personnel shall be moved off the second floor by April 30, 1993. Any questions regarding the termination of this leased space should be directed to Wes Brown at 280-1851 on or before October 23, 1992. Sincerely, /s/ Wesly O. Brown ------------------------ Wes Brown Facilities Manager concurrence: /s/ SANDRA G. JOHNSON --------------------- Sandra G. Johnson Vice President of Operations 47 EXHIBIT "C" ADDENDUM TO LEASE 1. ADDITIONS TO LEASED PREMISES. As part of the Leased Premises described in this Lease, Tenant agrees to lease two (2) additional areas, not previously Leased by Tenant, in "As Is" condition on the first (1st) floor encompassing approximately Two Thousand Four Hundred Sixty-five (2,465) square feet of Rentable Area as per Exhibit "A-4" attached hereto. Tenant shall pay monthly rent on these two (2) additional areas at the rate of $5.50 per square foot of Rentable Area per year through November 30, 1991. Commencing December 1, 1991, base rent on these two (2) additional areas shall increase to $13.50 per square foot of Rentable Area per year with a an expense stop equal to Estimated Basic Cost as set forth in Paragraph 13.A of the Lease. Landlord agrees to provide an allowance of up to $3.00 per usable square foot times the number of usable square feet within these two (2) additional areas for tenant improvements made by Tenant in accordance with plans and specifications agreed upon by Landlord and Tenant and attached to this Lease. The allowance is payable on December 1, 1991, based on copies of paid invoices furnished by Tenant to Landlord evidencing costs of improvements in these two (2) additional areas. 2. TENANT IMPROVEMENTS; ACCEPTANCE OF PREMISES. Tenant agrees to accept the Leased Premises in "As Is" condition. All improvements to the Leased Premises will be done by Tenant, at Tenant's sole cost and expense, and in accordance with the plans and specifications agreed upon by Landlord and Tenant and attached to this lease, with the exception that Landlord will provide Tenant with the following, at Landlord's cost: (a) Recarpet the third (3rd) floor lobby and all executive offices with building standard carpeting. (b) Repaint and/or touch up of paint in areas agreed to by Landlord and Tenant after an inspection tour made prior to execution of this Lease. (c) Clean carpet in high traffic areas agreed to by landlord and Tenant. (d) Installation of four (4) additional light fixtures in third (3rd) floor lobby. Tenant agrees, with respect to tenant improvements made under Paragraphs 1 and 2 of the Addendum, that all such improvements shall be made in a good and workmanlike manner, with comparable materials to those presently used on the Leased Premises, Tenant shall pay all costs in a timely manner to prevent the imposition of any liens for labor or materials furnished or, if a lien is filed, Tenant shall immediately bond same. 3. TENANT ELECTRICITY. Landlord shall install at Landlord's sole cost and expense a separate meter in the designated HVAC area(s) of the Leased Premises, shown on plans and specifications, dated , where separate HVAC units have been installed. The cost of electricity for operation of these units during the term of the Lease shall be at Tenant's sole cost and paid as additional rental pursuant to the terms and provisions of this Lease upon receipt of invoices from Landlord. In addition, Tenant shall Landlord's Initial ___ Tenant's Initial ___ ADDENDUM TO LEASE - Page 1 48 be given an annual credit of $9,000.00 toward the electrical, operating costs of these units, such credit to be applied as charges for electrical operating costs of these units are billed to Tenant. 4. CANCELLATION. After the completion of one (1) full calendar year of occupancy from the Commencement Date and if the Tenant is not then in default, Tenant shall have the right to cancel this Lease as to any portion of the Leased Premises on the first (1st) and second (2nd) floors with six (6) months prior written notice to Landlord. Notwithstanding anything to the contrary, throughout the term of this Lease, Tenant shall remain liable for rent and charges for the entire third (3rd) Floor. 5. SIGNAGE. Landlord reserves the right to change the exterior monument sign subject to the final approval of the Tenant, such approval not to be unreasonably withheld, and master plan developer. So long as Tenant occupies the largest Rentable Area of any tenant in the Building, Tenant shall be permitted to largest signage area on the monument sign. 6. BROKERS. Tenant represents and warrants to Landlord that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real estate broker other than Zann Commercial Brokerage, Inc., as Landlord's agent, and Alliance Commercial, Inc., as Tenant's agent, for the primary term of this Lease in the negotiating or making of this Lease, and Tenant agrees to indemnify and hold Landlord harmless from any claim or claims, as well as costs and expenses including attorneys' fees incurred by Landlord in conjunction with any such claim or claims, of Zann Commercial Brokerage, Inc. and Alliance Commercial, Inc. or any broker or brokers claiming to have interested Tenant in the Building or Premises or claiming to have caused Tenant to enter into this Lease. 7. LANDLORD'S LIABILITY. Notwithstanding anything in this Lease to the contrary, covenants, undertakings and agreements herein made on the part of Landlord are made and intended not for the purpose of binding Landlord personally or the assets of Landlord but are made and intended to bind only the Landlord's interest in the Leased Premises and Building, as the same may, from time to time, be encumbered and no personal liability shall at any time be asserted or enforceable against Landlord or its stockholders, officers or partners or their respective heirs, legal representatives, successors and assigns on account of the Lease or on account of any covenant, undertaking or agreement of Landlord in this Lease contained. 8. AUTHORITY OF TENANT. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation, and that this Lease is binding upon said corporation. 9. NO ACCORD OR SATISFACTION. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent and other sums due hereunder shall be deemed to be other than on account of the earliest rent or other sums due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or other sums or pursue any other remedy provided in this Lease. Landlord's Initial ___ Tenant's Initial ___ ADDENDUM TO LEASE - Page 2 49 SECOND AMENDMENT TO LEASE AGREEMENT THIS SECOND AMENDMENT TO LEASE AGREEMENT (this "First Amendment") is made and entered into this 7 day of February, 1994, by and between AETNA LIFE INSURANCE COMPANY, a Connecticut corporation (hereinafter "Landlord") and BARRIOS TECHNOLOGY, INC., a Texas corporation (hereinafter "Tenant"). WITNESSETH WHEREAS, by that certain Lease Contract dated August 21, 1991 (as amended, the "Lease") Landlord leased to Tenant approximately 32,560 square feet of Rentable Area of office space located on floors 1-3 (the "Leased Premises") of the building known as Gemini Development Office Building located at 1331 Gemini Street in Clear Lake City, Harris County, Texas (the "Building"), all as is more fully described in the Lease; and WHEREAS, pursuant to the Lease Landlord and Tenant subsequently reduced the Leased Premises by an aggregate amount of approximately 7,144 square feet of Rentable Area; and WHEREAS, Landlord and Tenant entered into that certain letter agreement dated October 7, 1993 and agreed and accepted on December 1, 1993 (the "First Amendment") amending the Lease to provide, among other provisions, for the reduction of the Leased Premises by approximately 3,330 square feet of Rentable Area; and WHEREAS, Landlord and Tenant desire to further amend the Lease by reducing the Leased Premises and to extend the term of the Lease under the terms and conditions as set forth below: NOW, THEREFORE, in consideration of the mutual covenants set forth herein, Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree to amend, and do hereby amend, the Lease as follows: 1. Relinquishment of First Floor Premises. So long as Tenant is not in default under this Lease, effective March 1, 1994, (the "First Floor Relinquishment Date") Landlord hereby takes back from Tenant and Tenant does hereby relinquish to Landlord 2,674 square feet of Rentable Area on the first floor of the Building, as shown cross-hatched on the floor plan attached as Exhibit A hereto and made a part hereof for all purposes (the "First Floor Relinquishment Premises"). From and after the First Floor Relinquishment Date all of Tenant's rights, privileges, duties and obligations accruing with respect to the First Floor Relinquishment Premises, including, without limitation, Tenant's right to possession and use thereof, shall terminate, except that Tenant shall be liable for all Base Rental and other sums due and owing from Tenant to Landlord (including, without limitation, all amounts accruing pursuant to Paragraph 13 of the Lease) with respect to such space accruing to the First Floor Relinquishment Date. Landlord and Tenant hereby agree that from and after the First Floor Relinquishment Date, the definition of "Leased 50 Premises" set forth in Paragraph 1 of the Lease shall be stipulated to mean 19,412 square feet of Rentable Area located on the third (3rd) floor of the Building. Accordingly, Tenant's "Basic Cost" and "Estimated Basic Cost" components of Base Rental calculated pursuant to Paragraph 13.B. of the Lease shall be proportionately reduced from and after the First Floor Relinquishment Date. 2. Partial Relinquishment of Third Floor Premises. So long as Tenant is not in default under this Lease either at the time of exercise or at the time of termination, effective November 30, 1994 (the "Sublease Premises Relinquishment Date") Landlord hereby agrees to take back from Tenant and Tenant does hereby agree to relinquish to Landlord 1,711 square feet of Rentable Area on the third floor of the Leased Premises as shown cross-hatched on the floor plan attached as Exhibit B hereto and made a part hereof for all purposes (the "Sublease Relinquishment Premises"). From and after the Sublease Premises Relinquishment Date all of Tenant's rights, privileges, duties and obligations accruing with respect to the Sublease Relinquishment Premises, including, without limitation, Tenant's right to possession and use thereof, shall terminate, except that Tenant shall be liable for all Base Rental and other sums due and owing from Tenant to Landlord (including, without limitation, all amounts accruing pursuant to Paragraph 13 of the Lease) with respect to such space accruing to the Sublease Premises Relinquishment Date. Landlord and Tenant hereby agree that from and after the Sublease Premises Relinquishment Date, the definition of "Leased Premises" set forth in Paragraph 1 of 5 the Lease shall be stipulated to mean 17,701 square feet of Rentable Area located on the third (3rd) floor of the Building. Accordingly, Tenant's "Basic Cost" and "Estimated Basic Cost" components of Base Rental calculated pursuant to Paragraph 13.B. of the Lease shall be proportionately reduced from and after the Sublease Premises Relinquishment Date. 3. Condition of Premises. Tenant shall vacate the First Floor Relinquishment Premises and the Sublease Relinquishment Premises no later than the dates specified in Sections 1 and 2 above. Tenant shall leave those portions of the Leased Premises in a clean and orderly condition in accordance with Paragraph 6.B. of the Lease. 4. Renewal Term. Subject to and upon the terms, provisions and conditions set forth herein and in the Lease, or in any exhibit hereto or to the Lease, the term of the Lease as to the remaining portion of the Leased Premises shall be extended for a period of four (4) years commencing on March 1, 1994 and expiring on February 28, 1998 (the "Termination Date"). 5. Rent. Base Rental payable by Tenant during the renewal term shall be determined according to the following schedule:
Lease Year Base Rental Rate - ---------- ---------------- 1-2 $11.50 per square foot of Rentable Area within the Leased Premises 3 $12.00 per square foot of Rentable Area within the Leased Premises 4 $12.50 per square foot of Rentable Area within the Leased Premises
In addition, Tenant agrees to pay all additional rental with respect to the Leased Premises in accordance with Paragraph 13.B. of the Lease. Tenant's "Basic Cost" and "Estimated Basic Cost" components of Base Rental as calculated pursuant to Section -2- 51 13.B. of the Lease during the renewal term shall be determined based on the Basic Cost for the calendar year 1994. Tenant agrees to pay all other sums payable to Landlord by Tenant with respect to the Leased Premises on the terms and conditions provided for in the Lease. 6. Leased Premises Improvements; Moving Expenses. Tenant acknowledges that (i) no representations as to the repair of the Leased Premises or the Building, nor promises to alter, remodel or improve the Leased Premises or the Building have been made by Landlord in connection with the renewal term and (ii) the Leased Premises shall be delivered to Tenant on March 1, 1994 in its current condition, i.e., "AS IS" and "WITH ALL FAULTS". Tenant shall be responsible for all expenses or costs incurred by Tenant in connection with (i) Tenant's relinquishment of the First Floor Relinquishment Premises and relocation to the third (3rd) floor portion of the Leased Premises and (ii) Tenant's remodeling of the third (3rd) floor portion of the Leased Premises in accordance with the specifications attached hereto as EXHIBIT C. 7. Exhibits. The third page of Exhibit A-1 and Exhibit A-2, Exhibit A-3 and Exhibit A-4 to Lease are hereby deleted in their entirety. In addition, paragraphs 1, 2, 4, 6, 12 and 13 of Exhibit C to the Lease are hereby deleted. 8. Parking. Landlord will provide parking to Tenant during the renewal term in accordance with Paragraph 22.A. of the Lease at no cost to Tenant. 9. Landlord Services. Landlord will provide to Tenant those services described in Paragraph 5 of the Lease during the renewal term. Air conditioning and heating will be provided during normal business hours of the Building which are currently 7:00 a.m. to 6:00 p.m., Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturday. After hours air conditioning will be made available to Tenant in accordance with the terms of the Lease at the rate then charged by Landlord from time to time which is currently $25.00 per hour. 10. Brokerage Commissions. Tenant hereby represents and warrants to Landlord that Tenant has not employed any agents, brokers or other such parties in connection with this Second Amendment, and agrees that Tenant shall hold Landlord harmless from and against any and all claims of agents, brokers, or other such parties claiming by or through Tenant. 11. Miscellaneous. (a) Amendment to Lease. Tenant and Landlord acknowledge and agree that the Lease has not been amended or modified in any respect, other than by the First Amendment and this Second Amendment, and there are no agreements of any kind currently in force and effect between Landlord and Tenant with respect to the Leased Premises or the Building. (b) Counterparts. This Second Amendment may be executed in multiple counterparts, and each counterpart when fully executed and delivered shall constitute an original instrument, and all such multiple counterparts shall constitute but one and the same instrument. -3- 52 (c) Entire Agreement. This Second Amendment sets forth all covenants, agreements and understandings between Landlord and Tenant with respect to the subject matter hereof and there are no other covenants, conditions or understandings, either written or oral, between the parties hereto except as set forth in this Second Amendment. (d) Lease Governs. Except as expressly provided herein, the Leased Premises shall be governed by the same terms and conditions as the Lease. (e) Full Force and Effect. Except as expressly amended hereby, all other items and provisions of the Lease remain unchanged and continue to be in full force and effect. (f) Conflicts. The terms of this Second Amendment shall control over any conflicts between the terms of the Lease and the terms of this Second Amendment. (g) Authority of Tenant. Tenant warrants and represents to Landlord that (i) Tenant is a duly organized and existing legal entity, in good standing in the State of Texas, (ii) Tenant has full right and authority to execute, deliver and perform this Second Amendment; (iii) the persons executing this Second Amendment were authorized to do so and (iv) upon request of Landlord, such persons will deliver to Landlord satisfactory evidence of their authority to execute this Second Amendment on behalf of Tenant. (h) Capitalized Terms. Capitalized terms not defined herein shall have the same meanings attached to such terms under the Lease. (i) Successors and Assigns. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Executed as of the first day written above. LANDLORD AETNA LIFE INSURANCE COMPANY By: /s/ Janice Y. Ewell --------------------------------- Name: Janice Y. Ewell Title: Director TENANT BARRIOS TECHNOLOGY, INC. By: /s/ Dale Pittman --------------------------------- Name: Dale Pittman Title: Contracts Manager -4- 53 Exhibit A 01 FIRST FLOOR PLAN [MAP] FIRST FLOOR PLAN AS BUILTS 1331 GEMINI CLEAR LAKE CITY, TEXAS [AINSLIE ARCHITECTS LOGO] 54 Exhibit B 01 THIRD FLOOR PLAN [MAP] THIRD FLOOR PLAN AS BUILTS 1331 GEMINI CLEAR LAKE CITY, TEXAS [AINSLIE ARCHITECTS LOGO] 55 Exhibit C [J&P CONSTRUCTION LOGO] Inquiry No.______________________ General Contractors Date 1-10-94 P.O. Box 122 Terms Net 30 Manvel, Texas 77578 Prices quoted are (713) 431-9263 F.O.B.___________________________ Delivery_________________________ To Barrios Technology Attn.: Mark and or Martha Rubloff Assett Management Company Attn.: Jim Painter or Lynda Salisbury 3rd floor Remodel for Barrios 1331 Gemini We are pleased to quote as follows. Your Inquiry ================================================================================ Quantity Description Price Amount - -------------------------------------------------------------------------------- Electrical: (31) 2X4 Lights relocate (2) switches ( 5) 2X4 Lights rewire (4) 3 way switches ( 3) ded plugs kitchen area ( 9) Power poles relocate FBO ( 3) New power poles (12) 120 Volt circuits ( 1) Sub Panel Misc. Demo and rewire 5,229.00 No Certification of existing 2X4 Lights is in the electrical bid HVAC: Relocate existing diffusers as required New lay out and use existing grills, slots and balance 748.00 Plumbing: Add new bar sink 19"X22" sink stainless steel (1) 6 gallon water heater Coffee maker: lines for rough in and floor coring for waste after Hours 3,245.00 Demo walls 192 lF. 1,216.00 New walls 192 lF. 3,645.00 12 lF. furr wall for plumbing 176.00 Patch sheet rock 346.00 (1) case opening 144.00 Ceiling tile patch 680.00 Grid repair 192.00 Relocate (6) doors 540.00 (6) Lever sets for ADA Compliance 966.00 Uppers and lower cabinets 1,725.00 Raco window Mullion (2) 108.00 Patch carpet building or tenant to supply carpet 460.00 ================================================================================ Bid continued on page -2- By _________Gary Hudson 56 [J&P CONSTRUCTION LOGO] Inquiry No.______________________ General Contractors Date 1-10-94 P.O. Box 122 Terms Net 30 Manvel, Texas 77578 Prices quoted are (713) 431-9263 F.O.B.___________________________ Delivery_________________________ To Barrios Technology attn.: Mr. Wess or Martha Rubloff attn.: Jim Painter or Lynda Salisbury Page -2- We are pleased to quote as follows. Your Inquiry ================================================================================ Quantity Description Price Amount - -------------------------------------------------------------------------------- Bid continued: New base at new walls only and construction related areas 397 LF. 389.00 Paint new walls and construction related areas 5,820 Sq. Ft. 1,397.00 Permits - drawings to obtain permits by others 250.00 Clean up construction area 3,054 Sq. Ft. 760.00 -------- Cost $22,216.00 Tax 1,832.82 ---------- Total $24,048.82 Work is based on regular business hours no overtime no weekend work is included All furniture to be moved by others not included Price god for 30 days Thanks J&P ================================================================================ By Gary Hudson ------------------------------ 57 [CAPITAL DEVELOPMENT LETTERHEAD] January 6, 1995 Mr. Dale Pittman Barrios Technology, Inc. 1331 Gemini, Suite 300 Houston, TX 77058-2799 Dear Dale: As per our conversation, I have agreed to adjust the net rentable square footage of your premises to include a 15% common area factor as opposed to a 20% factor used in your present lease. Therefore, effective January 1, 1995, the net rentable square footage is 17,354 (14,751/.85). In this respect, the new monthly rent is $16,630.92. I hope everything is to your satisfaction. Very truly yours, /s/ Gordon Margolese - ---------------------- Gordon Margolese Vice President GM:sb EX-10.52 8 ASTROTECH - AIR FORCE LEASE AGREEMENT. 1 EXHIBIT 10.52 DEPARTMENT OF THE AIR FORCE Headquarters Air Force Space Command Vandenberg Air Force Base LEASE NO. SPCVAN-2-94-0001 THIS LEASE, made between the Secretary of the Air Force, of the first part, and Astrotech Space Operations, L.P. of the second part, WITNESSETH: The secretary of the Air Force under the authority of Title 10, United States Code, Section 2667 (10 U.S.C. 2667) has determined that the land and facilities hereby leased is not excess property, as defined by 40 U.S.C. 472; is not for the time needed for public use; and leasing it will be advantageous to the United States and in the public interest. This lease is also entered into in furtherance of the purposes of the Commercial Space Launch Act of 1984 (PL 98-575) and the Commercial Space Launch Act Amendments of 1988 (PL 100-657). Therefore, for the consideration set out below and by means of this Lease Agreement, the Air Force leases the land and facilities or property, described in Attachment A, attached hereto and made a part hereof, to the party of the second part, called the "lessee". THIS LEASE is granted subject to the following conditions: 1. Term. This lease shall be for a term of 20 years, beginning on 1 October 1993 and ending on 30 September 2013. 2. Use of Leased_Premises. The lease shall be for the use of land and facilities located at Vandenberg Air Force Base (VAFB), CA, upon which lessee shall build facilities or refurbish existing government facilities, in support of government and commercial launches. 3. Commercialization Agreement. The Department of the Air Force/Astrotech Space Operations Commercialization Agreement, including Annex B for Astrotech Space Operations, L.P. Programs between the 30th Space Wing and Astrotcch Space Operations, L.P. (hereafter "Commercialization Agreement") is hereby incorporated into this Lease Agreement as Attachment B. Each time the Commercializatlon Agreement is revised, it shall supersede its predecessor and be incorporated into this Lease Agreement. In the event of any inconsistency between the provisions of the Lease Agreement and the Commercialization Agreement, the terms of the Lease Agreement shall take precedence. Other supporting documents such as Joint Operating Procedures (JOPs), if entered into, will be subordinate to both of the above documents. 4. Consideration. (a) In consideration for the lease of these premises, the lessee shall perform all maintenance, protection, repair, or restoration of the premises, and any improvements now or to be constructed on them; and pay an annual rental of $35, 000, payable in the amount of $8,750 quarterly in advance on 1 October, 1 January, 1 April and 1 July of each year. Payments shall be made payable to the Treasurer of the United States and forwarded by the lessee direct to Accounting and Finance, Commercial Services, DAO-DE Vandenberg/FS, 1031 California Suite A 216, Vandenberg Air Force Base, California 93437-6011, DSH 276-4964. 2 (b) Lessee shall pay to the United States on demand any sum which may have to be expended after the expiration, revocation, or termination of this lease in restoring the premises to the condition required by Condition 19. 5. Government Representatives and Their Successors. Except otherwise specifically provided, any reference herein to "Commander, 30SPW" or "said officer" shall mean the Commander, 30th Space Wing, or his duly appointed successors and his authorized representatives. 6. Extension of Lease. Subject lease may be extended with agreement of both parties. So long as Lessee satisfactorily complies with the terms and conditions of this Lease Agreement, Lessee shall be given the opportunity for such extension(s). Agreements to renew subject lease will not exceed a term of five years per renewal agreement. In order to support Lessee's commercial requirement to contractually commit up to three (3) years in advance to provide services to its customers utilizing the property that is the subject of this lease, extension of subject lease shall permitted up to three (3) years prior to expiration date of subject lease or subsequent extension. 7. Revocation or Termination by the Government (a) This lease may be revoked by the Deputy Assistant Secretary of the Air Force (Installations) or higher authority at any time upon the failure of the lessee to comply with the terms of this lease. Prior to the revocation, the lessee must be informed, in writing, by the said officer of the terms with which the lessee is not complying and afforded a sixty (60) day period to return to compliance with the provisions of the lease. If the lessee does not return to compliance within the time allotted, the lessee shall vacate the premises within 90 days thereafter. Lessee shall be liable for additional rental costs for this 90-day period and for any costs incurred by the United States in removing lessee from said premises and restoring the premises to the condition that existed on the date this lease was executed. (b) The lease may be terminated by the Deputy Assistant Secretary of the Air Force (Installations) or higher authority in the event of a national emergency declared by Congress or the President, declared or undeclared war involving the United States, or if the Deputy Assistant Secretary determines that the paramount interest of rational defense requires it. If the lease Is terminated by the Government without fault of the lessee, the lessee may request the Government pay the unamortized depreciation of any improvements which have been made to the premises by the lessee. The Government will act in good faith to seek appropriated funds for such purpose, and if authorized by appropriate Government officials, negotiate fair and reasonable compensation for any such unamortized depreciation. 3 8. Termination by Lesee. This lease may be terminated by the lessee at any time by giving the said officer at least sixty (60) days notice in writing. No money or other consideration paid or due to the Government up to the date of termination shall be refunded. 9. Assignment. The lessee shall not: (a) transfer or assign this leave or any property on the leased premises, except to a corporate affiliate or to a successor entity which is involved in space exploration and development activities substantially similar to those of Astrotech at Vandenberg AFB, without permission in writing from said of f icer; ( b ) sublet any part of the premises or property on it without permission in writing from said officer; or (c) grant any other form of interest, privilege, or license in connection with this lease without permission in writing from the said officer. 4 10. Condition of Premises. The lessee has inspected and knows the condition of the leased property. It is understood that it is leased without any representation or warranty by the Government concerning its condition, and without obligation on the part of the Government to make any alterations, repairs, or additions. 11. Maintenance of Property. Subject to the limitations of Condition 19 hereof with respect to the restoration of the property, all portions of the leased property, including any existing improvements contained in the area described in Attachment A or improvements built by lessee, shall be maintained, protected, repaired, or restored to good order and condition by and at the expense of the lessee. 12. Repair of Damage. Any property of the United States on the leased premises or elsewhere which is damaged or destroyed by occurrences arising out of the use of the leased premises shall be promptly repaired or replaced by the lessee to the satisfaction of the said officer. In lieu or such repair or replacement the lessee shall, if so required by the said officer, pay to the United States money in an amount sufficient to compensate for the loss. 5 13. Entry By Government. The United States, its officers, agents, employees, and contractors may enter upon the leased premises at any time, upon reasonable notice, for the purpose of inspection and inventory of property of the United States and when otherwise deemed necessary for the protection of the interests of the Government. The lessee shall have no claim on account of such entries against the Government or any officer, agent, employee, or contractor thereof provided, however, that nothing in this lease shall affect the Government's liability arising under the Federal Tort Claims Act, 28 U.S.C. 2671 et seq. 14. Liability and Indemnification. (a) Lessee agrees to assume all risks of loss or damage to property and injury or death to persons by reason of the activities conducted under this lease, except for such loss or damage and injury or death which results from the reckless disregard or willful misconduct of the Government or its agents or as provided in Condition 13 hereof. Lessee expressly waives all claims against the Government for any such loss, damage, personal injury or death occurring as a consequence of the conduct of activities or the performance of lessee's responsibilities under this lease. Lessee further agrees to indemnify, save, hold harmless, and defend the Government against all suits, claims or actions of any sort resulting from, related to, or arising out of lessee's activities conducted or services furnished in connection with this lease. (b) Lessee shall carry adequate liability and indemnity insurance acceptable to Commander, 30th Space Wing, to protect the Government against claims for bodily injury or death and for damage to property resulting from the operations of the lessee under the terms of this lease. The Government shall be a named insured under the policy, and the insurer shall have no right of subrogation against the Government. (c) The lessee shall procure and maintain, at its cost, a standard fire and extended coverage insurance policy or policies on the leased property to the full insurable value thereof. Such policy shall provide, as a minimum, for prompt restoration of the property to its condition at the date this lease is signed without cost to the Government. Coverage providing for repairing or rebuilding lessee's improvements is optional with the lessee. (d) All terms and conditions regarding liability and indemnification set out in the current Commercialization Agreement, as set forth in Attachment B, or as modified by the parties, which are not in conflict with above provisions, shall apply. 15. Compliance with Applicable Laws. (a) Lessee will comply with the provisions of all applicable federal, state, and local laws, regulations, and standards, and including those provisions concerning the protection and enhancement of environmental quality and pollution control and abatement. (b) Lessee shall comply with all applicable laws, ordinances, and regulations of the State of California and Santa Barbara County with regard to construction, sanitation, licenses or permits to do business, and all other matters. 6 (c) This clause does not constitute a waiver of Federal Supremacy or sovereign immunity. Only laws and regulations applicable to the premises under the Constitution and statutes of the United States are covered by this clause, (d) The said officer and the Air Force do not, by reason of this lease, assume the responsibility for enforcement of the foregoing statutes, ordinances or regulations. Enforcement remains the sole responsibility of the authorities duly constituted for the purpose of such enforcement. 16. Review and Approval of Construction Plans. (a) All plans for construction, modification, or additions by lessee must be approved in writing by the said officer or his delegate before the commencement of any construction project. In addition, the designs for all lessee connections to VAFB utilities will comply with DOD/USAF construction standards and be subject to 30SPW review and approval. DOD/USAF construction standards are available through the office of the VAFB Base Civil Engineer. (b) The Air Force review process for either a construction project or a utility connection will be completed within 30 days of receipt of plans and specifications. Approval will not be unreasonably withheld. (c) All construction shall be in accordance with the approved designs and plans and without cost to the Government. The lessee shall not proceed with excavation or construction until it receives written authorization from the said officer. (d) All matters of ingress, egress, contractor haul routes, construction activity and disposition of excavated material, in connection with the lease herein granted, shall be coordinated with the said officer. A11 excavation and construction activity shall be accomplished during periods (including hours of the day) acceptable to the said officer. 17. Utilities. (a) If the Government agrees to provide them, specific arrangements for utilities will be included in a separate Operating Agreement. 7 (b) The lessee shall pay direct costs incurred by the United States in producing and/or supplying any utilities. 18. Taxes. (a) The lessee shall pay to the proper authority on a timely basis all applicable taxes, assessments, and similar charges relating to the leased premises or facilities or operations thereon which, at any time during the term of this lease or any extensions, may be imposed on the lessee's interest in the leased premises pursuant to 10 U.S.C. 2667(e). (b) Should Congress enact a law making the Government's interest in the leased premises taxable by state or local governments (i.e., waive sovereign immunity to taxation), the lease shall be re negotiated to allocate the cost of the tax. 19. Vacation of Premises. (a) On or before the date of expiration of this lease, or its final extension, or of its termination by the lessee, the lessee shall vacate the premises, remove its property (including improvements and personal property) and restore the premises to the condition that existed on the date this lease was executed, except as the Government may exercise its rights under Paragraph (c) below. (b) If the lease is revoked under Paragraph 7(a) hereof, the lessee shall vacate the premises, remove its property (including any improvements and personal property}, and restore the premises to the condition described in Paragraph 19(a) above within 90 days or such longer time as the said officer may direct, except as the Government may exercise its rights under Paragraph (c) below. (c) The Government may, at its option, accept title to some or all of the lessee's property or improvements in lieu of restoration. The Government shall have a reasonable time, extending at least until the end of the next annual session of Congress, to obtain any authorization by law that may be needed to exercise the right to acquire such property or improvements. (d) If the lessee fails to remove its property and restore the premises by the required date, and the said officer declines to take title to the property, the said officer may cause the property to be removed and the premises restored at the expense of the lessee. No claim for damages against the United States or its officers, agents, or contractors shall be created by or made on account of such removal and restoration work. 20. Disputes. (a) Except as otherwise provided in this lease, any dispute concerning a question of fact arising under this lease which is not disposed of by agreement shall be decided by the said officer. Said officer shall reduce the decision to writing and mail or otherwise furnish a copy to the lessee. The decision of the said officer shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the lessee mails or otherwise furnishes to the said officer a written appeal addressed to the Secretary of the Air Force. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this condition, the lessee shal1 be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the lessee shall proceed diligently with the performance of the lease in accordance with the said officer's decision. 8 (b) This clause does not preclude consideration of legal questions in connection with decisions provided for in Paragraph (a) above, provided that nothing in this clause shall be construed as making final the decision of any administrative official, representative, or board on a question of law. 21. Rules and_Regulations. The use and occupation of the leased premises shall be subject to the general supervision and approval or the said officer and to such reasonable rules and regulations as may be prescribed by him or her from time to time. 22. Notices. All notices to be given pursuant to this lease shall be addressed, if to the lessee, to: President Astrotech Space Operations, L.P. 12510 Prosperity Drive, Suite 100 Silver Spring, MD 20904-1663 if to the Government, to: Commander 30th Space Wing 747 Nebraska Ave., Suite 1 Vandenberg AFB, CA 93437-6261 or as may from time to time be directed by the parties. Notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope or wrapper, addressed as aforesaid, and personally delivered or sent certified mail, return receipt requested. 23. General Provisions. (a) The lessee warrants that no person or selling agency has been employed or retained to solicit or secure this lease upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the lessee for the purpose of securing business. For breach or violation of this warranty, the Government shall have the right to annul this lease without liability or in its discretion to require the lessee to pay, in addition to the lease rental or consideration, the full amount of such commission, percentage, brokerage, or contingent fee. (b) No Member of or Delegate to Congress or Resident Commissioner shall be admitted to any share or part of this lease or to any benefit to arise therefrom. Nothing, however, herein contained shall be construed to extend to any incorporated company, if the lease be for the general benefit of such corporation or company. (c) Facilities Nondiscrimination. (1) As used in this paragraph, The term "facility" means lodgings, stores, shops, restaurants, cafeterias, restrooms, and any other facility of a public nature in any building covered by, or built on land covered by, this lease. (2) The lessee agrees not to discriminate by segregation or otherwise against any person because of race, color, religion, sex, or nationa1 origin in furnishing, or refusing to furnish, to such person the use of any facility, including ALL services, privileges, accommodations, and activities provided on the premises. This does not require the furnishing to the general public the use of any facility customarily furnished by the lessee solely to tenants or to Air Force military and civilian personnel, and the guests and invitees of any of them. 9 24. Environmental Compliance and Cleanup. (a) The lessee agrees that from the effective date of this lease and during the lessee's use and/or possession of leased premises, including during any extension period, the lessee shall be the operator of the leased premises and shall operate in compliance with all applicable federal, state, and local environmenta1 laws, statutes, ordinances, and regulations in effect at any time during the period of this lease. The lessee further agrees that during the lessee's use and/or possession of the leased premises, including any extension period, the lessee shall not treat, store, dispose of, discharge, or release emissions, waste, effluent, hazardous substances, or contaminates in such a manner that such actions will unlawfully pollute or contaminate air, ground (including subsurface strata), water (including ground water), or become a public nuisance. The total responsibility for ensuring compliance with the aforementioned laws, statutes, ordinances, and regulations shall be the lessee's alone. The lessee shall obtain and maintain, pursuant to the aforementioned laws, statutes, ordinances, and regulations, such permits, licenses, or other authorizing documents as may be required for the lessee's use and/or possession, The lessee shall sign such permits, licenses, or other authorizing documents as operator of the leased promises. (b) During the initial lease period, and any extension period, the total responsibility shall be the lessee's alone for the treatment, storage, disposal of emissions, waste, effluent, hazardous substances, or contaminants and for cleaning up or correcting any environmental pollution, contamination, and/or damage to the leased premises occurring on or after the effective date of this lease and resulting from the lessee's use and/or possession on or after the effective date of this lease. This responsibility shall exist even if said emissions, waste, effluent, hazardous substances, pollution, damage, or contamination are not discovered until after the date this lease expires or is terminated. Furthermore, the leasee's responsibility shall continue even if said treatment, storage, disposal, cleanup, or correction operations continue or are required to begin after the date this lease expires or is terminated. (c) The lessee agrees that it shall reimburse, indemnify, hold harmless, and defend the Government against any and all claims (including equitable claims and tort claims), lawsuits or enforcement actions concerning, or resulting from, any actual or alleged noncompliance or violation of any laws, statutes, ordinances, or regulations, or any actual or alleged environmental pollution resulting from, but not limited to, the treatment, storage, disposal, discharge or release by the lessee of emissions, waste, effluent, hazardous substances or contaminants on the leased premises. The lessee's indemnification of the Government herein shall include all claims, lawsuits, or enforcement actions brought by either private citizens (including, but net limited to, individuals, corporations, businesses, etc.) or any governmenta1 agency. The lessee's responsibility under this provision shall continue even if such pollution is not discovered, or said claims, lawsuits, or enforcement actions are not brought, until after this lease expires or is terminated. (d) This lease does not change the parties' respective rights, liabilities, and responsibilities regarding environmental cleanup or compliance with environmenta1 laws, statutes, ordinances, and regulations with respect to actions that occurred prior to the effective date of this lease. 25. Reporting to Congress. This lease is not subject to 10 U.S.C 2662(a). IN WITNESS WHEREOF, I have hereunto set my hand by authority of the Secretary of the Air Force this _____day of _______________1993. By: Title: THIS LEASE is also executed by the lessee this ____day of _______________ 1993. By: RICHARD G. WOLF Title: President, Astrotech Space Operations, L.P. Signed and sealed in the presence of: (1) (2) 10 ATTACHMENT A TO LEASE NO. SPCVAN-2-94-0001 DESCRIPTION OF LAND AND FACILITIES LEASED BY DEPARTMENT OF THE AIR FORCE TO ASTROTECH SPACE OPERATIONS, L. P. The land and facilities leased by the Department of the Air Force to Astrotech Space Operations, L.P. under this Lease Agreement, as shown in Figure 1-1, are comprised of: (1) The approximately 59 acre deactivated magazine storage bunker site, which is located along the southwest side of Tangair Road and accessed via Red Road. VAFB is currently demolishing and removing, at Government expense, all existing bunkers and buildings within the fenced area of this site. Approximately one-half of this demolition and removal project has been completed. The remainder of the project will be accomplished subsequent to execution of this Lease Agreement without any expense to lessee. Subject to the review and approval process set forth in Condition 16 of this Lease Agreement, a first phase of construction by lessee is planned for a portion of the area which has already been cleared. (2) Building 1028, which is located on the southeast side of Red Road immediately outside the fenced area described in Paragraph (1) above. Since Building 1028 was scheduled to be demolished and removed as part of the VAFB funded project described in Paragraph (1) above, upon the expiration or termination of this Lease Agreement, lessee hereby agrees to demolish and remove Building 1028 as part of restoration of the leased premises pursuant to Condition 19 of this Lease Agreement. EX-10.53 9 ASTROTECH - RANDOLPH PARK LEASE AGREEMENT. 1 [THE MEDOWS CORPORATE PARK LOGO] 12510 PROSPERITY DRIVE AGREEMENT OF LEASE THIS AGREEMENT OF LEASE (hereinafter referred to as "this Lease"), made this 30th day of May, 1984 by and between RANDOLPH PARK ASSOCIATES II LIMITED PARTNERSHIP and RANDOLH PARK ASSOCIATES, a Maryland limited partnership having their principal offices in Montgomery County, State of Maryland (hereinafter referred collectively to as "the Landlord"), and Astrotech Space Operations, Inc. a wholly owned subsidiary of Astrotech International Corporation organized and existing under the law of Delaware, having an address at 4920 Niagara Road, College Park, MD (hereinafer referred to as "the Tenant"). WITNESSETH, THAT FOR AND IN CONSIDERATION of the mutual entry into this Lease by the parties hereto, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by each party hereto, the Landlord hereby leases to the Tenant, and Tenant hereby leases from the Landlord, all of that real property, situated and lying in Montgomery County, Maryland, which consists of the space (containing approximately 3,057 square feet of Gross Rentable Floor Area, as hereinafter defined shown outlined in red on a plat attached hereto as Exhibit A (hereinafter referred to as "the Premises") and located in a building located at 12510 Prosperity Drive (hereinafter referred to as "the Building") at The Meadows Corporate Park in Silver Spring, Maryland on tract of land designated as Lot numbered twenty-two (22) in the subdivision known as Montgomery Industrial Park as per plat thereof recorded among the Land Records of Montgomery County, Maryland, in Plat Book 122 at Plat 14335, and recorded among the Land Records of the said County in Plat Book N.L.P. 99 at folio 33 (the Premises, the remainder of the Building, such tract of land and any other buildings or improvements thereon being hereinafter referred to collectively as "the Property"). Gross Rentable Floor Area (GRFA) shall be defined to mean the space to be occupied by Tenant as shown on Exhibit "A", plus a prorated share of all areas of interior space in the building measured from the glass line of the permanent outer walls. SUBJECT TO THE OPERATION AND EFFECT, of any and all instruments and matters of record or in fact. UPON THE TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set forth: Section 1. Term. This Lease shall be for a term (hereinafter referred to as "the Term") commencing on June 1, 1984 (hereinafter referred to as "the commencement Date"), and terminating at 12:01 A.M. local time, on the Fifth (5th) anniversary of the first (1st) day of the first (1st) full calendar month during the Term (hereinafter referred to as "the Termination Date"). Section 2. Use. 2.1 The Tenant shall, continuously throughout the Term, occupy and use the Premises for and only for general office purposes. 2.2 In its use of the Premises and the remainder of the Property, the Tenant shall not violate any applicable law, ordinance or regulation 2.3 Except for the parking of automobiles in the ordinary course of business, the Tenant shall not place or permit its agents or employees to place any trash or other objects anywhere or within the Building or the rest of the Property (other than within the Premises) without first becomes necessary to designate parking spaces for Tenant. Landlord may do so upon giving written notice thereof to Tenant with the designation of parking spaces to be assigned to Tenant. Section 3. Rent 3.1 Amount. As rent for the Premises (all of which is hereinafter referred to collectively as "Rent"), the Tenant shall pay to the Landlord all of the following. 3.1.1. Base Rent. An annual base rent of See Rider No. 1 Dollars ($ --- )(hereinafter referred to as "the Base Rent") for each Lease Year during the term, in equal monthly installments of Rider #1 Dollars ($ --- ) each, plus (if the Term commences one day other than the first (1st) day of a calendar month), for the initial Lease Year, a fraction of such sum, the numerator of which shall be the number of days of such calendar month falling within the Term, and the denominator of which shall be three hundred sixty-five (365); and 3.1.2 Additional Rent. Additional rent (hereinafter referred to as "Additional Rent") in the amount of any payment to be made by tenant to landlord refereed to as such in any provision of this Lease which accrues while this Lease is in effect. 3.1.3 Increase in Base Rent. Commencing on the first day of the calendar year next succeeding the Commencement Date, Base Rent shall be increased by (1) A sum of money obtained by multiplying the Base Rent by a fraction, the denominator of which shall be the CPI-U (as hereinunder defined) for the second month preceding the Commencement Date, and the numerator of which shall be the CPI-U for the second month preceding each calendar year, then multiplying the product obtained by thirty percent (30%). The CPI-U shall be defined as the Consumer Price Index for all urban consumers, all items Washington, D.C., SMSA Base, 1967 =100, or (in the event the CPI_U ceases to exist, then the parties shall agree upon a similar substitute. If the parties cannot agree, then the matter shall be submitted to arbitration to determine adjustment in rent.) 3.2 Annual Operating Costs 3.2.1 Definition. As used herein, the term "Annual Operating Costs" shall mean the actual costs to the Landlord of operating and maintaining the Property during each calendar year of the Term. Such costs shall include, by ways of example rather than of limitation (a) real property, front-foot benefit, Washington Suburban Sanitary Commission, other metropolitan district and other similar taxes or assessments (whether regular or special) with respect to any or all of the Property; (b) charges or fees for, and taxes on, the furnishing of water, sewer service, gas, fuel, electricity, or other utility services to the Property; (c) costs of elevator service and charges or fees for the maintenance, repair and replacement of common areas and mechanical and electrical systems of buildings and structural members of buildings such as exterior walls, roof, and load-bearing walls and for grounds maintenance, janitorial service and trash removal; (d) charges or fees for any necessary governmental permits; (e) management fees, overhead and expenses; (f) premiums for hazard, liability, workmen's' compensation or similar insurance upon the Property or portions thereof: (g) costs arising under service contracts with independent contractors; and (h) the cost of any other items which, under generally accepted accounting principles consistently applied from year to year with respect to the Property, constitute operating or maintenance costs attributable to any or all of the Property. 3.2.2 Portion covered by Base Rent. Included in the Base Rent is an amount equaling the product obtained by multiplying $4.15 times the number of square feet of Gross Rentable Floor Area, which product represents the Landlord's estimate on the date hereof of the cost to the Landlord for the current calendar year for providing to or for the benefit of the Premises all of the services or other items, the costs of which are included in the Annual Operating Costs, excluding such services or other items as are to be provided at the Tenant's expense under the provision of Section 7. 3.2.3 Computation. After the end of each calendar year during the term, the Landlord shall compute the total of the annual Operating costs incurred during such calendar year, and shall allocate such costs to the GRFA within the Property by dividing such Annual Operating costs by the aggregate square footage of all the GRFA with the Property, thereby deriving the cost of such categories of services and items per square foot of such GRFA; provided, that anything contained in the foregoing provision of this of the subsection 3.2 to the contrary notwithstanding, wherever the Tenant and/or any other tenant of space within the Property has agreed in its lease or otherwise to provide any item of such services partially or entirely at its own expense, or wherever any such item of expense is not incurred, with 1 2 respect to all of the GRFA within the Property, in allocating the Annual Operating Costs pursuant to the foregoing provisions of this subsection the Landlord shall make an appropriate adjustment, using generally accepted accounting principles, as aforesaid, so as to avoid allocating to the Tenant or to such other tenant (as the case may be) those Annual Operating Costs covering such services already being provided by the Tenant or by such other tenant, at its own expense, or to avoid allocating to all of the net rentable space within the Property those Annual Operating costs incurred only with respect to a portion thereof, as aforesaid. *See Rider No.2, paragraph 1. 3.2.4 Payment as Additional Rent. The Tenant shall, within 15 days after demand therefore by the Landlord (with respect to each calendar year during the Term), pay to the Landlord as Additional Rent the amount obtained by multiplying (a) the GRFA (as set forth hereinabove) by (b) the amount by which (i) the Annual Operating costs per square foot of GRFA for such calendar year (as derived under the provisions of paragraph 3.2.3) exceeds (ii) the said sum of $ 4.15 per square foot. 3.2.5 Proration. If only part of any calendar year falls within the Term, the amount computed as Additional Rent with respect to such calendar year under the foregoing provisions of this subsection shall be prorated in proportion to the portion of such calendar year falling within the Term (but the expiration of the Term before the end of such calendar year shall not impair the Tenant's obligation hereunder to pay such pro-rated portion of such Additional Rent with respect to that portion of such year falling within the Term, which shall be paid on demand, as aforesaid). 3.2.6 Landlord's right to estimate. Anything contained in the foregoing provisions of this subsection to the contrary notwithstanding the Landlord may, at its discretion, make form time to time during the Term a reasonable estimate of Additional Rent which may become due under such provision with respect to any calendar year, and may require the Tenant to pay to the Landlord with respect to each calendar month during such year one-twelfth (1/12th) of such Additional Rent, at the time and in the manner that the Tenant is required hereunder to pay the monthly installment of the Base Rent for such month. In such event, the Landlord shall cause the actual amount of such Additional Rent, at the time and in the manner that the Tenant is required hereunder to pay the monthly installment of the Base Rent for such month. In such event, the Landlord shall cause the actual amount of such Additional Rent to be computed and certified to the Tenant within 120 days after the end of such calendar year, and the Tenant or the Landlord, as the case may be, shall promptly thereafter pay to the other the amount of any deficiency or overpayment therein, as the case may be. 3.3 Tax on Lease. If feral, state or local law now or thereafter imposes any tax, assessment, levy or other charge (other than any income tax) directly or indirectly upon (a) the Landlord with respect to this Lease or the value thereof, (b) the Tenant's use or occupancy of the Premises, (c) the Base Rent. Additional Rent or any other sum payable under this Lease, or (d) this transaction, except if and to the extent that such tax, assessment, levy or other charge is included in the Annual Operating costs the Tenant shall pay the amount thereof at its election, as Additional Rent to the Landlord upon demand, unless the Tenant is prohibited by law from doing so, in which event the Landlord may at its election terminate this Lease by giving written notice thereof to the Tenant. 3.4 Time of payment. Each installment of Rent shall be paid in advance with deduction, demand, or set off, on the first (1st) day of each month during the Term; provided, that the installment of Rent payable with respect to the first full calendar month of the Term shall be paid the Landlord upon the full execution and delivery of this Lease. 3.5 Place of payment. All Rent and other charges due from the Tenant to the Landlord hereunder shall be paid to the Landlord's agent, Polinger Company, when due, at Suite 1000, 5530 Wisconsin Avenue, Chevy Chase, MD 20815, or at any other address which the Landlord may specify to the Tenant by written notice. 3.6 Security deposit. 3.6.1 Simultaneously with the full execution and delivery of this Lease by the parties hereto, the Tenant shall deposit with the Landlord the sum of Three Thousand Nine Hundred Dollars ($3,948.63) , which shall be retained by the Landlord as security for the Tenant's payment of Forty Eight and 63/100, and its performance of all of its other obligations under the provisions of this Lease. * See Rider 3.6.2 Upon the occurrence of an Event of Default, the Landlord shall be entitled, at its sole discretion, (a) to apply nay or all of such sum in payment of (i) any Rent, for the payment of which the Tenant is in default, (ii) any expense incurred by the Landlord in curing any such default, and/or (iii) any damages incurred by Landlord by reason of such default (including, by way of example rather than of limitation, the expense of reasonable attorney's fees); or (b) to retain any or all of such sum in liquidation of any or all damages suffered by the Landlord by reason of such default. 3.6.3 Upon the termination of this Lease, any of such sum which is not so paid or retained shall be returned to the Tenant. Section 4. Assignment and subletting. 4.1 The Tenant shall not mortgage, pledge or encumber this Lease. 4.2 The Tenant shall not assign this Lease, or sublet or underlet any or all of the Premises, or permit any other person or entity to occupy any or all of the Premises, without on each occasion first obtaining the Landlord's written consent thereto (which consent shall not be unreasonable withheld, but may be conditioned, inter alia, upon the entry by the parities involved into appropriate instruments by which they rectify and confirm this Lease). For purposes of the foregoing provision of this subsection, a transfer, by any person or persons controlling the Tenant on the date hereof, of such control to a person or persons to controlling the Tenant on the date hereof shall be deemed to be an assignment of this Lease. No such action taken with or without the Landlord's consent shall in any way relive or release the Tenant from liability for timely performance of all of the Tenant's obligations hereunder. The Landlord shall be entitled to receive and retain and the Tenant shall promptly remit to the Landlord, any profit which may inure to the Tenant's benefit as a result of any such assignment, subletting or underletting, whether or not consented to by the Landlord. 4.3 Anything containing in the foregoing provision of this Section to the contrary notwithstanding, either the Tenant nor any other person having an interest in the possession, use, occupancy or utilization of the Premises or any other portion of the Property shall enter into any lease, sublease, license, concession or of the agreement of the use, occupancy or utilization of space in the Premises or any other portion of the property which provides for any rental or other payment for such use, occupancy or utilization based in whole or in part upon the net income or profits derived by any person form the space in the Premises or other portion of the Property so lease, used, occupied or utilized (other than any amount based on a fixed percentage or percentages of receipts or sales.) Section 5 Tenant's plan for improvements. 5.1 Leasehold improvements. The Landlord shall make the improvements to the Premises which are set forth in the plans and specifications attached hereto as Exhibit B. the Landlord shall use its best efforts complete such improvements by the date upon which doing so by reason of any (a) strike, lock-out or other labor troubles, (b) governmental restrictions or limitations, (c) failure or shortage of flood, fir or other casualty, (f) adverse weather condition, (g) other act of God, (h) inability to obtain a building permit or a certificate of occupancy, or (i) other cause similar or dissimilar to any of the foregoing and beyond the Landlord's reasonable control (in which event the dates of commencement and expiration of the Term shall be postponed for a length of time equaling the length of such delay, and the Tenant shall accept possession of the Premises within ten (10) days after such completion). 5.2 Acceptance of possession. Except for (a) latent defects or incomplete work which would not reasonably have been revealed by an inspection of the Premises made for the purpose of discovering the same at the time of the Tenant's assumption of possession of the Premises and (b) any other items of incomplete work which are set forth on a punch list submitted to an approved in writing by the Landlord prior to have accepted them and to have acknowledged to be in the condition called for hereunder. Landlord and Tenant shall, within five (5) days from the date Tenant accepts possession of the Premises, execute the Declaration by Landlord and Tenant as to Date of Delivery. Section 6 Fire and other casualty. 6.1 General. If the Premises are damaged by fire or any other casualty during the Term. 6.1.1 the Landlord shall restore the Premises with reasonable prompt- ness (taking, into account the time required by the Landlord of effect a settle- ment with, and to procure any insurance proceeds fro, any insurer against such casualty, but in any event within one hundred fifty (150) days after the date of such casulaty) to substanially their condition immediately before such casualty, and may temporarily enter and possess any or all of the Premises for such purpose (provided, that the Landlord shall not be obligted to repair, restore or replace any fixture, improvements, alteration, furniture or other property owned, installed or made by the Tenant), but 6.1.2 the times for commencement and completion of any such restoration shall be extended for the period (not longer than sixty (60) days) of any delay occasioned by the Landlord in doing so arising out of any of the causes enumerated in the provisions of subsection 5.1. If the Landlord undertakes to restore the Premises and such restoration is not accomplished with the said period of one hundred fifty (150) days plus the period of any extension thereof, as aforesaid, the Tenant may terminate this Lease by giving written notice thereof to the Landlord within thirty (30) days after the expiration of such period, as so extended; and 6.1.3 for so long as the Tenant is deprived of the use of any or all of the Premises on account of such casualty, the Base Rent and any Additional Rent payable under the provisions of subsection 3.2 shall be abated in proportion to the number of square feet of the 2 3 Premises rendered substantially unfit for occupany by such casualty, unless, because of any such damage, the undamaged portion of the Premises is made materially unsuitable for use by the Tenant for the purposes set forth in the provisions of Section 2, in which event the Base Rent and any such Additional Rent shall be abated entirely during such period of deprivation. 6.2 Subtantial destruction. Anything contained in the foregoing provisions of this Section to the contrary notwithstanding. 6.2.1 if during the Term, the Building is so damaged by fire or any other casualty that (a) either the Premises or (whter or not the Premises are damaged) the Building are rendered substantially unfit for occupany, as reasonably determined by the Landlord, or (b) the Building is damaged to the extent that the Landlord reasonably elects to demolish the Building, then in either case the Landlord may elect to terminate this Lease as of the date of the occurrence of such damage, by giving written notice thereof to the Tenant within thirty (30) days after such date; and 6.2.2 in such event, (a) the Tenant shall pay to the Landlord the Base Rent and any Additional Rent (apportioned, where applicable) to the time of such termination, (b) the Landlord shall repay to the Tenant any and all prepaid Rent for periods beyond such termination, and (c) the Landlord may enter upon and repossess the Premises without further notice. 6.3 Tenant's negligence. Anything contained in any provision of this Lease to the contrary notwithstanding, if any such damage to the Premises, the Building or both are caused by or result from the negligent or intentionally tortious act or omission of the Tenant, those claiming under the Tenant or any of their respective officers, employees, agents or invitees 6.3.1. the Rent shall not be suspended, abated or apportioned as aforesaid, and 6.3.2. except if and to the extend that the Tenant is released from liability therefore pursuant to the provision of subsection 11.4, the Tenant shall pay to the Landlord upon demand, as Additional Rent, the cost of (a) any repairs and restoration made or to be made as a result of such damage, or (b) (if the Landlord elects not to restore the Building) any damage or loss which the Landlord may incur as a result of such damage. Section 7. Maintenance and services. 7.1 Ordinary services. The Landlord shall furnish the Premises with (a) electricity suitable for their intended use of the purposes set forth in the provisions of Section 2, (b) heating and air conditioning for the comfortable use and occupany of the Premises between 8:00 o'clock A.M. and 6:00 o'clock P.M., Monday through Friday, and 8:00 o'clock A.M. and 1:00 o'clock P.M. on Saturday (except or legal holidays) of each week during the Term, (c) janitorial service, and (d) trash removal from the Premises, all at the Landlord's expense. 7.2 Extraordinary services. If the Tenant: 7.2.1. Requires electrical current or installs electrical equipment (including by way of example rather than of limitation, any electrical heating or refrigeration equipment, electronic data processing machine, punch-card machine, or machinery or equipment using current in excess of 110 volts which in any way increases that amount of the electricity which would normally be consumed upon the Premises when used general office space), or 7.2.2. intends to use the Premises in such a manner that the services to be furnished by the Landlord hereunder would be required during periods other than or in addition to the business hours customarily observed in the locality of the Property, then in either case the Tenant shall not do so without first obtaining the Landlord's written approval thereof, and shall pay periodically as Additional Rent the additional direct expense resulting therefrom, including that resulting from any installation of such equipment. 7.3. Maintenance and alterations by Tenant. 7.3.1 The Tenant shall maintain the nonstructural parts of the interior of the Premises in good repair and condition, damages by causes reasonably beyond the Tenant's control and ordinary wear and tear excepted. 7.3.2 The Tenant shall not make or permit to be made any alteration, addition or improvement to the Premises without first obtaining the Landlord's written consent thereof (which, in the case of non-structural alteration, addition and improvements, it shall be made at the Tenant's sole expense (and the Tenant shall hold the Landlord harmless from any cost incurred on account thereof), and at such time and in such manner as not unreasonably to interfere with the use and enjoyment of the reminder of the Property by any tenant thereof or any other person. 7.4. Maintenance by Landlord 7.4.1 The Landlord shall maintain the roof, structure and the remainder of the exterior of the Building, as well as each sidewalk and parking lot from time to time existing within the Property, all in good order and repair (which maintenance shall include the removal of snow from each such sidewalk and parking lot). 7.4.2 Common areas, The Landlord shall furnish, supply and maintain any and all hallways, stairways, lobbies, elevators, heating and or conditioning facilities, electrical, sanitary sever and water lines and facilities, grounds and parking areas, the common areas of the Building not contained with the Premises and the rest of the Property (other than the Premises) , all at the Landlord's expense except as is set forth in the provisions of Section 3 or any other provision of this Lease. Section 8. Defaults by the Tenant. 8.1. Definition: As sued in the provisions of this Lease, each of the following events shall constitute, and is hereinafter refereed to as, and "Event of Default" 8.1.1. If the Tenant (a) fails to pay the Rent or any other sum which the Tenant is obligated to pay by any provision of this Lease. When and as it is due and payable hereunder and without demand therefor, or (b) in any respect violates any of the terms, conditions or covenants set forth in the provisions of this Lease; or 8.1.2. if the Tenant (a) applies for or consents to the appointment of a receiver, trustee or liquidator of the Tenant or of all or a substantial part of its assets, (b) files a voluntary petition in bankruptcy or admits in writing it inability to pay its debts as they come due, (c) makes an assignment for the benefit of its creditors, (d) files a petition or an answer seeking a reorganization or an arrangement with creditors, or seeks to take advantage of any insolvency law, (e) performs any other act of bankruptcy, or (f) files an answer admitting the material allegations of a petition filed against the Tenant in any bankruptcy, reorganization or insolvency proceedings: or 8.1.3. if (a) an order, judgment or decree is entered by any court of competent jurisdiction adjudicating the Tenant a bankrupt or an insolvent, approving a petition seeking such a reorganization, or appointing a receiver, trustee or liquidator of the Tenant or of all or a substantial part of its assets, or (b0 there otherwise commences with respect to the Tenant or any of its assets any proceeding under any proceeding continues unstayed for more than sixty (60) consecutive days after the expiration of any stay thereof. 8.2. Notice to Tenant; grace period, Anything contained in the provisions of this Section to the contrary notwithstanding, upon the occurrence of an Event of Default the Landlord shall not exercise any right or remedy which it holds under any provision of this Lease or under applicable law unless and until. 8.2.1. the Landlord has given written notice thereof to the Tenant, and 8.2.2. the Tenant has failed, (a) if such Event of default consists of the failure to pay money , within thirty (30) days thereafter to cure such Event of Default provided, that 8.2.3. no such notice shall be required, and the Tenant shall be entitled to no such grace period, (a) more than twice during any twelve (12) month period, or (b) if such Event of Default consists of something other than the failure to pay money, within thirty (30) days thereafter to cure such Event of Default provided that 8.3. Landlord's right upon Event of Default. Upon the occurrence of any event of Default, the Landlord may 8.3.1. re-enter and repossess the premises and any and all improvements thereon and additions thereto: 8.3.2. declare the entire balance of the Rent for the remainder of the Term to be due and payable, and collect such balance in any manner not inconsistent with applicable law; 8.3.3. relet any or all of the Premises for the Tenant's account for any or all of the remainder of the Terms as hereinabove defined, or for a period exceeding such reminder, in which event the tenant shall pay to the Landlord any deficiency in the Base Rent and any Additional Rent resulting, with respect to such remainder, from such reletting, as well as the cost to the Landlord of any attorney's fees or of any repairs or other action (including those taken in exercising the Landlord's rights under any provision of this Lease) taken by the Landlord on account of such Event of Default: and or 8.3.4. pursue any combination of such remedies and/or any other remedy available to the Landlord on account of such Event of Default under applicable law. 8.3.5. Landlord's right to cure. Upon the occurrence of an Event of default, the Landlord shall be entitled (but shall not be obligated). In addition to any other rights which it may have hereunder or under applicable law as a result thereof, and after giving the tenant written 3 4 notice of the Landlord's intention to do so except in the case of emergency, to cure such Event of Default, and the Tenant shall (reimburse) the Landlord for all expenses incurred by the Landlord in doing so, plus interest thereon at a lesser of the rate of sixteen percent (16%) annum or the highest rate the permitted on account thereof by applicable law, which expenses and interest shall be additional Rent shall be payable by the Tenant immediately upon demand therefor by the Landlord. Section 9. Holding over. The Tenant shall not continue to occupy the Premises after the expiration or earlier termination of the Lease or any renewal thereof , unless the Landlord consents in writing to such continuation of occupancy, in which event 9.1. such occupancy shall (unless the parties hereto otherwise agree in writing) be deemed to be under a month-to-month tenant which shall continue until either party hereto notifies the other in writing, by at least thirty (30) days before the end of any calendar month that the party giving such notice elects to terminate such tenancy at the end of the such calendar month, in which event such tenancy shall terminate: 9.2. anything contained in the foregoing provisions of this Section to the contrary notwithstanding, the rental payable with respect each such monthly period shall equal one-twelfth (1/12) of the Base Rent and the Additional Rent payable under the provisions of Section 3 (calculated in accordance with such provisions of Section 3 as if this Lease had been renewed for a period of twelve (12) full calendar months after such expiration or earlier termination of the Terms or such renewal); and 9.3. and such month-to-month tenancy shall be upon the same terms and subject to the same conditions as those set forth in the provision of this Lease; provided, that if the Landlord gives to the Tenant, by at least thirty (30) days before the end of any calendar month during such month-to-month tenancy, written notice that such terms and conditions (including any thereof relating to the amount and payment Rent) shall, after such month, be modified in any manner specified in such notice, then such tenancy shall, after such month, be upon said terms and subject to the said conditions, as so modified. 9.4. In the event Tenant holds over without Landlord's written consent obtained prior to the expiration or earlier termination of Term, Tenant, during the period of its possession, shall pay to Landlord twice the amount of Base Rent and Additional Rent paid Landlord immediately proceeding the expiration or earlier termination of the Term. Section 10. Landlord's right of entry. The Landlord and its agents shall be entitled to enter the Premises at any reasonable time 10.1. to inspect the Premises. 10.2. to exhibit the Premises to any existing or prospective tenant, purchaser or Mortgagee thereof or any prospective tenant there 10.3. to make any alteration, improvement or repair to the Building or the Premises, or 10.4. for any other purpose relating to the operation or maintenance of the Property: provided, that the Landlord shall (a) (unless doing so is impractical or unreasonable because of emergency) give the Tenant a least twenty-four (24) hours' prior notice of its intention to enter the Premises. and (b) use reasonable efforts to avoid thereby interfering any more than is reasonably necessary with the Tenant's use and enjoyment thereof. Section 11. Insurance and indemnification 11.1. Increase in risk. The Tenant 11.1.1. shall not do or permit to be done any act or thing as a result of which wither (a) any policy of insurance or any kind covering any or all of the Property or any liability of the Landlord in connection therewith may become void or suspended, or (b) the insurance covered under any such policy would (in the opinion of the insures thereunder) be made greater; and 11.1.2. shall pay as Additional Rent the amount of any increase in any premium for such insurance resulting from any breach such covenant. 11.2. Insurance to be maintained by Tenant. The Tenant shall maintain at its expense, throughout the Term, insurance against claim or liability in connection with bodily injury, death, property damage and destruction, occurring within the Premises or arising, out of the threat thereof by the Tenant or its agents, employees. Officers or invites, visitors and guests under one or more policies of general public liability insurance having such limits as to each as are reasonably required by the Landlord from time to time (but in any event of not less than One Million dollars ($1,000.000.00) for injury to or death of any one person during any one occurrence, (b) Two Million Dollars ($2,000.000.00) for injury to or death of more than one person during any one occurrence and (c) Five Hundred Thousand Dollars ($500,000.00) for property damage or destruction during any one occurrence. Such policies shall name the Landlord and the Tenant (and, at the Landlord's request and Mortgagee) as the insured parties, shall provide that they shall not be cancellable without at least thirty (30) day's prior written notice to the Landlord (and , at the Landlord's request any such Mortgagee), and shall be issued by insures of recognized responsibility license to do business in Maryland. 11.3 Insurance to be maintained by Landlord. The Landlord shall maintain throughout the term all-risk or fire and extended coverage insurance upon the Building, The cost of premiums for such insurance and each endorsement thereto shall be deemed, for purposes to be part of cost of operating and maintaining the Property. 11.4. Waiver of subrogation, If either party hereto is paid any proceeds under any policy of insurance naming such party as an insured on account of any loss, damage or liability, then such party hereby release the other party hereto, to and only to the extent of the amount of the negligent or intentionally tortious act or omission of the other party, its agents or employees; provided. That such release shall be that such release shall not impair the effectiveness of such policy or the insured's ability to recover thereunder. Each party hereto shall use reasonable efforts to have a clause to such effect included in its said policies. And shall promptly notify the other in writing is such clause cannot be included in any such policy. 11.5. Liability of parties. Except if and to the extent that such party is released from liability to the other party hereto pursuant to the provisions of subsection 11.4. 11.5.1. the Landlord (a) shall be responsible for, and shall indemnify and hold harmless the Tenant against and from any and a liability arising out of any injury to or death of any person or damage to any property, occurring anywhere upon the Property, if, only if and to the extent that such injury, death or damage is proximately caused by the grossly negligent or intentionally tortious act or omission of the Landlord or its agents, offices or employees, but (b)shall not be responsible for or be obligated to indemnify or hold harmless the Tenant against or from any liability for any such injury , death or damage occurring anywhere upon the Property (including the Premises) by reason of the Tenant's occupancy or use of the Premises or any other portion of the Property, or because of fire, windstorm, act of God or other cause unless proximately caused by such negligent or intentionally tortions or omission, as aforesaid: and 11.5.2. subject to the operation and effect of the foregoing provision of this subsection, the Tenant shall be responsible form and shall indemnify and hold harmless the Landlord against and form, any and all liability arising out of any injury to or death of any person or damage to any property, occurring within the Premises. Section 12. Eminent domain. 12.1. Right to award. 12.1.1. If any or all of the Premises are taken by the exercise of any power of eminent domain or are conveyed to or at the direction of any governmental entity under a threat of any such taking (each of which is hereinafter referred to as a "Condemnation"). The Landlord shall be entitled to collect from the condemning authority thereunder the entire amount of any award made in any such proceeding or as consideration for such deed, with out deduction therefrom for any leasehold or other estate held by the Tenant by virtue of this Lease. 12.1.2. The Tenant hereby (a) assigns to the Landlord all of the Tenant's right, title and interest, if any , in and to any such award:(b) waives any right which it may otherwise have in connection with such Condemnation, against the Landlord or such condemning authority, to any payment for (i) the value of the then-unexpired portion of the Term, (ii) leasehold damages, and (iii) any damage to or diminution of the value of the Tenant's leasehold interest hereunder or any portion of the Premises not covered by such Condemnation and (c) agrees to execute any and all further documents which may be required in order to facilitate the Landlord's collection of any and all such awards. 12.1.3. Subject to the operation and effect of the foregoing provisions of this Section, the Tenant may seek, in a separate proceeding, a separate award on account of any damages or costs incurred by the Tenant as a result of such Condemnation, so long as such separate award in no way diminishes any award or payment which the Landlord would otherwise receive as a result of such Condemnation. 12.2. Effect of Condemnation. 12.2.1. If (a) all of the Premises are covered by a Condemnation, or (b) if any part of the Premises is covered by a Condemnation and the remainder thereof is insufficient for the reasonable operation therein of the Tenant's business, or (c) any of the Building is covered by a Condemnation and, the Term shall terminate on the date upon which possession of so much of the Premises or the Building, as the case my it, covered by such event, the Term shall terminate on the date upon which possession of so much of the Premises or the Building, as the case may be, covered by such Condemnation is taken by the condemning authority thereunder, and all Rent (including, by way of example rather than of limitation, any Additional Rent payable pursuant to the Provisions of subsection 3.2), takes and other charges payable hereunder shall be prorated and paid to such date. 4 5 12.2.2. If there is a Condemnation and the Term does not terminate pursuant to the foregoing provisions of this subsection, the operation and effect of this Lease shall be unaffected by such Condemnation except that the Base Rent and the Additional Rent payable under the provisions of Section 3 shall be reduced in proportion to the square footage of floor area if any of the Premises covered by such Condemnation. 12.3. If there is a Condemnation the Landlord shall have no liability to the Tenant on account of any (a) interruption of the Tenant's business upon the Premises (b) diminution in the Tenant's ability to use the Premises or (c) other injury or damage sustained by the Tenant as a result of such Condemnation. 12.4. Except for any separate proceeding brought by the Tenant under the provisions of paragraph 12.1.3 the Landlord shall be entitled to conduct any such condemnation proceeding and any settlement thereof free of interference from the Tenant and the Tenant hereby unfixes any right which it might otherwise have to participate therein. Section 13. Mechanics and materialmens' liens. The Tenant shall 13.1. bond, remove or have removed and mechanist. materialman's or other lien fiend or claimed against and or all of the Premises the Property or any other property owned or leased by the Landlord by reason of labor or materials provided for or at the request of the Tenant or any of its contractors or subcontractors (other than labor or materials provided by the Landlord pursuant to the provisions of Section 5). Or otherwise arising out of the Tenant s use or occupancy of the Premises or and other portion of the Property and 13.2. indemnify and hold harmless the Landlord against and from any and all liability or expense (including, by way of example rather than of limitation, that of reasonable attorneys fees) incurred by the Landlord on account of any such lien or claim. Section 14. Quiet enjoyment; surrender. 14.1 Quiet enjoyment. The Landlord hereby covenants that the Tenant on paying the Rent and performing the covenants set forth herein shall peaceably and quietly hold and enjoy throughout the Term. (a) the Premises, and (b) such rights as the Tenant man hold hereunder with respect to the remainder of the Property (including. by way of example rather than of limitation. any such right to use parking lot within the Property). 14.2. Surrender. 14.2.1. Upon the expiration or earlier termination of the Term. The Tenant shall surrender the Premises to the Landlord in good order and repair (arising from fire or other casuals beyond the Tenant's reasonable control and ordinary wear and tear excepted), and broom clean. 14.2.2. Any and all improvements, repairs, alterations and all other property attached to, used in connection with or otherwise installed upon the Premises (a) shall immediately upon the completion of the installation thereof be and become the Landlord's property without payment therefor by the Landlord, and (b) shall be surrendered to the Landlord upon the expiration or earlier termination of the Term except that any machinery, equipment or fixtures installed by the Tenant and used in the conduct of the Tenant s trade or business (rather than to service the Premises or any of the remainder of the Building or the Property generally) shall remain the Tenant's property and shall he removed be the Tenant within five (5) days after the expiation or earlier termination of the Term. and the Tenant shall promptly thereafter fully restore any of the Premises or the Building damaged by such installation or removal thereof. Section 15: Rules and Regulations. The Landlord hereby resends the right to prescribe at its sole discretion, reasonable rules and regulations (hereinafter referred to as the Rules and Regulations), having uniform applicability to all tenants of the Building and governing the use and enjoyment of the Building and the remainder of the Property provided the: the Rules and Regulations shall not materially interfere with the Tenant's use and enjoyment of the Premises in accordance with the provisions of this Lease. For the purposes enumerated in the provisions of Section 2. The Tenant shall adhere to the Rules and Regulations and shall cause its agents, employees, invitees, visitors and guests to do so. A copy of the Rules and Regulations in effect on the date hereof is attached hereto as Exhibit C. Section 16. Subordination: attornment. 16.1. Subordination. This Lease shall be subject and subordinate at all times to the lien of any first mortgage, first deed of trust, ground lease and/or other instrument of encumbrance heretofore or hereafter placed be the Landlord upon and or all of the Premises or the remainder of the Property and of all renewals, modifications, consolidations, replacements and extensions thereof (each of which is herein referred to as a "Mortgage"), all automatically and without the necessity of and further action on the part of the Tenant to effectuate such subordination. 16.2. Adornment. The Tenant shall promptly at the request of the Landlord or the holder of any Mortgage (herein reduced to as a "Mortgagee". 16.2.1. execute, enseal, acknowledge and deliver such further instrument or instruments evidencing such subordination as the Landlord or such Mortgage may deem necessary or desirable, and 16.2.2. attorn to such Mortgagee. 16.3. Anything contained in the provisions of this Section to contrary notwithstanding any Mortgagee may at and time subordinate the lien of it's mortgage to the operation and effect of this Lease without the necessity of obtaining the Tenant s consent thereto: be giving the Tenant written notice thereof in which event this Lease shall be deemed to be senior to such Mortgage without regard to their respective dates of execution, delivery, and or recordation among the land Records of the said (such Mortgagee shall have the same rights faith respect to this lease as though this lease had been executed and recorded among the said Land Records before the execution and delivery of such Mortgage. Section 17. Estoppel certificate. The Tenant shall from time to time, within five (5) days after being requested to do so by the Landlord or any first Mortgagee, execute, enseal, acknowledge, and deliver to the Landlord an instrument in recordable form. 17.1. certifying 17.1.1. that this Lease is unmodified and in full force and effect (or it there has been and modification thereof. that it is in full force and effect as so modified, stating therein the nature of such modification): 17.1.2. as to the dates to which the Base Rate and any additional Rent and other charges arising hereunder have been paid in advance of the dates on which payment thereof is due hereunder, if any: 17.1.3. as to the amount of and unpaid Rent or and credit due to the Tenant hereunder; 17.1.4 that the Tenant has accepted possession of the Premises, and the date on which the Term commenced: 17.1.5. as to whether, to the best knowledge, information and belief, the signer of such certificate, the Landlord is then in default in the performance of and of its obligations hereunder (and it so. specifying the nature of each such default): and 17.1.6. as to any other tact or condition reasonably requested by the Landlord, and first Mortgagee or prospective first Mortgagee or purchaser of any or all of the Premises, the Property or any interest therein, or assignee, or prospective assignee of any interest of the Landlord under this Lease: and 17.2. acknowledging and agreeing that any statement contained in any such certificate may be relied upon by the Landlord and any such other person. Section 18. Notices Any notice, demand, consent, approval, request or other communication or document to be provided hereunder to a party hereto shall be; 18.1. in writing, and 18.2. deemed to have been provided (a) forty-eight (48) hours after being sent as certified or registered mail in the United States mails, postage prepaid, return receipt requested, to the address of such party set forth below or to such other address in the United States of America as such party may designate from time to time by notice to the other, or (b) (if such party's receipt thereof is acknowledged in writing) given by hand or other delivery to such party. LANDLORD TENANT Managing General Partner Gerald Schraeder, Vice President --------------------------------- Randolph Park. Associates Astrotech Space Operations, Inc. --------------------------------- 5530 Wisconsin Avenue 12150 Prosperity Drive --------------------------------- Suite 1135 Silver Spring, Maryland 20904 --------------------------------- Chevy Chase, Maryland 20815 5 6 Section 19. General. 19.1. Effectiveness. This Lease shall become effective upon and only upon the execution and delivery hereof by each party hereto. 19.2 Complete understanding. This Lease represents the complete understanding between the parties hereto as to the subject matter hereof; and supersedes all prior negotiations representations, warranties, statements or agreements either written or oral between the parties hereto as to the same. 19.3. Amendment. This Lease may be amended by and only by an instrument executed and delivered by each party hereto. 19.4. Applicable law. This Lease shall be given effect and construed by application of the law of Maryland and any action or proceeding, arising hereunder shall be brought in the courts of Maryland; provided, that if any such action or proceeding arises under the Constitution, laws or treaties of the United States of America or if there is a diversity of citizenship between the parties thereto, so that it is to be brought in a United States District Court, it shall be brought in the United States District Court for the District of Maryland. 19.5. Waiver. The Landlord shall not he deemed to have waived the exercise of and right which it holds hereunder unless such waiver is made expressly and in writing (and no delay or omission by the Landlord in exercising any such right shall be deemed to be a waiver of the future exercise thereof). No such waiver made with respect to any instance involving the exercise of any such right shall be deemed to be a waiver with respect to and other such instance, or any other such right. 19.6. Time of essence. Time shall be of the essence of this Lease. 19.7. Headings. The headings of the Sections, subsections, paragraphs and subparagraphs thereof., be provided herein for and only for convenience of reference, and shall not be considered in construing the contents thereof. 19.8. Construction, As used herein. 19.8.1. The term "person" shall mean a natural person, a trustee a corporation a partnership and any other form of legal entity; and 19.8.2. all references made (a) in the neuter, masculine or feminine gender shall be deemed to have been made in all such genders. {b) in the singular or plural number shall be deemed to have been made. respectively in the plural or singular number as well, and (c) to any Section, subsection, paragraph or subparagraph shall, unless therein expressly indicated to the contrary, be deemed to have been made to such Section, subsection, paragraph or subparagraph of this Lease. 19.9. Exhibits. Each writing or plat referred to herein as being attached hereto as en exhibit or otherwise designated herein as an exhibit hereto is hereby made a part hereof. 19.10. Severability. No determination by any court, governmental body or otherwise that any provision of this Lease or any amendment hereof is invalid or unenforceable in any instance shall affect the validity or enforceability of (a) any other provision thereof, or (b) such provision in any circumstance not controlled by such determination. Each such provision shall be valid and enforceable to the fullest tent allotted by and shall be construed wherever possible as being consistent with applicable law. 19.11. Definition of the Landlord . 19.11.1. As used herein; the term "the Landlord" shall mean the entire herein above named as such and its heirs personal representatives, successors and assignees (each of whom shall have the same rights, remedies powers, authorities and privileges as it would have had, had it originally signed this Lease as the Landlord. 19.11.2. No person holding the Landlord s interest hereunder [whether or not such person is named as the Landlord) herein shall have any liability hereunder after such person ceases to hold such interest. except for any such liability accruing while such person holds such interest. 19.11.3. Neither the landlord nor any principal of the landlord, whether disclosed or undisclosed shall have any personal liability under provisions of this Lease. If the landlord defaults in the performance of any of its obligations hereunder or otherwise, the Tenant shall look solely to the Landlord equity, interest and rights in the Property for satisfaction of the Tenants remedies on account thereof. 19.12. Definition of "the Tenant". As used herein, the term the Tenant shall mean each person hereinabove named as such and such person's heirs, personal representatives, successors and assigns, each of whom shall have the same obligations, liabilities, rights and provisions as it would have had it originally executed this as the Tenant: provided, that no such right or privilege shall inure to the benefit of any assignee of the Tenant, immediate or remote, unless the assignment to such assignee is made in accordance with the provisions of Section 4. Whenever or more persons constitute the Tenant, all such persons shall be jointly and severally liable for the performance of the Tenant's obligations hereunder. Section 20. Warranties and Representations. 20.1. Tenant hereby acknowledges and agrees that there have been no warranties or representations, verbal or written, made be Landlord or any agent or representative of landlord, including, but not by any of limitation, any broker employed be Landlord, other then is expressly set forth in this Lease, and Tenant hereby waives any claim which it may have against Landlord by virtue of and representation or warranty not expressly set forth herein made by any person whomsoever on behalf of Landlord. IN WITNESS WHEREOF: each party hereto has executed and sealed this Lease, or has caused it to be executed and sealed on its behalf by its duly authorized representatives, the day and year first above written. < WITNESS: Randolph Park Associates II Limited Partnership and Randolph Park Associates, a Maryland Limited Partnership [SIG] by: [SIG] ----------------------------------- ---------------------------------------------- (SEAL) Managing General Partner The Landlord WITNESS or ATTEST: Astrotech Space Operations, Inc. -------------------------------------------------------- [SIG] by: /s/ Gerald R. Schraeder, VP Administration ----------------------------------- ----------------------------------------------(SEAL) The Tenant
6 7 Agreement of Lease by and between Randolph Park Associates II Limited Partnership and Randolph Park Associates, A Maryland Limited Partnership and Astrotech Space Operations, Inc. Rider No. 1 ----------- The following provisions are hereby inserted on the attached Lease: 3.1.1. Base Rent. A base rent of forty seven thousand, three hundred eighty three and 50/100 dollars ($47,383.50) per annum for years one (1) through five (5), payable in monthly installments of three thousand, nine hundred, forty eight and 63/100 dollars ($3,948.63). The above stated base rental computations are subject to the adjustments set forth in paragraph 3 of the attached Lease. 21.1. Free Rent. The Landlord agrees to waive the rental payments due for the second (2nd), third (3rd), and fourth (4th) months of the Lease term; provided Tenant is not otherwise in default. Randolph Park Associates II Limited Partnership and Randolph Park Associates, A Maryland Partnership [SIG] [SIG] - ---------------------------------- -------------------------------------------- Witness Managing General Partner [SIG] /s/ GERALD R. SCHRAEDER - V.P. Administration - ---------------------------------- -------------------------------------------- Witness Astrotech Space Operations, Inc.
8 Agreement of Lease by and between Randolph Park Associates II Limited Partnership and Randolph Park Associates, A Maryland Limited Partnership and Astrotech Space Operations, Inc. Rider No. 2 ----------- The following provisions are hereby inserted on the attached Lease: 1. At the end of section 3.2.3., "The Landlord hereby agrees to limit increases in operating expenses to no more than ten percent (10%) above the previous years operating expenses for building standard hours of operation." 2. Change section 3.6.4. to "Such sum shall bear interest at an annual rate of 6.5%." 3. Add to Exhibit C, "17. Landlord agrees to provide an additional allowance of $320.00 for carpeting in areas designated by the Tenant." 4. Add to Exhibit C, "18. Landlord agrees to provide an allowance of 64 lineal feet of sound insulation in ceiling height partitions in areas designated by the Tenant." 5. Add to Exhibit C, "19. Landlord agrees to provide an additional allowance of $330.00 for wallpaper in the area designated by tenant." 6. Landlord hereby agrees that throughout the initial term and option period of this lease , no charge shall be assessed tenant for parking for its employees or guests. Randolph Park Associates II Limited Partnership and Randolph Park Associates. A Maryland Limited Partnership [SIG] [SIG] - ----------------------------------- ------------------------------------------- Witness Managing General Partner [SIG] /s/ GERALD R SCHRAEDER - VP Administration - ----------------------------------- ------------------------------------------- Witness Astrotech Space Operations, Inc.
9 Agreement of Lease by and between Randolph Park Associates II Limited Partnership and Randolph Park Associates, A Maryland Limited Partnership and Astrotech Space Operations, Inc. Rider No. 3 ----------- The following provision is hereby inserted on the attached Lease: Renewal Option. Provided Tenant has fully performed each and every covenant, condition and obligation set forth in this Lease, Tenant shall have the option to extend the term of this Lease for an additional period of five (5) years from the expiration of the original Lease, and provided Tenant shall have notified Landlord in writing of his intention to exercise this option no later than 120 days prior to the expiration of the original term. All terms and conditions of the Lease will remain in full force and effect, except that the rental rate per square foot will be the then prevailing rate for similar space in the building. Randolph Park Associates II Limited Partnership and Randolph Park Associates, A Maryland Limited Partnership [SIG] [SIG] - ----------------------------------- ------------------------------------------- Witness Managing General Partner [SIG] /s/ GERALD R. SCHRAEDER - VP Administration - ----------------------------------- ------------------------------------------- Witness Astrotech Space Operations, Inc.
EX-10.54 10 ASTROTECH - SIGNET BANK LOAN AGREEMENT. 1 EXHIBIT 10.54 LOAN AND SECURITY AGREEMENT THIS LOAN AND SECURITY AGREEMENT, dated as of the 16th day of June, 1997, is made by and among SPACEHAB, INCORPORATED, a Washington corporation ("SPACEHAB") and ASTROTECH SPACE OPERATIONS. INC., a Delaware corporation ("Astrotech"; Astrotech and SPACEHAB is also referred to individually as a "Borrower' and collectively as the "Borrowers") and SIGNET BANK, a Virginia banking corporation (the "Lender"). The Lender has agreed to extend credit to the Borrowers, and the Borrowers have agreed to obtain credit from the Lender, on the terms and conditions set form in this Agreement. Accordingly, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Lender and the Borrowers agree as follows: SECTION I . Definitions. Certain terms used in this Agreement are defined in this Section 1. These terms, and the additional terms defined above, shall have the meanings assigned wherever the terms appear in this Agreement. These meanings are also applicable to the singular and plural forms of the terms defined. "Account Receivable" means collectively and includes any of the following, whether now owned or hereafter acquired by a Borrower: all present and future rights to payments for goods sold or leased or for services rendered, whether or not represented by instruments or chattel paper, and whether or not earned by performance; all present and fixture rights to payments arising out of the licensing of computer software and systems; all accounts, contract: rights, chattel paper, and instruments; proceeds of any letter of credit of which a Borrower is a beneficiary: all forms of obligations whatsoever owed to a Borrower, together with all instruments representing any of the foregoing; all rights in any returned or repossessed goods; all rights, security and guaranties with respect to any of the foregoing, including, without limitation, any right of stoppage in transit; together with all property included within the definitions of "accounts", "chattel paper", "documents" and "instruments" set forth in the UCC. "Act" means the Securities Act of 1933, as amended. "Advance Request" means a written request from the Borrowers (through SPACEHAB as their agent) for a Loan. Each Advance Request shall state the amount of the Loan requested and the purpose of such Loan. shall confirm that no Default or Event of Default has occurred and is continuing, and shall be substantially in the form attached hereto as Exhibit A (or such subsequent form as the Lender shall require). "Affiliate" means, with respect to any specified Person, any other Person which, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with. such specified Person. The term. "control" means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of a Person, whether through ownership of common stock, by contract, or otherwise. 2 "Agreement" means Loan and Security Agreement, as the same may be amended, modified or supplemented from time to time. "Bank" means any commercial banking corporation, saving bank, commercial finance company, or other financial institution. "Blue Sky Laws" means the securities laws of one or more states. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to close under the laws of the State. "Capital Expenditure" means an expenditure by a Borrower for the purpose of acquiring land, buildings, machinery, equipment, furniture, leasehold improvements and fixtures, or any other asset that is, or under GAAP would be, properly characterized as a capital asset on the balance sheet of such Borrower. "Capital Lease" means any lease which has been or should be capitalized on the books of the lessee in accordance with GAAP. "Cash Collateral Account" means emit of the non-interest bearing bank accounts which the Lender shall; cause to be opened pursuant to Section 3.2 hereof. "CERCLA" shall mean the Comprehensive Environmental Response. Compensation and Liability Act of 1980, as amended. "Closing" means the date on which the initial disbursement of the Loan is made. "Code" means the Internal Revenue Code of 1986, as amended and in effect from time to time. "Collateral" means collectively and includes all General Intangibles, Accounts Receivable and all other property of a Borrower in which a Lien is granted to the Lender pursuant to this Agreement or any other Loan Document. "Compliance Certificate" means a certificate of the Borrowers substantially in the form attached hereto as Exhibit B (or such subsequent form as the Lender shall require), executed by the chief financial officer of each Borrower, the Treasurer of each Borrower or such other financial officer of each Borrower as is acceptable to the Lender containing a calculation of the financial covenants set forth in Section 5.12 hereof applicable to the financial statements accompanying such Compliance Certificate and a certification that no Default or Event of Default has occurred and is continuing. 3 "Current Ratio" means the ratio of SPACEHAB's consolidated Current Assets to SPACEHAB's consolidated Current Liabilities "Current Asset " means any asset of a Borrower that is characterized as a current asset in accordance with GAAP. "Current Liability" means any liability of a Borrower that is characterized as current liability in accordance with GAAP. "Customer" means any Person obligated on an Account Receivable. "Debt" means collectively and includes (a) indebtedness or liability for boomed money, or for the deferred purchase price of property or series; (b) obligations as a lessee under a Capital Lease; (c) obligations to reimburse the issuer of letters of credit or acceptances: (a) all guaranties, endorsements (other than for collection or deposit in the ordinal course of business), and other contingent obligations to purchase, to provide funds for payment. to supply funds to invest in any Person, or otherwise to assure a creditor against loss; and (e) obligations secured by any Lien on property owned by the Person, whether or not the obligations have been assumed. "Default" means any event which with the giving of notice, the lapse of time, or both, would constitute an Event of Default. "Default Rate" means a rate of interest equal to 3% above the rate or interest otherwise applicable to Loans. "EBITDA" means, for any period, SPACEHAB's consolidated earnings before payment of interest or provision for taxes, depreciation and amortization calculated by adding to SPACEHAB's consolidated net income (or net loss) during such period the following: (a) SPACEHAB's consolidated interest expense recognized during such period, (b) SPACEHAB's consolidated income tax expense recognized during such period, (c) SPACEHAB's consolidated depreciation expense recognized during such period, and (d) and SPACEHAB's consolidated amortization expense recognized during such period and adjusting such resulting such by subtracting any extraordinary or unusual gains or other gains not incurred in the ordinary course of a Borrower's business which have been included in the consolidated net income for such period, in each case determined in accordance with GAAP. "Employee Benefit Plan" means any employee welfare benefit plan or employee pension benefit plan, as those terms are defined in Sections 3(1) and 3(2) of ERISA for the benefit of employees of a Borrower or any ERISA Affiliate. "Environmental Laws" means all federal, state or local laws, rules, regulations or orders relating to air, water or noise pollution, employee health and safety, or the production, storage, labeling, transportation or disposition of waste or hazardous or toxic substances, including, but not 4 limited to CERCLA, the Toxic Substances Control Act of 1976, as amended, the Resource Conservation Recovery Act of 1976, as amends the Clean Air Act, as amended, the Federal Water Pollution Control Act, as amended, or the Occupational Safety and Health Act of 1970, as amended. "Equipment" means collectively and includes all of the following, whether now owned or hereafter acquired by a Borrower: equipment and fixtures, including, without limitation, computer hardware, computer software and systems, furniture, machinery, vehicles and trade fixtures, together with any and all accessories, accessions, parts and appurtenances thereto, substitutions therefor and replacements thereof, together with all other such items which are included within the definitions of "equipment" and "fixtures" as set forth in the UCC. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" shall mean each trade or business (whether or not incorporated) which together with a Borrower would be treated as a "single employer" within the meaning of Code Sections 414(b), (c), (m), (n) or (o). "Euro-Dollar Amount" means each portion of the Principal Amount then bearing, or to bear, interest at a LIBO-Based Rate pursuant to a Euro-Dollar Rate Request. "Euro-Dollar Business Day" means any day on which commercial banks, are open for domestic and international business (including dealings in U.S. Dollar deposits) in London, England and Richmond, Virginia. "Euro-Dollar Interest Period" means the one (1), two (2), or three (3) month period, as selected by the Borrowers (through SPACEHAB as their agent), during which interest at a LIBO-Based Rate shall be applicable to the Euro-Dollar Amount in question beginning, on the date specified by the Borrowers (through SPACEHAB as their agent) in each Euro-Dollar Rare Request for the commencement of the computation of interest at a LIBO-Based Rate and ending on the numerically corresponding day in the calendar month in which such period terminates (or, if there is no numerical correspondent in such month, or if the date selected by the Borrowers (through SPACEHAB as their agent) for commencement is the last Euro-Dollar Business Day of a calendar month, then the last Euro-Dollar Business Day of the calendar month in which such period terminates, or if the numerically corresponding day is not a Euro-Dollar Business Day, then the next succeeding Euro-Dollar Business Day, unless such next succeeding Euro-Dollar Business Day enters a new calendar month. in which case such period shall end on the next preceding Euro-Dollar Business Day); provided that in no event shall any such period extend beyond the Termination Date. "Euro-Dollar Rate Request" means the Borrowers' telephonic notice issued by SPACEHAB as their agent (to be confirmed promptly in writing) to be received by he Lender by 19 Noon (Washington. D.C. time) one (1) Euro-Dollar Business Day, prior to the date specified in the Euro-Dollar Rate Request for the commencement of the Euro-Dollar Interest Period, of (a) the 5 Borrowers' intention to have (1) all or any portion of the principal which is not then the subject of a Euro-Dollar interest Period (other than a Euro-Dollar Interest Period which is terminating on such Euro-Dollar Business Day), and /or (2) all or arty portion of any Loan which is to be made on such Euro-Dollar Business Day bear interest at a specified LIBO-Based Rate and (b) the Euro-Dollar Interest Period desired by the Borrowers in respect of the amount specified. "Event of Default" means any of the events specified as an "Event of Default" under this Agreement, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Flight Hardware" means all hardware and subsystems owned or leased by SPACEHAB which are designed or acquired for space flight (including but not limited to flight modules, adapter rings, tunnel segments, Multi-layer insulation Blankets, cargo pallets and associated piece parts) and non-flight equipment directly supporting such hardware and subsystems (including but not limited to mechanical and electrical ground support, and flight training modules and equipment). "GAAP" means generally accepted accounting principles consistently applied. "General Intangibles" means collectively and includes all of the following, whether now owned or hereafter acquired by a Borrower: closes in action and causes of action (except if related to fixed assets of a Borrower), refunds, volume discounts, incentives, any "general intangible" (as defined in the UCC) related to an Account Receivable, corporate or other business records, goodwill, customer list, tax refunds, tax refund claims, and rights to indemnification. "Government" means the United States of America or any agency or instrumentality thereof. "Indemnitee" shall mean the Lender, its Affiliates, and its and their respective directors, officers, employees, agents, successors and assigns. "Intellectual Property" shall mean all letters patent, licenses, trade names, trademarks, copyrights, inventions, service marks, trademark registrations, service mark registrations and copyright registrations, whether domestic or foreign and applications for any of the foregoing, and all proprietor technology, know-how, trade secrets or other intellectual property rights owned or used by a Borrower or any Subsidiary in the operation of their respective businesses. "Interest Payment Date" means the last day of each calendar month. "Inventory" means collectively and includes all of the following, whether now owned or hereafter acquired by a Borrower: all goods held or intended for sale or lease by a Borrower, or furnished or to be furnished under contracts of service, all raw materials, work in process, finished goods, materials and supplies of every nature used or usable in connection with the manufacture, packing, shipping, advertising or sale of any such goods, together with all property included within 6 the definition of "inventory" set forth in the UCC, but Inventory shall not include the Flight Hardware. "Launch Revenue" means the revenue recognized by SPACEHAB in connection with the completion of each Shuttle mission carrying Flight Hardware. A Shuttle mission carrying Flight Hardware is considered complete when the Shuttle has returned to Earth and the Flight Hardware has been returned by NASA to SPACEHAB's custody. "Letter of Credit" means any letter of credit issued for the benefit of a Borrower by the Lender, but the inclusion of this definition shall not imply, or be construed as, a commitment by the Lender to issue any Letters of Credit. "Letter of Credit Exposure" means, at any given date, the available face amount of outstanding Letters of Credit on such plus the aggregate amount of drafts drawn under or purporting to be drawn under Letters of Credit that have been paid by the Lender and for which the Lender has not been reimbursed as of such date. "LIBO-Based Rate" means the late per annum (expressed as a percentage) determined by the Lender to be equal to the sum of (a) the LIBO Rate for the Euro-Dollar Amount and the Euro-Dollar Interest Period in question plus (b) .0250. "LIBO Rate" means that rate per annum quoted by the Lender, in its sole discretion (and as adjusted to reflect the cost of reserve requirements as they exist from time to time), as the London Interbank Offered Rate as published by Bloomberg or Dow Jones-Tolerate, as BBA LIBOR on page 3750 (or by Reuters Monitor Money Rates Services (LIBO page), if Bloomberg or Dow Jones-Tolerate is not available), or such other page as may replace that page on that service for the purpose of displaying rates or prices comparable to that rate (rounded upwards, if necessary, to the next higher l/100%) representing the offered rates for deposits In United States Dollars in an amount equal to the applicable Euro-Dollar Amount and for a designated period (e.g. one (1), two (2) or three (3) months) corresponding to the applicable Euro-Dollar Interest Period selected by the Borrowers. If more than one such rate appears on such page or its replacement, LIBO Rate shall be the arithmetic mean of such rates. "License" shall mean any certificate, license, franchise, permit or other authorization. "Lien" means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement. Encumbrance, lien (statutory or other), or preference, priority, or other security agreement, or preferential arrangement, charge or encumbrance of any kind or nature whatsoever (including. without limitation, any conditional sale or our title retention, agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing); provided, however, that Lien shall not include any of the following: 7 (a) any liens for current taxes, assessments and other governmental charms not yet due and payable; (b) any mechanic's, materialman's, carrier's, warehousemen's or similar liens for sums not yet due; (c) easements, rights-of-way, restrictions and other similar encumbrances on the real property fixtures a Borrower or a Subsidiary incurred in the ordinary course of business which, individually or in the aggregate are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business such Borrower or such Subsidiary; and (d) liens (other than liens on imposed on any property of a Borrower, a Subsidiary or an ERISA Affiliate pursuant to ERISA or section 412 of the Code) incurred or deposits made in the ordinary course of business, including liens in connection with workers' compensation, unemployment insurance and other types of social security. "Loans" means the loans to be made to the Borrowers by the Lender pursuant to this Agreement. "Loan Documents" means this Agreement, the Note, and any other document now or hereafter executed or delivered in connection with the Obligations in evidence thereof or as security, therefor, including, without limitation, any guaranty, life insurance assignment, pledge agreement. security agreement, deed of trust, mortgage, promissory note or subordination agreement. "Maximum Amount" means, at any time, the difference between (i) $10,000,000.00 and (ii) the Letter of Credit Exposure as of such time. "Multi-employer Plan" means a multi-employer plan defined as such in Section 4001(a)(3) of ERISA. "Non-Utilization Fee" means the quarterly fee to be paid by the Borrowers to the Lender pursuant to Section 2.4 hereof in consideration of the commitment by the Lender to make Loans hereunder. The Non-Utilization Fee due for each calendar quarter (or portion thereof) shall equal the product of the Non-Utilization Fee Rate in effect for such quarter (or portion thereof) multiplied by the difference between $10,000,000.00 and else average daily principal balance of the Loans during such quarter (or applicable portion thereof). "Non-Utilization Fee Rate" means the rate, expressed as a percentage, calculated by multiplying 1/4% by a fraction the numerator of which is the number of days in the calendar quarter, or shorter period, for which the Non-Utilization Fee Rate is being calculated and the denominator of which is 360. "Note" means the promissory note in forth substance acceptable to the Lender in the original principal amount of $10,000.000.00 (as it may be amended, modified supplemented or replaced from 8 time to time) evidencing the obligation of the Borrowers to pay the Principal Amount together with interest on the Loans. "Obligations" means the Loans, the Note, all indebtedness and obligations of the Borrowers under this Agreement and the other Loan Documents, as well as all other obligations and indebtedness of a Borrower to the Lender, now existing or hereafter arising, of every kind and description whether or not evidenced by notes or other instruments, and whether such obligations are direct or indirect, fixed or contingent, liquidated or unliquidated, including, without limitation, any overdrafts in any deposit account maintained by a Borrower with the Lender and all obligations of a Borrower with respect to Letters of Credit. "Operating Account" means the demand deposit account maintained with the Lender by SPACEHAB as agent for the Borrowers, into which all Loans will be disbursed. The initial Operating Account is account number 6520450542. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, partnership, limited liability partnership, limited liability company, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Prime Rate" means the rate of interest established from time to time by the Lender and announced by the Lender as its prime rate. The Prime Rate is not necessarily the lowest or most favorable rate of interest charged by the Lender on extensions of credit to debtors. "Principal Amount" means, on any specified date. the aggregate outstanding principal balance of the Loans on such date. "Proceeding" shall mean any action, suit or proceeding before any Tribunal. "Reportable Event" means any of the events described in Section 4043(b) of ERISA. "State" means the Commonwealth of Virginia. "Subsidiary" means a Person now existing or hereafter formed of which ownership interests having ordinary voting power to create a majority of the managers (e.g., board of directors) of such Person are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both by a Borrower. Unless required by the context (e.g., Sections 8(a) and (b)) Astrotech shall nor be deemed to be a Subsidiary of SPACEHAB, but rather shall be a Borrower. "Tangible Net Worth" means at any date, all amounts which, in accordance with GAAP, would be included under stockholders equity on the consolidated balance sheet of SPACEHAB and its Subsidiaries on such date; provided that, in any event, such amounts are to be net of amount carried on the books of a Borrower and its Subsidiaries for (a) any write-up in the book value of any assets resulting from a 9 revaluation thereof subsequent to the date of this Agreement; (b) treasury stock; (c) unamortized debt discount expense; (d) Rev cost of investments in excess of net assets acquired at any time of acquisition; (c) loans or advances to any Affiliate of a Borrower or Subsidiary, or directors, officers, employees or shareholders of a Borrower., any Affiliate of a Borrower, or any Subsidiary; (f) patents, patent applications, copyrights, trademarks, trade names, good mill, research and development costs, organizational expenses, capitalized software development costs and other like intangibles; and (g) any investments in securities which are not actively traded on a national securities exchange. "Tax Return" shall mean any federal, state and local income, excise, property and other Tax return or report. "Termination Date" means October 15, 1998 any any extension or extensions thereof granted by the Lender in its sole discretion. "Tribunal" means any federal state, municipal, foreign, territorial, or other court, arbitration panel or governmental body, subdivision, agency, department, commission, board, bureau or instrumentality having jurisdiction over the matter concerned. "UCC" means the Uniform Commercial Code as adopted in the State and all amendments "Unearned Contract Value" means the difference between (1) the then fully handed dollar value of a specific contract or subcontract, whether or not earned, and (2) the total amounts previously billed and properly billable for accepted end items or services supplied, or to be supplied, or rendered, or to be rendered, under such contract or subcontract. SECTION 2. Loans. 2.1 Amount and Borrowing Procedure. (a) Subject to the terms and conditions of this Agreement, including the receipt of an Advance Request theater, the Lender agrees to make Loans to the Borrowers (through SPACEHAB as their agent) from time to time until the Termination Date unless, after giving effect to any such Loan (i) the Principal Amount of Loans to the Borrowers would exceed the Maximum Amount or (ii) the Borrowers then have, or it a result of such Loan would have an obligation to prepay any Loan; provided, however that, for the purposes of all such calculations, Loans to be repaid by Loans to be advanced on such date shall be excluded from the Principal Amount. Subject to the foregoing limitations, the Borrowers (acting through SPACEHAB as their agent) may borrow, repay without penalty and re-borrow hereunder from the date hereof until the Termination Date. (b) If the Principal Amount exceeds the Maximum Amount, the Borrowers shall immediately prepay Loans to the extent necessary to reduce such excess. (c) The proceeds of the Loans shall be used for business or commercial purposes and for no other purposes (d) Each Advance Request must be received by the Lender not later than 1:00 p.m. (Washington, D.C. tone) on the date on which the Loan requested thereby is to be made. Advance Requests may be 10 transmitted by telecopy to the Lender at (703) 506-9553 or such other number as the lender may designate in written notice to the Borrowers. If an Advance Request is transmitted by telecopy, the Borrowers shall maintain the original of such Advance Request as a permanent record for so long as any of the Obligations remain outstanding and shall allow the Lender to inspect such Advance Request and shall provide copies of such original to the Lender upon its request therefor Nile proceeds of a Loan will be credited to the Operating Account. Loans may be requested by those individuals designated by SPACEHAB from time to time in written instruments delivered to the Lender, provided, however, that the Borrowers shall remain liable with respect to any Loan disbursed by the Lender in good faith hereunder, even if such a Loan is requested by an individual who has not been so designated. The Borrowers agree to confirm in writing from time to time, when and as requested by the Lender, for purposes of which the proceeds of each Loan were used. 2.2. Interest (a) General Provisions. Principal Amount shall bear interest for each day such Principal Amount is outstanding until it becomes due, at a per annum rate or rates of interest determined as set forth in this Section 2.2. The Borrowers, acting through their SPACEHAB as their agent, shall have the option, subject to the terms and conditions hereinafter set forth, of paying interest on the Principal Amount, or portions thereof, at the Prime Rate or a LIBO-Based Rate; provided, however, that each Euro-Dollar Rate Request must apply to at least $1,000,000.00 of the Principal Amount, unless the Principal Amount is less than $1,000,000.00 in which event all but not less than all of such Principal Amount may bear interest at a LIBO-Based Rate. Following the Lender's receipt of an oral request Mom SPACEHAB, the Lender will provide the Borrowers with the current one, two, or three month LIBO Rates. If the Borrowers desire the application of a LIBO-Based Rare, SPACEHAB shall submit a Euro-Dollar Rate Request to the Lender which Euro-Dollar Rate Request, if accepted by the Lender shall be irrevocable until the expiration of the Euro-Dollar Interest Period applicable thereto. In the event SPACEHAB fails to submit a Euro-Dollar Rate Request levity respect to a Euro-Dollar amount no later than 12:00 Noon Washington, D C. time on the Euro-Dollar Business Day preceding the last day of the relevant Euro-Dollar Interest Period, the Euro-Dollar Amount in question shall thereafter bear interest at the Prime Rate for or any period when SPACEHAB has failed to designate an interest rate applicable to any portion of the Principal Amount, Prime Rate shall be the applicable interest rate. The rate of interest with respect to any portion of the Principal Amount which, under the terms hereof, is bearing interest at the Prime Rate shall change as well when the Prime Rate Change. Payments of interest on each Loan shall be made on each Interest Payment Date beginning on the Interest Payment Date next succeeding the date of disbursement of such Loan, and with respect to Loans bearing interest at a LIBO-Based Rate on the last day of the Euro-Dollar Interest Period applicable thereto. At the option of the Lender, the Loans shall bear interest at the Default Rate, payable on demand, during any period of Default hereunder. (b) Inability to Determine Rate. In the event that the Lender shall have determined (which determination shall be conclusive and binding upon the Borrowers that by reason of circumstances affecting the interbank Eurodollar market adequate and reasonable means do not exist for ascertaining the LIBO Rate. For any given Euro-Dollar Interest Period the Lender shall forthwith give notice (which ma, be telephonic and promptly confirmed in writing or by facsimile transmission) of such determination to the Borrowers at least one (1) Euro-Dollar Business Day prior to, as the case may be, the conversion date of any portion of the Principal Amount bearing interest at the Prime Rate to a 11 LIBO-Based Rate or the proposed continuation date of any portion of the Principal Amount bearing interest at a LIBO-Based Rate. If such notice is given: ( 1 ) any portion of the Principal Amount bearing interest at the Prime Rate that was to have been converted to a LIBO-Based Rate subject to the provisions hereof, shall be continued at the Prime Rate and (2) any portion of the Principal Amount bearing interest at a LIBO-Based Rate shall be converted, on the last day of the these current Euro-Dollar Interest Period with respect thereto, to the Prime Rate until such notice has been withdrawn by the Lender, the Borrowers shall not have the right to have a LIBO-Based Rate apply to any portion of the Principal Amount. (c) Funding Indemnification. In addition to all other payment obligations hereunder, in the event: (I ) any portion of the Principal Amount which is bearing interest at LIBO-Based Rate is prepaid prior to the last day of the applicable Euro-Dollar Interest Period, whether following a mandatory prepayment. application of proceeds from the sale of Collateral or otherwise, or (2) the Borrowers shall fail to convert any portion of the Principal Amount bearing interest at the Prime Rate to a LIBO-Based Rate after SPACEHAB has issued a Euro-Dollar Rate Request with respect to such portion of the Principal Amount, or (3) the Borrowers shall fail to continue any portion of the Principal Amount bearing interest at a LIBO-Based Rate which they have elected to have continued at a LIBO-Based Rate or (4) the Borrowers shall fail to make any payment of principal or interest on any Loan bearing interest at a LIBO-Based Rate when due, then the Borrowers shall immediately pay to the Lender an additional amount compensating the Lender for all losses, costs and expenses incurred by the Lender in connection therewith, including, without limitation, such as may arise out of reemployment of funds obtained by the Lender or more fees payable to terminate the deposits from which such fund were obtained, such losses, costs and expenses and the method of calculation thereof being set forth in reasonable detail in a statement delivered to the Borrowers by the Lender, such statement to be conclusive in the absence of manifest error. Under no circumstances shall the Lender have any obligation to remit monies to the Borrowers upon prepayment of any portion of the Principal Amount bearing interest at a LIBO-Based Rate, even under circumstances which do not result in the necessity for the payment by the Borrowers of any amount hereunder. The hereof shall survive termination of this Agreement and the discharge of all other Obligations. (d) Illegality Impracticality . Notwithstanding any other provisions herein, if any law, regulation, treaty or directive or any change therein or in the interpretation or application thereof (whether having the force of law or not) shall or may in the opinion of the Lender makes it unlawful or impractical for the Lender to make or maintain claims bearing interest at a LIBO-Based Rate: ( 1 ) the commitment of the Lender hereunder to make Loans bearing interest at a LIBO-Based Rate shall forthwith be suspended and (2) the outstanding Loans bearing interest at a LIBO-Based Rate, if any, shall be converted automatically to Loans bearing interest at the Prime Rate at the end of their respective Euro-Dollar Interest Periods or within such earlier period as required by the event giving rise to such conversion In the event of a conversion of any Loan bearing interest at a LIBO-Based Rate prior to the end of its applicable Euro-Dollar Interest. Period pursuant to this Section 2.2(d), the Borrowers hereby agree promptly, to pay the Lender, upon its written demand, the amounts required pursuant to Section 22(c) above, it being agreed and understood that such conversion shall constitute 12 a prepayment for all purposes hereof: The provisions hereof shall survive the termination of this Agreement by the discharge of all other Obligations. 2.3. Note. The obligation of the Borrowers to repay the Loans, together with interest thereon, shall be evidenced by the note. The unpaid principal balance of the Note shall be payable on the Termination Date subject to acceleration, termination or prepayment under the terms of this Agreement. 2.4. Non-Utilization Fee. The obligation of the Borrowers to pay the Non-Utilization Fee shall commence on the date hereof and shall continue until the Obligations have been fully and completely paid and discharged. Commencing on June 30, 1997, and continuing on the last day of each subsequent calendar quarter thereafter (i.e. March 3l, June 30, September 30 and December, 31) until the Obligations have been fully and completely paid and discharged, the Borrowers shall pay the Non-Utilization Fee due for the quarter (or portion thereof) then ending any accrued and unpaid portion of this fee shall be paid on the Termination Date. 2.5. Payment and Computations. All payments hereunder (including any payment or prepayment of principal, interest, fees and other changes) or with respect to the blots or the Loans shall be made in lawful money of the United States of America. in immediately available funds, to the Lender at its office at North Tower, 5th Floor, 7799 Leesburg Pike, Falls Church, Virginia 22043, or at such other place as the Lender may in writing designate and shall be applied, at the option of the Lender, first to accrued Obligations other than principal and interest, next to accrued interest, then to principal due on Loans bearing, interest at the Prime Rate and last to interest due on monies bearing interest at a LIBO-Based Rate in chronological order according to the last day of the Euro-Dollar Interest Periods applicable thereto. If any payment of principal interest or fees is not due on a Business Day, then the due date will be extended to the next succeeding full Business Day and interest and fees will be payable with respect the extension. If any payment of principal, interest or fees is not made within seven (7) days of its due date, the Borrowers agree to pay to the Lender late charge equal to 4% of the amount of the payment. Except as otherwise specifically provided, interest and fees shall be computed on the basis of a year of 365 days and actual days elapsed. The Lender may, but shall not be obligated to, debit the amount of any payment due under this Agreement to and, deposit account or loan account of a Borrower maintained with the Lender. If the Lender elects to exercise the foregoing rift at any time when no Default or Event of Default exists, the Lender will so notify the Borrowers telephonically in advance. 2.6. Termination of Credit Facility by Borrowers. The Borrowers may terminate the credit facility provided for in this Agreement and discontinue borrowing hereunder by giving not less than 30 Business Days' prior written notice of such termination to the Lender. The termination of the credit facility provided for in this Agreement shall not affect the rights of the Lender with respect to any Obligations having prior or subsequent to such termination and the provisions of this Agreement shall remain in full force and effect until the Obligations have been fully and completely paid and discharged. Once the Obligations have been fully and completely paid and discharged and all obligations of the Lender to make Loans has terminated, the Lender will renege its Liens in the Collateral. 2.7. Extensions of Termination Date. The Lender may from time to time, in its sole discretion, extend the Termination Date giving written notice of such extension to the Borrowers. During any such periods of extension, the remaining terms and conditions of this Agreement shall remain in full force and effect. 2.8. Increase Costs. 13 (a) If, on or after the date hereof, the Lender shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation thereof, or compliance by the Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Lender's capital as a consequence of its obligations hereunder to a level below that which the Lender could have achieved but for such adoption, change or compliance (taking into consideration the Lender's policies with respect to capital adequacy), then from time to time after demand by the Lender, the Borrowers shall pay to the Lender such additional amount or amounts as will compensate the Lender for such reduction. (b) In the event that a change subsequent to the date hereof, or any applicable law, regulation, treaty or directive or in the governmental or judicial interpretation or thereof, or compliance by he Lender with any request or directive (whether or not having the force of law) issued subsequent to the date hereof by any central bank or other governmental authority, agency or instrumentality; (1) Does or shall subject the Lender to any tax of any kind whatsoever with respect to this Agreement or any others made or Letters of Credit issued hereunder, or changes the basis of taxation of payments to the Lender of principal, fees, interest or any other amount payable hereunder (except for changes in the rate of tax on the overall net income of the Lender); (2) Does or shall impose, modify or hold applicable any reserve special deposits compulsory loan or similar requirement against assets held by or deposits or other liabilities in or for the account of advances or loans by, or other credit extended by or any other acquisition of funds by any office of the Lender which are not otherwise included in the determination of the Prime Rate or an applicable LIBO Based Rate; or (3) Does or shall impose on the Lender any other condition; and the result of any of the foregoing is to increase the cost to the Lender of making, issuing, agreeing to make or issue, renewing, or maintaining any Loan or Letter of Credit or to reduce any amount receivable in respect thereof then in any such case, the Borrowers shall pay (including with respect to Taxes, any taxes or deductions imposed on such taxes) to the Lender, within ten (10) days of its written demand therefor, any additional amounts necessary to compensate the Lender for such additional cost or reduced amounts receivable as determined by the Lender levity with respect to this Agreement or such credit extensions. (c) If the Lender becomes entitled to claim any additional amounts pursuant to this Section 2.8 it shall promptly notify the Borrowers of the event by reason of which it has become so entitled. A certificate (including basis of calculation) as to any additional amounts payable pursuant to the foregoing sentence submitted by the Lender to the Borrowers shall be conclusive in the absence of manifest error. The obligations of the Borrowers under this Section 2.7 shall survive the terms of this Agreement and the discharge of the Obligations. 2.9. SPACEHAB as Agent for Borrowers. The Borrowers hereby appoint SPACEHAB to act as agent for the Borrowers hereunder and under the other Loan Documents. Each of the Borrowers hereby authorizes SPACEHAB to make such action on its behalf hereunder and under the provisions of the other Loan Documents and any other instruments and agreements referred to herein or therein, and to exercise such powers and to perform such duties hereunder or thereunder, as are specifically delegated to or required of SPACEHAB, either expressly or implicitly, by the terms hereof or thereof, together with such powers as are reasonably incidental thereto. SPACEHAB agrees to act as the agent 14 on behalf of the Borrower to the extent provided herein and in the other Loan Documents. Any action taken by SPACEHAB or any failure of SPACEHAB to act, either pursuant to instructions from the Borrowers or in the exercise of its discretion, shall be binding on the Borrowers, and the Lender shall have no obligation to inquire into the authority of SPACEHAB to act for the Borrowers hereunder and under any other Loan Document. 2.10 Commitment Fee. At Closing, the Borrowers shall pay to the Lender the balance of the commitment fee due to the Lender pursuant to the Lender's commitment letter dated May 9, 1997 and accepted by the Borrowers May 19, 1997. SECTION 3. Covenants, Representations and Other Terms Regarding Collateral. 3.1. Security Interest. Each Borrower hereby grants to the Lender, its successors and assigns a security interest in the Collateral and all proceeds and products thereof, all books of account and records, including all computer software relating thereto, all of which shall secure the Obligations. 3.2. Accounts Receivable. (a) The Borrowers represent and warrant as to each and every Account Receivable, which is an account, now existing or hereafter arising, that: (i) it is a bona fide existing obligation, valid and enforceable against the Customer, for goods sold or leased or services rendered in the ordinary course of business; (ii) it is subject to no dispute, defense or offset except as disclosed in writing to the Lender; (iii) the supporting documents, instruments, chattel paper and other evidences of indebtedness, if any, delivered to the Lender are genuine, complete valid and enforceable in accordance with their terms; (iv) it is not subject to any discount, or to terms of special payment except as disclosed in writing to the Lender; and (v) except to the extent the assignment or Claims Act of 1940 or similar state law may apply to an Account Receivable from the Government, it is not and shall not be subject to any prohibition or limitation upon assignment. (b) The Borrowers shall immediately notify the Lender of: (i) any dispute with a Customer relating to an Account Receivable due from such Customer in excess of $100,000.00 and (ii) any bankruptcy, insolvency, receivership, assignment for the benefit of creditor or suspension of business of any Customer of which the Borrower has knowledge. (c) Unless the Lender has exercised its rights to receive direct parents in respect of Accounts Receivable from Customers, each Borrower is authorized to collect amounts owing to it with respect to Accounts Receivable. At any time, the Lender shall have the right to require that payments in respect of Accounts Receivable be made directly to the Lender. Upon such an election by the Lender, the Borrowers will so notify their respective Customers and shall direct all Customers to make payments on Accounts Receivable to the Cash Collateral Account designated by the Lender by printing such direction on all invoices giver to Customers. At any time when a Default exists, the Lender shall have the right to notify Customers of its security interest in the Accounts Receivable, and. at the Lender's request the Borrowers will notify each Customer of the Lender's security interest in the Accounts Receivable; provided; however, that the foregoing shall not impair or restrict the Lender's right, and the Borrowers, obligation to take all actions deemed reasonably necessary by the Lender under the 15 Assignment of Claims Act of 1040 as amended, and all applicable regulations issued pursuant thereto to perfect the assignment to the Lender of Accounts Receivable due from the Government. (d) If Lender elects to receive direct payments in respect of Accounts receivable from Customers, the Lender shall cause one or more Cash Collateral Accounts to be opened and maintained at the principal office of the Lender. The Cash Collateral Accounts will contain only cash proceeds of the Accounts Receivable. Any cash proceeds (as such term is defined in Section 9-306(1) of the UCC) received by the Lender directs from Customers obligated to make payments under Accounts Receivable pursuant to clause (c) of this Section 3 or from Borrower pursuant to clause (c) of this Section 2.2. whether consisting of checks, notes, drains, bills of exchange, money orders, commercial paper or other proceeds received on account of any Collateral, shall be promptly deposited the Cash Collateral Accounts and until so deposited shall be held in trust by the Lender in recognition of the Lender's security interest therein ant shall not be commingled with any funds of the Borrowers not constituting proceeds of Collateral. The name in which each Cash Collateral Account is carried shall clearly indicate that the funds deposited therein are the property of the appropriate Borrower, subject to the security interest of the Lender hereunder. Such proceeds, when deposited, shall continue to be secured for the Obligations and shall not constitute payment thereof until applied as hereinafter provided. The Lender shall have sole dominion and control over the funds deposited in the Cash Collateral Accounts, and such funds may be withdrawn therefrom only by the Lender. Provided that no Default or Event of Default exists, each Business Day the Lender (after final collection) will apply the funds in the Cash Collateral Accounts to reduce that portion of the Principal Amount bearing interest at the Prime Rate and will transfer any funds remaining in the Cash Collateral Accounts after such principal curtailments to the Operating Account. (e) If the Lender has elected to receive payments directly from Customers in respect of Accounts Receivable, each Borrower shall cause all payments from Customers in respect of Accounts Receivable collected by it to be delivered to the Lender forthwith upon receipt for deposit in the appropriate Cash Collateral Account, in the original form in which received (with such endorsements or assignments as may be necessary to permit collection thereof by the Lender) and until so delivered such payments shall be held in trust by the Borrowers in recognition of the Lender's security interest therein and shall not be commingled with any funds of the Borrowers not constituting proceeds of Collateral. Each Borrower hereby appoints the Lender and any officer, employee or agent of the Lender as the Lender may from time to time designate as attorneys-in-fact for such Borrower to endorse and sign the name of such Borrower on all checks, drafts, money orders or other media of payment so delivered and to perform all actions necessary or desirable in the discretion of the Lender to effect the provisions of this Section 3.2(e) and to carry out the intent hereof, to do any act which such Borrower is required to do pursuant to the terms of this Section 3.2(e), and to exercise such rights and powers as such Borrower might exercise with respect to the Collateral, all at the cost and expense of the Borrowers. Any endorsements or assignments made pursuant to the foregoing power of attorney shall, for all purposes, be deemed to have been made by the Borrower granting such, power of attorney prior to any endorsement or assignment thereof by the Lender. The Lender may use any convenient or customary means for the purpose of collecting such checks, draft, money orders or other media of payment. (f) To facilitate the direct collection of payments made in respect of Accounts Receivable, the Lender shall have the right to take over each Borrower's post office boxes or make 16 other arrangements, with which the Borrowers shall cooperate, to receive payment made in respect of Accounts Receivable contained in each Borrower's mail. (g) Each Borrower shall execute all other agreements, instruments and documents and shall perform all further acts which the Lender may require with respect to Accounts Receivable owing by the Government to ensure compliance with the Assignment of Claims Act of 1940, as amended, and all applicable regulations issued pursuant thereto. 3.3 Defense of Collateral. Each. Borrower, at its expense, will defend the Collateral against any claims or demands adverse to the Lender's security interest therein and will promptly pay, when due, all taxes or assessments levied against the Borrowers on the Collateral, except as contested in good faith and through appropriate proceedings deemed reasonably acceptable to the Lender. 3.4. Information Regarding Collateral. The Borrowers shall provide the Lender such information as the Lender may from time to time reasonably request with respect to the Collateral, including, without limitation, statements describing, designating, identifying and evaluating all Collateral. 3.5. Perfection of Security. The Borrowers shall perform any and all steps in all relevant or appropriate jurisdictions as may be necessary or reasonably requested by the Lender to perfect, maintain and protect the Lender's security interest in the Collateral. The Borrowers shall pay taxes and costs of, or incidental to, any recording or filing of any financing statements concerning the Collateral. The Borrowers agree that a carbon, photographic, photostatic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement; provided that this shall not limit the obligations of the Borrowers to execute separate to, subsequent financing statements with respect to the Collateral upon the Lender's request. 3.6. Power of Attorney. Each Borrower hereby appoints the Lender and any officer, employee or agent of the Lender as the Lender may from time to time designate as attorneys-in-fact for such Borrower to perform all actions necessary or desirable in the discretion of the Lender to effect full provisions of this Agreement and to carry out the intent hereof, to do any act which such Borrower is required to do pursuant to the terms of this Agreement, and to exercise such rights and powers as such Borrower might exercise with respect to the Collateral, all at the cost and expense of such Borrower. Each Borrower agrees that neither the Lender nor any other such attorney-in-fact will be liable for any acts of omission or commission unless such acts were willful and malicious or grossly negligent, nor for any error of judgment or mistake or law or fact. This power is coupled with an interest and is irrevocable so long as any Obligations are outstanding. The Lender agrees that it shall not exercise any right under this Section prior to the occurrence of a Default. 3.7. Limitations on Obligations. It is expressly agreed by the Borrowers that, anything herein to the contrary notwithstanding, the Borrowers shall remain liable under each Account Receivable and contract giving rise to each Account Receivable to observe and perform all the conditions and obligations to be observed and performed by the Borrowers thereunder, all in accordance with and pursuant to the terms and provisions of each such Account Receivable and contract. The Lender shall not have any obligation or liability under any Account Receivable or contract by reason of or arising out of this Agreement or the assignment of such Account Receivable or 17 contract to the Lender or the receipt by the Lender of any payment relating to the Account Receivable pursuant hereto nor shall the Lender be required or obligated in any manner to perform or fulfill any of the obligations of the Borrowers under or pursuant to any Account Receivable or contract, or to make any payment or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Account Receivable, or to present or file any claim, or to take any action to collect or enforce any performance of the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. 3.8. Indemnification In any suit, proceeding counterclaim or action brought by or against he Lender relating to the Collateral, the Borrowers will save, indemnify and keep the Lender harmless from and against all expense, loss or carnage suffered by reason of any defense, set-off, counterclaim. recoupment or reduction of liability whatsoever of any obligor thereunder, arising out of a breach by the Borrowers of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligor or its successors from the Borrowers. and all such obligations of the Borrowers shall be and remain enforceable against and only against the Borrowers and shall not be enforceable against the Lender. The foregoing obligation of the Borrowers to indemnify the Lender shall survive the payment of the Obligations and the termination of this Agreement but shall not extend to any suit, proceeding or action arising out of the Lender's gross negligence or willful misconduct. SECTION 4. Representations and Warranties. As of the date hereof and as of each date a Loan is requested hereunder the Borrowers represent and warrant to the Lender: 4.1. Incorporation, Good Standing and Due Qualification. Each Borrower and each Subsidiary is a corporation duly organized, validly existing, and in good standing under the laws or the jurisdiction of its incorporation; has the corporate power, and authority to own its assets and to transact the business in which it is now engaged or in which it is proposed to be engaged; and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required. 4.2. Corporate Power and Authority. The execution, delivery and performance by each Borrower of the Loan Documents to which each is a party have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of the stockholders of such corporation: (b) contravene such corporation's charter or bylaw (c) result in a material breach of or constitute a default under any material agreement or instrument to which such corporation is a party or by which it or its properties may be bound or affected: (d) result in, or require, the creation or imposition of any Lien. upon or with respect to any of the properties now owned or hereafter by such corporation except be specifically created by or permitted under the Loan, Documents; and (e) to each Borrower's best knowledge cause such corporation to be in default under any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to such corporation. 4.3 Legally Enforceable Agreement. This Agreement is, and each of the other Loan Documents when delivered under this Agreement will be, legal, valid and binding obligations of the Borrowers, enforceable against the Borrowers, as the case may be, in accordance with their respective terms, except 18 as such enforceability may be limited by bankruptcy, insolvency, receivership or by general principles of equity. 4.4. Financial Statements. The financial statements of the Borrowers which have been furnished to the Lender in connection with this Agreement are complete and correct in all material respects in accordance with GAAP and fairly present the financial condition of such Borrower, and, since the date of each such statement, there has been no material adverse change in the condition (financial or otherwise), business or operations of the Borrowers. 4.5. Litigation. There's no pending or, to each Borrower's best knowledge, threatened action or proceeding against or affecting a Borrower or any Subsidiary before any Tribunal which may, in any case or in the aggregate, materially adversely affect the financial condition, operations, properties or business of a Borrower or any Subsidiary. 4.6. Ownership and Liens. Each Borrower and each Subsidiary has title to all of its assets, including the Collateral and none of the Collateral or such assets, to the best of each Borrower's knowledge, is subject to any Lien, except Liens permitted by this Agreement. 4.7. ERISA. (a) Prohibited Transactions. No transaction has occurred in connection with which a Borrower or any Subsidiary would be subject to a liability to either civil penalty assessed pursuant to Code 502(i) of ERISA or a tax imposed by Code 4975. (b) Plan Termination. There has been no termination of an Employee Benefit Plan or trust created under any Employee Benefit Plan that has or will give rise to liability to the PBGC on the part of a borrower an ERISA affiliate. No withdrawal or other liability has been incurred under Title IV of ERISA with respect to any Employee Benefit Plan by a Borrower or an ERISA Affiliate. The PBGC As not instituted proceedings to terminate any Employee Benefit Plan. (c) Accumulated Funding Deficiency. Full payment has been made of all amounts which are required under the terms of each Employee Benefit Plan to have been, paid as contributions to such Employee Benefit Plan as of the last day of the most recent fiscal year of such Employee Benefit Plan ended on or before the dare of this Agreement, and no accumulated funding deficiency (as defined in Section 302 of ERISA and Code Section 419), whether or not waived, exists with respect to any Employee Benefit Plow Each Borrower and each E~SA Affiliate are current with all required installments under Code Section 412. (d) Relationship of Benefits to Pension Plan Assets. The current value of the benefit liabilities (as defined in Section 4001 (a)(6) of ERISA) of each Employee Benefit Plan does not exceed the fair market value of the assets of such Employee Benefit Plan. Neither a Borrower nor any ERISA affiliate is required to provide security to an Employee Benefit Plan under Code Section 401(a)(29). No lien under Code Section 412(n) or Sections 312(f) or 4068 of ERISA has been or is reasonably expected by the Borrowers to be imposed on the assets of a Borrower or any ERISA Affiliate. 19 (e) Multiemployer Plan. Either the Borrowers nor any ERISA Affiliate participates in or contributes to or, since September 26, 1980 has participated in or contributed to, any Multiemployer Plan. (f) Compliance with ERISA. The Borrowers and the ERISA Affiliates are in compliance in all material respects with those provisions of ERISA which are applicable to them. Any Employee Benefit Plan which is intended to be "qualified" under Code Section 401 (a) is so qualified. No Reportable Event has occurred with respect to any Employee Benefit Plan. Each Employee Benefit Plan has been administered in compliance with ERISA and the applicable provisions of the Code, and in accordance with its terms and any related agreements or documents. Each Borrower may terminate its contributions to any ether Employee Benefit Plan maintained by it without incurring any liability to any person interested therein. There is no pending or, to the best knowledge of each Borrower, threatened assessment. complaint, proceeding or investigation of any kind before any Tribunal, including, but not limited to, the Internal Revenue Service, the Department of Labor, the PBGC or any court of competent jurisdiction, related to an Employee Benefit Plan, nor is there any basis therefor. The Borrowers and each ERISA Affiliate have complied with the continuation coverage requirements of Code Section 4980B and Part 6 of Title of ERIS.A and any predecessor provisions thereto and, to the extent elective. the group health plan for ability, access and renewability requirements in Code Sections 9801 through 9806. 4.8. Taxes. The Borrowers and each Subsidiary have (a) timely flied or caused to be filed all Tax Reviews required to be filed for all periods up to and including the date hereof in each jurisdiction in which they are or have been subject to taxation and such return and reports are true and corrects have timely filled all claims for refunds to which they are entitled and have timely paid or caused to be paid in full all taxes which are due and payable to any taxing authorities for such periods, (b) fully paid or accrued on their respective books an amount sufficient to pay all taxes to the extent of known liabilities therefor which are not yet due and payable, (c) made or caused to be made all withholdings of taxes required to be made, and such withholdings have either been paid to the appropriate governmental authority or set aside in separate accounts for such purposes, and (d) otherwise satisfied, in all material respects, all federal requirements applicable to them with respect to all aforementioned obligations of all taxing jurisdictions, and neither the Internal Revenue Service nor any other taxing authority is now asserting or, to the best knowledge of each Borrower, threatening assert against a Borrower or and, Subsidiary any deficiency or claim for additional truces or any interest thereon or penalties in connection therewith. 4 9. Debt. No Borrower is in any manner directly or contingently obligated with respect to any Debt which is not permitted by this Agreement. No Borrower is in default with respect to any such Debt. 4.10 Corporate Name: Chief Executive Office. During the five years immediately preceding the date of this Agreement, neither a Borrower nor any predecessor of a Borrower has used arty corporate or fictitious name other than its current corporate name. The chief executive office of SPACEHAB, within the meaning of Section 9.103(3!(d) of the UCC is Suite 360, 1595 Spring Hill Road, Vienna, Virginia 22182 and the chief executive office of Astrotech, within the meaning of Section 9.1 03(3)(d) of the UCC is 125110 Prosperity Drive, Suite 100, Silver Spring, Maryland 20904. 4.11. Environmental and Safety Matters. The operation of the business of the Borrowers and all Subsidiaries does not violate any applicable Environmental Laws. The Borrowers and all 20 Subsidiaries have timely obtained all licenses and permits and timely filed all reports required to be filed under any applicable Environmental Laws. Neither a Borrower nor any Subsidiary has, and, to the best knowledge of each Borrower, no other Person has, stored any chemical or hazardous substances, including any "Hazardous Substances," "Pollutants" or "Contaminants" (as such terms are defined in CERCLA), asbestos, petroleum products, or polychlorinated biphenyls on, beneath or about any of the owned or leased properties of a Borrower or any Subsidiary in violation of any applicable legal requirements, including any environmental Laws. Except as otherwise disclosed to the Lender in writing prior to the date hereof: to the best knowledge of each Borrower, there is no condition relating to or resulting from. the release or discharge into the soil, surface waters, groundwaters, drinking water supplies. navigable waters, lands surface or subsurface: strata, ambient air or any other environmental medium which has resulted or could result in any damage, loss, cost, expense, claim, demand, order or liability to or against a Borrower or any Subsidiary by any Tribunal or other third party relating to or resulting from the operation of its business or otherwise related to any real properly owned or leased of a Borrower or any Subsidiary, irrespective of the cause of such condition. Neither a Borrower nor any Subsidiary has received notice from any Tribunal or private or public entities advising a Borrower or any Subsidiary that it is potentially responsible for response costs with respect to a release or threatened release of any Hazardous Substances. Neither a Borrower nor any Subsidiary has and, to the best knowledge of each Borrower, no other Person has, buried, dumped or otherwise disposed of any Hazardous Substances on, beneath or about any property of a Borrower or any Subsidiary or on, beneath or about any other property in violation of any applicable legal requirements, including any Environmental Laws. Neither a Borrower nor any Subsidiary has received notice of violation of any Environmental Law or zoning or land use ordinance, law or regulation relating to the operation of the business of the Borrowers or any Subsidiary, nor is either Borrower severe of any such violation. 4.12. Licenses. The Borrowers and all Subsidiaries possess all Licenses from federal, state and local governmental or regulatory authorities that are necessary for the ownership, maintenance and operation of their respective businesses as now conducted or as proposed to be conducted and the ownership or leasing of their respective properties where the failure to possess such Licenses would have a material adverse effect on the condition (financial or otherwise), operations, business or property of such Borrower or such Subsidiary. The Licenses are in full force and effect, and the Borrowers and each Subsidiary, as the case may be, are in compliance in all material respects with all of such Licenses. 4.13. Intellectual Property. The Borrowers and all Subsidiaries own all right, title and interest in and to all Intellectual Property used in and material to the operation of their respective businesses or, for such Intellectual Property that is not owned, possesses adequate licenses or other legally enforceable rights to use the same. Each Borrower has no reason to believe that any valid basis exists upon which a claim adversely affecting any such Intellectual Property may be asserted against a Borrower or any Subsidiary. To the best knowledge of each Borrower, no person is infringing upon the Intellectual Property used by a Borrower or any Subsidiary material to the operation of their respective businesses. Each Borrower has taken appropriate steps to protect the secrecy, confidentiality and value of its and all Subsidiaries rights in any to such Intellectual Property and to prevent others from using such Intellectual Proper without consent. 4.14. Absence of Payments. None of the Borrowers, any Subsidiary, any of their respective directors, officers, agents or employees, or, to the best knowledge of each Borrower, any other Person acting on behalf of any such Person has made any unlawful contributions, payments, gifts 21 or entertainment, or make any unlawful expenditures relating to political activity, to government officials or others. 4.15. Related Party Transactions. No present or former officer, director, stockholder or Affiliate of a Borrower is a party to any transaction or series of transactions with a Borrower which requires payments by a Borrower to such officer, director, stockholder or affiliate other than normal and customary employment compensation and benefits. 4.16. Disclosure. All facts material to the financial condition results of operations, business, prospects and property of the Borrowers and each Subsidiary have heretofore been disclosed o the Lender. No representation or warranty made by a Borrower in this Agreement or in any of the other Loan Documents or in any statement certificate, exhibit or schedule furnished or to be furnished to the Lender pursuant to this Agreement or any of the other Loan Documents or in connection with the transactions contemplated herein and therein contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein and therein not misleading. SECTION 5. Affirmative Covenants. The Borrowers covenant and agree with the Lender that each will: 5.1. Maintenance of Existence. Preserve and maintain, and cause each Subsidiary to preserve and maintain, its corporate existence and good standing in the jurisdiction of its incorporation, and qualify and remain qualified, and cause each Subsidiary to qualify and remain qualified, as a foreign corporation in each jurisdiction in which to he best of each Borrower's knowledge such qualification is required. 5.2. Maintenance of Records. Keep and cause each Subsidiary to keep, adequate records and books of account, in which complete entries will be made in accordance with GAAP, reflecting all financial transactions of each Borrower and each Subsidiary, and maintain the principal records and books of account of each Borrower and each Subsidiary, including those concerning the Collateral, at the chief executive office of SPACEHAB. 5.3. Maintenance of Properties. Maintain, keep and preserve, and cause each Subsidiary to maintain, keep and preserve, all or its 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. 5.4. Conduct of Business. Continue, and cause each Subsidiary to continue, to engage in an efficient and economical manner in a business of the same general type as conducted by it on the date of this Agreement. 5.5. Maintenance of Insurance. Maintain, and cause each Subsidiary to maintain, insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risk as are usually carried by companies engaged in the same or a similar business and similarly situated. 5.6. Compliance with Laws. Comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations and orders (including, without limitation, ERISA), such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon, its property, except is contested in good faith, and through appropriate proceedings deemed reasonably acceptable to the Lender. 22 5 7. Right of Inspection. At any reasonable time and from time to time permit the Lender or any agent or representative thereof to audit and verify the collateral, examine and notice copies of and abstracts from the records and books of account of; and visit the properties of, the Borrowers and any Subsidiary, and to discuss the affairs, finances and accounts of the Borrowers and any Subsidiary with any of heir respective of officers, directors or shareholders and each Borrower's independent accountants, and in connection with any such inspection, pay to the Lender upon demand its then current fee for such inspections compensate the Lender for the cost incurred and the commitment of resources required for conducting such inspection. 5.8 Reporting Requirements Furnish to the Lender: (a) Form 10-Q. As soon as available, and in any event within the earlier or five (5) days after filing with the Securities and Exchange Commission and fifty (50) days after the end of each of the first three quarters of each fiscal year of SPACEHAB. Securities and Exchange Commission Form 10-Q prepared by SPACEHAB in accordance with GAAP. The financial statements contained in each Form 10-Q statements shall be certified by an officer of each Borrower acceptable to the Lender to present fairly the financial condition of the Borrowers (subject to year-end adjustment) and shall be accompanied by a Compliance Certificate; (b) Form 10-K. As soon as available, and in any event within the earlier of five (5) days after filing with the Securities and Exchange Commission and ninety-five (95) days after the end of each fiscal year of SPACEHAB. Securities and Exchange Commission Form 10-K prepared by SPACEHAB. The consolidated financial statements contained in such Form 10-K shall be prepared in accordance with GAAP and be accompanied by an opinion thereon acceptable to the Lender of an independent certified public accountant firm selected by the Borrowers and acceptable to the Lender and shall also be accompanied by a Compliance Certificate. (c) Management Letters. Promptly upon receipt thereof copies of any reports submitted to a Borrower or any Subsidiary by independent certified public accountants in connection with examination of the financial statements of a Borrower or any Subsidiary made by such accountants; (d) Notice of Litigation. Promptly after the commencement thereof, notice of all actions, suits and proceedings before any Tribunal affecting a Borrower or Any Subsidiary, which, in the reasonable opinion of the Borrowers, if determined adversely, is reasonably likely to have a material adverse effect on the financial condition, properties or operations of such Borrower or such Subsidiary; (e) Notice of Defaults and Events of Default. As soon as possible and in any event within five (a) Business Days after the occurrence of each Default and Event of Default, a written notice setting forth the details of such Default or Event of Default and the action which is proposed to be taken by the Borrowers with respect thereto; (f) Proxy Statements, Etc. Promptly after the sending or filing thereof copies of all proxy statements, financial statements and reports which a Borrower or any Subsidiary sends to its stockholders, and copies of all regular, periodic and specific reports, and all registration statements which a Borrower or any Subsidiary files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or with any national securities exchange; 23 (g) Government Contract Audits. Promptly after a Borrower's receipt thereof; notice of any final decision of a contracting officer disallowing costs aggregating more than $500,000.00, which disallowed costs arise out of any audit of such Borrowers contracts with the Government; (h) Notice Claimed Defaults. Immediately upon becoming aware that the holder of any Debt or Lien has given notice or taken any action with respect to a claimed breach, default or coven of default, a written notice specifying the notice given or action taken by such holder and the nature of the claimed breach. default or event of default by a Borrower thereunder and the action being taken or proposed to be taken with respect thereto; and (i) General Information. Such other information respecting the condition or operations, financial or otherwise, of the Borrowers or any Subsidiary as the Lender may from time to time reasonably request. 5.9. Licenses. Keep, and cause each Subsidiary, to keep, all increases and all other agreements necessary to operate the business of such Borrower or such Subsidiary in full force and effect and free from burdensome restrictions and comply in all material respects with all terms and conditions thereof. 5.10. ERISA. (a) Make, and cause each Subsidiary to make, prompt payments of contributions required by the terms of each Employee Benefit Plan and meet the minimum Ending standards set forth under ER1SA and the Code with respect to each Employee Benefit Plan to which such standards apply; (b) notify the Lender immediately of any fact including, without limitation, any Reportable Event, arising in connection with any Employee Benefit Plan which, more likely than not, would constitute grounds for the termination thereof by the PBGC or for the appointment by the appropriate United States district court of a trustee to administer the Employee Benefit Plan; (c) notify the Lender immediately of the intent by a Borrower to terminate any Employee Benefit Plan; (d) notify the Lender immediately of the adoption of an amendment to any Employee Benefit Plan (or of any other event) which causes any Employee Benefit Plan to fail to leave sufficient assets to qualify for a standard termination under Section 4041 of ERISA or to require providing security under Code Section 401 (a)(29); (e) promptly after receipt thereof, furnish to the Lender a copy of any notice received by a Borrower or any Subsidiary from the PBGC relating to the intention of the PBGC to terminate any Employee Benefit Plan or to appoint a trustee to administer an Employee Benefit Plan.; (f) promptly after receipt thereof furnish to the Lender a copy of any notice received by a Borrower or any Subsidiary from the Internal Revenue Service relating to the intention of the Internal Revenue Service to disqualify any Employee Benefit Plan or to refuse to grant a favorable determination letter with regard to any Employee Benefit Plan; (g) notify the Lender immediately of arty lawsuit, claim for damages or administrative proceeding in which an Employee Benefit Plan or a fiduciary with respect thereto is a defendant: and (h) furnish to the Leader. promptly upon its request therefor, such additional information concerning each and every Employee Benefit Plan as may be reasonably requested including, but not limited to, the annual report required to be film under ERISA and any notices filed or proposed to be filed in connection with any of the foregoing. 24 5.11. Environmental Matters. Notify the Lender immediately of the receipt by a Borrower or any Subsidiary of any notice from any Tribunal that there has been a violation by a Borrower or any Subsidiary of any Environmental Law and that remediation of such violation is necessary and assume responsibility for, and control the process of, any response action, penalties or correction associated with such violation. 5.12. Financial Covenants. (a) EBITDA. Cause EBITDA, determined on a quarterly basis, to be not less than the amount set forth below for the corresponding period:
Amount Period $3,000,000.00 From April 1, 1997 through June 30, 1997 $4,600,000.00 From July 1, 1997 through September 30, 1997 $4,100,000.00 From October 1, 1997 through December 31, 1997 $6,700,000.00 From January 1, 1998 through March 31, 1998 $5,000,000.00 From April 1, 1998 through June 30, 1998
The Lender shall calculate EBITDA for the purpose of measuring the Borrowers' compliance with foregoing covenant using information contained in the consolidated financial statements of SPACEBAB included in each Form 10-Q or Form 10-K that the Borrowers are required to deliver to the Lender under this Agreement. (b) Minimum Tangible Net Worth. Cause Tangible Net Worth to be at least $72,500,000.00. - ------------- * If the Launch Revenue is recognized during the period from July 1, 1997 through September 30, 1997 then this amount shall be changed to $1,748,000.00 ** If the Launch Revenue is recognized during the period from October 1,1997 through December 31,1997, then this amount shall be changed to ($2,248,000.00). The Lender shall calculate Tangible Net worth for the purpose of measuring the Borrowers' compliance with foregoing covenant using information contained in the consolidated balance sheet of SPACEHAB included in each Form 10-Q or Form 10-K that the Borrowers are required to deliver to the Lender under this Agreement. 25 (c) Current Ratio. Cause the Current Ratio to be at least 1.2 to 1. The Lender shall calculate the Current Ratio for the purpose of measuring the Borrowers' compliance with foregoing covenant using information contained in the consolidated financial statements of SPACEHAB included in each Form 10-Q or Form 10-K that the Borrowers are required to deliver to the Lender under this Agreement. SECTION 6. Negative Covenants. Each Borrower agrees that it will not: 6.1 Liens. Create, incur, assume or permit to exist, or permit any Subsidiary to create, incur, assume or permit to exist, any Lien upon or with respect to any of its properties, now owned or hereafter acquired, except: (a) Liens in favor of tile Lender; (b) Liens which are incidental to the conduct off the business of the Borrowers or any Subsidiary arising in connection with operating lease obligations evidencing the rights of the lessors under such leases. (c) Liens on any assets of a Borrower (other than assets included in the Collateral and inventory) securing Debt of such Borrower to a Bank that is permitted pursuant to Section 6.2(b) hereof, including the Liens in existence on the date of this Agreement and disclosed in Schedule 6.1 (c) attached hereto; and (d) Liens securing obligations of a Subsidiary to a Borrower or another Subsidiary. 6.2. Debt. Create, incur, assume or permit to exist, or permit any Subsidiary to create, incur, assume or permit to exist, any Debt, except (a) the Obligations; (b) Debt of a Borrower or a Subsidiary to any Bank that is either unsecured or secured by assets of such Borrower or Subsidiary not included in the Collateral or constituting inventory, including the Debt in existence on the date of this Agreement and depicted in Schedule 6.2 attached hereto: provided that after giving effect to the payments required by such Debt, no Default or Event of Default will occur; (c) Debt of a Borrower subordinated to the Obligations on terms satisfactory to the Lender; (d) subject to the limitations specified in Sections 6.7 and 6.10 hereof, Debt of any Subsidiary to a Borrower or another Subsidiary; and (e) ordinary trade accounts payable. 6.3 Mergers, Etc. Without obtaining the prior written consent of the Lender, which will not be unreasonably withheld, merge or consolidate with a Person, or permit any Subsidiary to do so, except that without the Lender's prior written consent (a) any Subsidiary may merge into or transfer assets to a Borrower, and (b) Any Subsidiary may merge into or consolidate with or transfer assets to any other Subsidiary. 6.4. Leases .Create, incur, assume or permit to exist, or permit any Subsidiary to create, incur, assume or permit to exist any obligation as lessee for the rental or hire of any real or personal property, except as is necessary in connection with such party's normal and customary business activities. 6.5. Dividends. Declare or pay any dividends; purchase, redeem, retire, or otherwise acquire for value any of its capital stock note of hereafter outstanding; make any distribution of assets to its stockholders whether in cash, assets or obligations of a Borrower; allocate or otherwise set apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption, or retirement 26 of, any shares of its capital stock: retake any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock; or Permit any Subsidiary to purchase or otherwise acquire for value any stock of a Borrower or another Subsidiary, except that if there is no Default at such time and, after giving effect to the proposed dividend, no Default will occur, (a) a Borrower may declare and deliver dividends and make distributions payable solely in common stock of such Borrower, (b) a Borrower may purchase or otherwise acquire shares of its capital stock by exchange for or out of the proceeds received from a substantially concurrent issue of new shares of its capital stock, and (c) a Borrower may declare and pay cash dividends; provided that no Borrower shall declare or pay any dividends permitted under this Section 6.5 until the Lender has received written notice from such Borrower at least five (5) Business Days in advance of declaring or paying any such dividend and has also received such other information as the Lender may have requested in order to verify the amount of the proposed dividends and to determine that the conditions precedent to the making of the requested dividends has been satisfied. 6.6. Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of any of its now owned or hereafter acquired assets including in the Collateral or constituting inventory, except: (a) the sale of Inventory in the ordinary course of business and (b) the sale or other disposition of tangible property included in Collateral or constituting Inventory which, in each case, a Borrower determines in good faith to be obsolete. 6.7. Loans. Make, or permit any Subsidiary to make, any loan or advance to any Person except for reasonable advances by a Borrower to its employees for anticipated business expenses that would be reimbursable to such employees under such Borrower's expense reimbursement policy. 6.8. Guaranties, Etc. Assume, guarantee, endorse or otherwise be or become directly or contingently responsible or liable (including. but not limited to, an agreement to purchase any obligation, stock, assets, goods or services, or to supply or advance any funds, assets, goods or services, or to maintain or cause such Person to maintain a minimum working capital or net worth, or otherwise to assure the creditors of any Person against loss) for obligations of any Person, except, guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business 6.9. Acquisitions. Purchase or acquire, or permit any Subsidiary to purchase or acquire, (a) all or substantially all of the assets of any Person, or (b) any capital stock of or ownership interest in any other Person unless the Lender has consented in writing to such acquisition, which consent will not be unreasonably withheld. 27 6.10. Transaction with Affiliate. Except as specifically permitted by the terms of this Agreement, enter into any transaction, including without limitation, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate, or 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, except in the ordinary course of and pursuant to the reasonable requirements of such Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to such Borrower or such Subsidiary than would be applicable in a comparable arm's-length transaction with a Person not an Affiliate. 6.11. Change of Chief Executive Office and Corporate Name. Move the principal records and books of account of any Borrower or any Subsidiary, including those concerning the Collateral from its chief executive office or change its chief executive office or the name under which it does business without (a) giving the Lender at least thirty (30) days prior written notice, and (b) executing and delivering financing statements reasonably satisfactory to the Lender prior to such move or change. 6.12. Capital Expenditures. Permit the aggregate Capital Expenditures of the Borrowers (other than Capital Expenditures paid for by proceeds of Debt of a Borrower permitted under the terms of this Agreement and obtained by such Borrower specifically to fund such Capital Expenditures) to exceed the amounts set forth below for the corresponding period:
Amount Period ------ ------ $30,000,000.00 For the fiscal year ending June 30, 1997 $12,000,000.00 For the fiscal year ending June 30, 1998 $ 2,000,000.00 For the period beginning July 1, 1998 through the period ends October 15, 1998
SECTION 7. Conditions of Lending. The making of the Loans shall be subject to the following conditions: 7.1. Conditions Precedent to Closing. The initial disbursement of the Loans shall be subject to the following conditions precedent: (a) The Loan Documents shall have been appropriately completed. duly executed by the panties thereto, recorded and or filed where necessary and delivered to the Lender, and all taxes and fees with respect to such recording and filing shall have been paid by the Borrowers. (b) No Default or Event of Default shall have occurred and be continuing. (c) All representations and warranties contained herein shall be true and correct at the date of the Closing. 28 (d) All legal Matters incident to the Loans shall be satisfactory to counsel for the Lender, and each Borrower agrees to execute and deliver to the Lender such additional documents and certificates relating to the Loans as the Lender may reasonably request. (e) If required by the Lender, the Lender shall have received an opinion of counsel to the Borrowers as to such matters as the Lender may request, in form and substance satisfactory to the Lender and its counsel. (f) The Lender shall have received a certification by an acceptable pros ides of financing statement searches of all financing statements of public record which relate or pertain to the Borrowers and/or the Collateral, financing statements in form and substance satisfactory to the Lender shall have been properly filed in each office where necessary to perfect the Lender's security interest in the Collateral, termination statements shall have been filed with respect to any other financing statements covering all or any portion of the Collateral (except with respect to Liens permitted by this Agreement), and all taxes and fees with respect to such recording and filing shall have been paid by the Borrowers: provided that the Lender may choose to waive this condition with respect to the filing of certain financing statements or termination statements prior to Closing. The Lender shall also have received a certification by an acceptable provider of judgments and tax lien searches of the absence of any judgments or tax liens of public record against the Borrowers and/or the Collateral. (g) If requested by the Lender, each Borrower shall have delivered to the Lender (i) certified copies of evidence of all corporate actions taken by such Borrower and each Corporate Guarantor to authorize the execution and delivery of this Agreement, the Note and the other Loan Documents, (ii) a certificate of incumbency or the officers of each Borrower and each Corporate Guarantor executing the Loan Documents required herein, (iii) a good standing certificate dated not more than 30 days prior to the date of the Closing from the appropriate state official of any state in which each Borrower is incorporated or qualified to do business, and (iv) such additional supporting documents as the Lender or counsel for the Lender may reasonably request. (h) The Lender shall have received an Advance Request in form and substance satisfactory to the Lender with respect to such initial Loan. (i) The Borrowers shall have executed all other agreements, instruments and documents and shall have performed all acts which the Lender may require with respect to Accounts Receivable owing by the Government to ensure compliance with the Assignment of Claims Act of 1940, as amended, and all applicable regulations issued pursuant thereto. (j) The Lender shall have received the fee due pursuant to Section 2.10 hereof. (k) No cure notice or show-cause notice shall be in effect relating to a possible termination for default under and contract of a Borrower which is either a contract with the Government or is a subcontract (at any tier) which is related to a contract between a third party and the Government the Unearned Contact Value of which is greater than or equal to $250,000.00. 7.2. Conditions Precedent to Subsequent Disbursement. The Disbursement of subsequent Loans shall be subject to the following conditions precedent: (a) No Default or Event of Default shall have occurred and be continuing. 29 (b) No material adverse change shall have occurred in the financial condition of a Borrower or a Subsidiary and no material adverse change shall have occurred in the business condition of a Borrower or a Subsidiary which the Lender reasonably concludes is likely to result in a material adverse change in the financial condition of the Borrowers. (c) All representation and warranties contained herein shall be true and correct at the date of such disbursement. (d) No change shall have occurred in any law or regulations thereunder or interpretations thereof which in the opinion of counsel for the Lender would make it illegal for the Lender to make Loans hereunder. (e) The Lender shall have received an Advance Request in form and substance satisfactory to the Lender with respect to such Loan. (f) If previously waived by the Lender as a condition to Closing, financing statements and/or termination statements shall have been filed in each location where the Lender deems such filing necessary to perfect its security interest in the Collateral or terminate a previously perfected security interest in the Collateral. (g) The Borrowers shall have executed all other agreements, instruments and documents and shall have performed all acts which the Lender may require with respect to Accounts Receivable owing by the Government to ensure compliance with the Assignment of Claims Act of 1940, as amended, and all applicable regulations issued pursuant thereto. (h) No cure notice or show-cause notice shall relating to a possible termination for default under any contract of a Borrower which is either a contract with the Government or is a subcontract (at any tier) which, is related to a contract between a third party and the Government the Unearned Contract Value of which is greater than or equal to $250,000.00. SECTION 8. Default. 8.1. Events of Default. Each of the following shall constitute an Event of Default under this Agreement: (a) The failure of a Borrower to pay any Obligation to the Lender including, without limitation the principal of or interest on the Note or any of the Loans, when the same shall become due and payable whether at maturity, as a result of the Lender's demand for payment or otherwise; provided, however, that any such failure (other than a failure to make a payment due pursuant to Section 2.1 (b), as to which no notice and cure period applies) shall constitute an Event of Default only if such failure is not cured and such failure shall continue for a period of ten (10) days after the date when the Lender's notice of such failure (which notice may be a computer generated late payment notice) is deemed effective pursuant to Section 9.3 hereof; or (b) The refusal by a Borrower to permit the Lender to inspect, examine, verify or audit the Collateral in accordance with the provisions of this Agreement; or (c) The failure of a Borrower to perform or observe any covenant set forth herein (except any such failure resulting in the occurrence of another Event of Default described in this Section) or 30 to perform or observe any other term, condition, covenant, warranty, agreement or other provision contained in this Agreement or any of the other Loan Documents; provided that if such failure is capable of cure then such failure shall constitute an Event of Default only if such failure is not cures within ten (10) days after the date when a notice from the Lender specifying such failure is deemed effective pursuant to Section 9.3 hereof; provided; however, that if such Borrower has commenced and is diligently prosecuting a cure of such Default within the foregoing ten (10) day period, such Borrower shall have an additional twenty (20) days to complete such cure for a total of thirty (30) days: or (d) The existence of any material inaccuracy in any representation or warranty made by a Borrower or any statement or representation made in any certificate, report or opinion delivered pursuant hereto or in connection with any borrowing hereunder or the occurrence of any material breach thereof; or (e) The occurrence of a default under and the acceleration of any other obligation of a Borrower, any Subsidiary, or any Guarantor for the payment of any Debt in excess or $250,000.00, unless and to the extent that the declaration of default and acceleration is being contested in good faith in a court of appropriate jurisdiction; or (f) The making by a Borrower of an assignment for the benefit of creditors, the filing by a Borrower of a petition in bankruptcy or a petition or application to any Tribunal for the appointment of any receiver or trustee for a Borrower or any substantial part of its property, or the commencement by a Borrower of any proceeding relating to such Borrower under any reorganization, arrangement, readjustments of debt, dissolution or liquidation law or statue of any jurisdiction, whether now or hereafter in effect; or (g) The failure within 30 days after the filing of a bankruptcy petition or the commencement of any proceeding against a Borrower seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, lay, or regulation, to have such proceeding dismissed, or the failure within 30 days after the appointment, without the consent or acquiescence of a Borrower, of any trustee, receiver or liquidator of such Borrower or of all or any substantial part of the properties of such Borrower to have such appointment vacated; or (h) The occurrence of any of the events described in the two immediately preceding clauses with respect to a Subsidiary, or any property of a Subsidiary; or (i) The entry of any judgment against a Borrower or any Subsidiary in excess of $1,000,000.00 or the attachment of any property of a Borrower or any Subsidiary having a value in excess of $100,000.00 and the failure by the affected Person to pay, discharge, bond-off or cause to be dismissed such judgment or attachment within 30 days, unless and to the extent that the judgment or attachment is appealed in good faith to a court of higher jurisdiction and the appeal remains pending; or (j) The occurrence of a material adverse change in the financial condition of a Borrower or a Subsidiary or the occurrence of a material adverse change in the business condition of a Borrower or a Subsidiary which the Lender reasonably concludes is likely to result in a material adverse change in the financial condition of the Borrowers, or 31 (k) The failure of the stock of SPACEHAB to be listed or NASDAQ or a national stock exchange; or (1) The failure of SPACEHAB to own at least eighty percent (80%) of the voting capital stock of be other Borrowers; or (m) The issuance to a Borrower or any Subsidiary of a notice of actual termination for default (complete or partial), under any contract which is either a contract with the Government or is a subcontract (at any tier) which is related to a contract between a third party and the Government; provided, however, that no Event of Default under this Section 8.1 (m) if the notice in question is issued at a time when the Unearned Contract Value of the contract or subcontract in question is less than $250,000.00.; or (n) With respect to a Borrower or any Subsidiary, by occurrence of any debarment or suspension from contracting or subcontracting with the Government; or (o) The occurrence of any of the following events: (i) the termination of any Employee Benefit Plan in a distress termination under Section 4041 (c) of ERISA or an involuntary termination under Section 4042 of ERISA; (ii) the failure to maintain, or the filing of a request for a waiver of, the minimum funding standard with respect to any Employee Benefit Plan; (iii) the occurrence of any event which causes any Employee Benefit Plan to cease to have sufficient assets at all times so as to qualify for a standard termination under Section 4041 of ERISA; (iv) the occurrence of any event which causes the unfunded liability with regard to all such Employee Benefit Plans in the aggregate to become an amount in excess of $10,000.00; (v) the appointment of a trustee by an appropriate United States district court to administrator any Employee Benefit Plan; or (vi) the institution of any proceedings by the PBGC to terminate any such Employee Benefit Plan or to appoint a trust to administer any such Employee Benefit Plan; or (p) The occurrence of an event of default under any other Loan Document. 8.2. Remedies upon Default. Upon the occurrence of an Event of Default, the following provisions shall be applicable: (a) The Lender may, at its option, declare all Obligations, whether incurred prior to, contemporaneous with, or subsequent to the date of this Agreement, and whether represented in writing or otherwise, immediately due and payable without presentment, demand, protest, notice of non-payment or any other notice required by law relative thereto, all of which are hereby expressly waived by the Borrowers and terminate the Lender's obligation to make Loans hereunder; provided, however, that upon the occurrence of an Event of Default specified in Sections 8.1(f) or (g), all Obligations automatically will be due and payable and the Lender's obligation to make Loans hereunder will automatically terminate without further action by the Lender. If any of the Obligations, including, without limitation, the Loans, shall be evidenced by a demand instrument, the right of the Lender to declare any and all Obligations to be immediately due and payable, as well as the recitation of the above events permitting the Lender to declare all Obligations due and payable, shall not constitute an election by the Lender to waive it's right to demand payment under a demand instrument at any time and in any event, as the Lender, in its discretion, may deem appropriate. In addition, the Lender may exercise all of its rights and remedies against the Borrowers and any Collateral. 32 (b) The Lender may foreclose its lien and security interest in the Collateral in any way permitted by low and shall have without limitation, the remedies of a secured party tinder the UCC. The Lender may notify the account debtors obligated on any of the Collateral to make payments thereon directly to the Lender, take control of the cash and non-cash proceeds of any such Collateral and may enter each Borrower's premises without legal process and without incurring liability to the Borrowed end remove the Collateral to such place or places as the Lender may deem advisable, or the Lender may require the Borrowers to, assemble the Collateral and make the Collateral available to the Lender at a convenient place and, with or without having the Collateral at the time or place of sale, the Lender may sell or otherwise dispose of all or any part of the Collateral whether in its then condition or after further preparation or processing, either at public or private sale or at any broker's board, in lots or in bulk for cash or for credit, at any time or place, in one or more sales, and upon such terms and conditions as the Lender may elect. The Lender shall give not less than five (5) Business Days prior written notice to the Borrowers of the time and place of any sale of the Collateral, which each Borrower hereby agrees constitutes commercially reasonable notice. At any such sale the Lender may be the purchaser. (c) The Borrowers recognize that the Lender may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Act and/or the Blue Sky Laws, bus may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Collateral for their own account, for investment and without a view to the distribution or resale thereof The Borrowers understand that private sales so made may be at prices and on other terms less favorable than if the Collateral were sold at public sales, and agrees that the Lender has no obligation to delay the sale of any of the Collateral for the period of time necessary to permit the issuer of the Collateral (even if the issuer agrees) to register the Collateral for sale under the Act or the Blue Sky Laws. Each Borrower agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. (d) The proceeds from any sale of the Collateral by the Lender shall first be applied to any costs and expenses in securing possession of the Collateral, and to any expenses in connection with the sale. The next proceeds will be applied toward the payment of the Obligations. Application of the net proceeds as to particular Obligations or as to principal or interest shall be in the Lender's absolute discretion. Any deficiency will be paid to the Lender forthwith upon demand and any surplus will be paid to the Borrowers or in accordance with law if the Borrowers are not otherwise indebted to the Lender. (e) To the extent that the Obligations are now or hereafter secured by property other than the Collateral described herein or by the guarantee, endorsement or property of any other Person, then the Lender shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of Event of Default, and the Lender shall have the right in its sole discretion to determine which rights, security, liens, security interests or remedies the Lender shall at any time pursue, relinquish, subordinate modify or take any other action with respect thereto, without in any way modifying or affecting any of them or any of the Lender's rights hereunder. (f) The Lender is hereby authorized at any time or from time to time, without notice to the Borrowers (any such notice being expressly waived by the Borrowers) to set-off and apply against any and all or the Obligations, whether or not due, any and all deposits (general or special, time or demand, provisional or final) at any time held by the Lender, including any certificate of deposit, 33 and all other obligations and indebtedness at any time owed by the Lender, in any capacity, to or for the credit or account of a Borrower. (g) EACH BORROWER, HAVING KNOWLEDGE THAT IT MAY BE ENTITLED TO NOTICE AND A HEARING PRIOR TO REPOSSESSION Of THE COLLATERAL, HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE UNDER EXISTING OR FUTURE LAW TO NOTICE OF FORECLOSE AND ANY OTHER ACT DESCRIBED HEREIN, TO ANY HEARING THAT MAY BE HELD RELATING TO FORECLOSE OR ANY OTHER SUCH ACTS, AND TO ANY NOTICE THAT MAY BE REQUIRED TO BE GIVEN BY THE LENDER PRIOR TO SUCH HEARING. EACH BORROWER HEREBY EXPRESSLY RELEASES THE LENDER AND ITS AGENTS FROM ANY AND ALL LIABILITY RELATING TO SUCH FORECLOSURE AND ANY OTHER ACTS DESCRIBED HEREIN. (h) The Lender may itself perform or comply, or otherwise cause performance or compliance with the obligations of the Borrowers contained in this Agreement, including, without limitation, the obligations of the Borrowers to defend and insure the Collateral. The expenses of the Lender incurred in connection with such performance or compliance, together with interest thereon at the Default Rate, shall be payable by the Borrowers to the Lender on demand and shall constitute Obligations. SECTION 9. Miscellaneous. 9.1. Collection Costs. The Borrowers shall pay all of the reasonable costs and expenses incurred by the Lender in connection with the enforcement of this Agreement and the other loan Documents, including, without limitation, reasonable attorneys' fees and expenses. 9.2. Modification and Waiver Except for the other documents expressly referred to herein, this Agreement contains the entire agreement between the parties, and no modification or waiver of any provision of this Agreement or the Note and no consent by the Lender to any departure therefrom by a Borrower shall be effective unless such modification or waiver shall be in writing ant signed by an officer of the Lender with a title of assistant vice president or any higher office, and the same shall then be effective only for the period and on the conditions and Or the specific instances and purposes specified in such writing. No notice to or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances. No failure or delay by the Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies otherwise provided by law. 9.3. Notices. All notices, requests, demands or other communications required or permitted bit or in connection with this Agreement or any other Loan Document, without implying the obligation to provide any such notice, request, demand or other communication, shall be in writing addressed to the appropriate address set forth below or to such other address as may be hereafter specified by written notice by the Lender or the Borrowers, as applicable, forwarded in like manner. Any such notice, requests, demand or other communication shall be deemed to be effective one (1) day after dispatch if sent by telegram, mailgram, Purolator Delivery, express mail, Federal Express or any other commercially recognized overnight delivery service or two (2) days after dispatch if sent by registered or certified mail, return receipt requested. Notwithstanding the 34 foregoing, all notices, requests, demands or other communications shall be considered to be effective upon receipt if accomplished by hand delivery. To the Lender: North Tower, 5th Floor 7799 Leesburg Pike Falls Church, Virginia 22043 Attention: Brian M. Haggerty To the Borrowers: 1595 Spring Hill Road, Suite 360 Vienna, Virginia 22181 Attention: Margaret E. Grayson 9.4. Counterparts. This Agreement may be executed by the parties hereto individually or in any combination, in one or more counterparts, each of which shall be an original and all of which together consulate one and the same agreement. 9.5. Captions. The captions of the various sections and paragraphs of this Agreement have been inserted only for the purpose of convenience; such captions are not a part of this Agreement and shall not be deemed in any manner to modify, explain, enlarge or restrict any of the provisions of this Agreement. 9.6. Survival of Agreements All agreements, representations and warranties made herein shall survive the delivery of this Agreement and the making and renewal of the Loans hereunder. 9.7. Fees and Expenses. Whether or not any Loans are made hereunder, the Borrowers shall pay on demand all costs and expenses incurred by the Lender in connection with the preparation, negotiation, execution, delivery, filing, recording and administration of this Agreement and any of the documents executed or delivered in connection herewith, including, without limitation, the reasonable fees and expenses of counsel to the Lender, including in-house counsel for the Lender and local counsel who may be retained by the Lender, with respect to this Agreement and such documents and any amendments thereof and with respect to advising the Lender as to its rights and responsibilities thereunder. 9.8. Use of Defined Terms. All terms defined in this Agreement shall have the defined meanings when used in certificates, reports or other documents made or delivered pursuant to this Agreement, unless the context shall otherwise require. 9.9. Successors and Assign. (a) This agreement shall inure to the benefit of and bind the respective parties hereto and their successors and assigns; provided, however, that no Borrower may assign its rights hereunder without the prior written consent of the Lender. (b) At any time and from time to time, the Lender may grant to one or more Banks participating interests in the Lender's commitment to makes Loans hereunder or in any or all of the 35 Loans or Note. In the event of any such grant by the Lender of a participating interest to a Bank, whether or not upon notice to the Borrowers, the Lender shall remain responsible for the performance of its obligations hereunder, and the Lender shall continue to deal solely and directly with the Borrowers in connection with the Lender's rights and obligations under this Agreement. Any agreement pursuant to which the Lender may grant such a participation interest shall provide that the Lender shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that the Lender will not agree to any modification, amendment or waiver of this Agreement which would have the effect increasing or decreasing the Maximum Amount, extending the Termination Date, subjecting the Lender to any additional obligation, reducing the principal of or rate of interest on any Loan, or postponing the date fixed for any payment of principal of or interest on any Loan or fees hereunder or under the Note without the consent of such Bank . An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest grant in accordance with this subsection (b). (c) At any time, the Lender may assign to one or more Banks all, or a proportionate part of all, of the Lender's rights and obligations under this Agreement and the Note, and such Bank shall assume such rights and obligations, pursuant to an instrument executed by such Bank and the Lender, with (and subject to) the consent of the Borrowers: provided that if such Bank is an affiliate of the Lender, the Borrowers' consent shall not be required. Upon execution and delivery of such an instrument and payment by such Bank to the Lender of an amount equal to the purchase price agreed between the Lender and such Bank, such Bank shall become a party to this Agreement and shall have all the rights and obligations of the Lender to the extent of such Bank's commitment to make Loans as set forth in such Bank's instrument of assumption, and the Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any parry shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the Lender and the Borrowers shall make appropriate arrangements so that, if required, a new Note is issued to the Bank. If the Bank is not incorporated under the laws of the United States of America or a state thereof, it shall, prior to the first date on which interest or fees are payable hereunder for its account deliver to the Borrowers certification as to exemption from deduction or withholding of any United States federal income taxes. (d) The Lender may at any time assign all or any portion of its rights under this Agreement and the Note to a Federal Reserve Bank. No such assignment shall release the Lender from its obligations hereunder. (e) The Lender may furnish any information concerning the Borrowers in its possession from time to time to any Bank which is or may become a participant or assignee under this Section 9.9 and may furnish such information in response to credit inquires consistent with general banking practice. 9.10. Accounting Term. All accounting terms used herein which are not otherwise expressly defined in this Agreement shall have the meanings respectively, given to them in accordance with GAAP in effect on the date of this Agreement except when such terms are used in reference to financial statements of a Borrower, in which event such terms shall leave the meanings respectively given to them in accordance with GAAP in effect on the date of such financial statements. Except as otherwise provided herein, all financial computations made pursuant to this 36 Agreement shall be made in accordance with GAAP and all balance sheets and other financial statements shall be prepared in accordance with GAAP. Except as otherwise provided herein, whenever reference is made in any provision of this Agreement to a balance sheet or other financial statement or the information depicted therein for performing a financial computation, such terms shall mean the most recent consolidated balance sheet or other financial statement received by the Lender pursuant to the terms hereof. 9.11. Consent to Jurisdiction Each Borrower irrevocably submits to the jurisdiction of any Virginia State court sitting in the County of Fairfax or the United States District Court for the Eastern District of Virginia, sitting in Alexandria, Virginia over any suit, action or proceeding arising out of or relating to this Agreement. To the fullest extent it may effectively do so under applicable law, each Borrower irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is nor subject to the Jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 9.12. Enforcement of Judgments. Each Borrower agrees, to the fullest extent it may effectively do so under applicable law, that a judgment in any suit, action or proceeding of the nature referred to in Section 9.11 brought in any such court shall be conclusive and binding upon such Borrower and may be enforced in the courts of the United States of America or the Commonwealth of Virginia (or any other courts to the jurisdiction of which such Borrower is or may be subject) by a suit upon such judgment. 9.13. Waiver of Jury Trial. AS A SPECIFICALLY INDUCED BARGAIN FOR THE LENDER TO ENTER INTO THIS AGREEMENT AND TO EXTEND CREDIT TO THE BORROWERS. THE BORROWERS AND THE LENDER EACH HEREBY WAIVES TRIAL BY JURY WITH RESPECT T0 ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT AND/OR THE CONDUCT OF THE RELATIONSHIP BETWEEN THE LENDER AND THE BORROWERS. 37 9.14. Service of Process. Each Borrower consents to process being served in any suit, action or proceeding of the nature referred to in Section 9.11 by mailing a copy thereof by registered or certified mail postage prepaid, return receipt requested, to the Borrowers' address specified in or designated pursuant to Section 9.3. Each Borrower agrees that such service (i) shall be deemed in every respect effective service of process upon such Borrower in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to such Borrower. 9.15. No Limitation on Service or Suit. Nothing in this Section 9 shall affect the right of the Lender to serve process in any manner permitted by law, or limit any right that the Lender may have to bring proceedings against the Borrowers in the courts of any jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. 9.16. Indemnification. At all times prior to and after the consummation or the transactions contemplated by this Agreement, the Borrowers will indemnify and hold each Indemnitee harmless from and against all losses, damages, claims, fines, costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by any such Indemnitee, whether direct or indirect, as a result of arising from or relating to any Proceedings by any Person, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any lndemnitee arising from or in connection with this Agreement, the Note or any of the other Loan Documents, and any of the transactions contemplated herein or therein, except to the extent such losses, damages, claims, fines, costs or expenses are due to the willful misconduct or gross negligence of the Lender; provided that in connection with such indemnification obligations, the Borrowers shall not be liable for any settlement effected by any Indemnitee without the Borrowers' prior consent (which the Borrowers shall not unreasonably withhold, delay or condition) and the Borrowers shall have the right to participate at their sole cost and expense in the defense of any proceeding for which such indemnification may be sought. In the event of any Proceeding, the Lender shall promptly and as soon as is practicable notify the Borrowers of the existence of such Proceeding, provided that the Lenders failure to do so shall not preclude any Indemnitee from seeking indemnification hereunder. At the request of the Lender, the Borrowers will indemnify any Person to whom the Lender transfers or sells all or any part of its interest in the Loans or participations therein on the terms set forth above. The obligations of the Borrowers under this Section 9.16 shall survive the termination of this Agreement and payment of the Obligations. 9.17. No Partnership, Joint Venture or Agency. Neither this Agreement nor any of the Loan Documents shall in any respect be interpreted, deemed or construed as making the Lender a partner join venturer with the Borrowers, nor shall they be interpreted, deemed or construed as making the Lender the agent of representative of the Borrowers, and each Borrower agrees not to make any contrary assertion, claim or counterclaim in any action, suit or other legal proceeding involving the Lender. 38 9.18. Interpretation. (a) This Agreement and the rights and obligations of the parties hereunder shall be construed and interpreted in accordance with the laws of the Commonwealth of Virginia, excluding principles of conflict of laws. (b) The Lender hereby acknowledges and agrees that this Agreement shall be subject to and interpreted in accordance with all applicable legal, regulatory and contractual obligations of the Borrowers with respect to the security, privacy or nondisclosure of certain information regarding the business of the Borrowers. By way of example and not limitation, the Lender acknowledges and agrees that the Borrowers may be prohibited from (i) disclosing the location of certain information with respect to certain Accounts Receivable, (ii) providing access to certain books and records and (iii) permitting the Lender to inspect certain Collateral. The Lender hereby agrees that the compliance of the Borrowers with such legal, regulatory and contractual obligations shall not give rise to an Event of Default hereunder, even if such compliance conflicts with the representations, warranties, covenants, agreements and conditions set forth herein. 9.19. Joint and Several Obligations. The Borrowers are jointly and severally liable for all Obligations. IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Agreement to be signed by their duly authorized representatives all as of the day and year first above written, with the specific intention that this Agreement constitute a document under seal. ATTEST: SPACEHAB, INCORPORATED, a Washington Corporation By: /s/ Margaret E. Grayson ------------------------ /s/ William S. Dawson Name: Margaret Grayson - --------------------- Title: Vice President of Finance/Treasurer Name: William Dawson III (Asst.) Secretary [corporate seal] ATTEST: ASTROTECH SPACE OPERATIONS, INC., a Delaware corporation By: /s/ Margaret E. Grayson /s/ William S. Dawson Name: Margaret E Grayson Secretary Title: Vice President of Finance/Treasurer [corporate seal] SIGNET BANK, a Virginia Banking Corporation By: /s/ Brian Haggerty Brian Haggerty, Vice President 39 EXHIBIT A ADVANCE REQUEST Re: Loan and Security Agreement (the "Agreement") dated June 12, 1997 between SPACEHAB, INCORPORATED and ASTROTECH SPACE OPERATIONS, INC (referred to individually as a "Borrower" and collectively as the "Borrowers") and Signet Bank (the "Lender"). Capitalized terms used in this Advance Request and not defined herein are defined in the Agreement. Loan amount request: $__________to be credited to the Operating account Purpose: I do hereby certify to the Lender, that I am familiar with the terms of the Agreement. Either I or individuals under my immediate supervision who are familiar with the terms of the Agreement have made a current review of the activities of the Borrowers to determine compliance by the Borrowers with their obligations under the Agreement and the continuing validity of the representations and warranties of the Borrowers contained in the Agreement. This review has included, if necessary, interviews with officers and employees of the Borrowers whose duties require them to have personal knowledge of the certifications made herein. To the best of my knowledge, information and belief, no Defaults or Events of Default have occurred and are continuing. My analysis of the books and records of the Borrowers reveals the information set forth in the statement above, upon which you are authorized to rely. SPACEHAB, INC., as agent for the Borrowers By: ------------------------ Title: ---------------------- 40 EXHIBIT B SPACEHAB, INC. And ASTROTECH SPACE OPERATIONS, INC. Compliance Certificate FOR THE FISCAL___________________ ENDING ___________, ______, 199_ The undersigned hereby certifies that he/she is the_______________________________________ _ of SPACEHAB, INC., a Washington corporation and ASTROTECH SPACE OPERATIONS, INC., a__________________ corporation (each referred to individually as a "Borrower", and collectively the "Borrowers"), and, as such, is authorized to execute this Certificate on behalf of each Borrower, and pursuant to Section 5.8 of the Loan and Security Agreement dated June 12, 1997, as amended from time to time (the "Agreement"; terms defined in the Agreement being used herein as therein defined), among the Borrowers and Signet Bank (the "Lender"), hereby further certifies, based upon a review made under his/her supervision, that: I. The attached financial statements have been prepared in accordance with GAAP; they are accurate and present fairly the consolidated financial condition and results of operations of SPACEHAB, incorporated and Subsidiaries for the period ending_______________ , 199_; subject to normal year-end audit adjustments. II. The Borrowers have performed and observed all of, and are not in default in the performance or observance of any of, the covenants and conditions of the Agreement except the following: III. Set forth below are the calculations necessary to demonstrate the Borrowers' compliance with all of the financial covenants and representations contained in Sections 5 and 6 of the Agreement, in each case as of the end of the period ending__________ , 199_. SPACEHAB, INCORPORATED ASTROTECH SPACE OPERATIONS, INC. By: . By: ----------------------- ----------------------------- Name: Name: --------------------- --------------------------- Date: Date: --------------------- --------------------------- Attachment 41 SECTION 5.12 (A), EBITDA. Cause EBITDA, determined on a quarterly basis, to be not less than the amount set forth below for the corresponding period.
Amount Period - ------- ------ $3,000,000.00 From April 1, 1997 through June 30, 1997 ($4,600,000.00) * From July 1, 1997 through September 30, 1997 $4,100,000.00 ** From October 1, 1997 through December 31, 1997 $6,700,000.00 From January 1, 1998 through March 31, 1998 $5,000,000.00 From April 1, 1998 through June 30, 1998
* If the Launch Revenue is recognized during the period from July 1, 1997 through September 30, 1997, then this amount shall be changed to $l,748,000.00. ** If the Launch Revenue is recognized during the period from July 1, 1997 through September 30, 1997, then this amount shall be changed to ($2,248,000.00). Financial Period Applicable Covenant Level - ------------------------------ ------------------------------
EBITDA Calculation: - ------------------- Consolidated Net Income $____________ PLUS: Consolidated Interest Expense $____________ Consolidated Tax Expense $____________ Consolidated Amortization Expense $____________ Consolidated Depreciation Expense $____________ EBITDA $____________
42 Section 5.12 (b). Minimum Tangible Net Worth. Cause Tangible Net Worth to be at least $72,500,000. Tangible Net Worth Calculation: Stockholder's; Equity (per balance sheet on above referenced date) $_______________ LESS: Intangible Assets *Goodwill: $_______________ *Loans/Advances due from employees, officers $_______________ *Other Intangibles: $_______________ Tangible Net Worth (not to he less than $72,500,000): $_______________
Section 5.12 (c). Current Ratio. Cause the Current Ratio to be at least 1.2 to 1.
Current Assets Divided By Current Liabilities Equal to Current Ratio - -------------- ---------- ------------------- -------- ------------- $ / $ = $ ----------- ------------------- -------------
Section 6.12 Capital Expenditures. Permit the aggregate Capital Expenditures of the Borrowers (other than Capital Expenditures paid for by proceeds of Debt of a Borrower permitted under the terms of this Agreement and obtained by such Borrower specifically to fund such Capital Expenditures) exceed the amounts set forth below for the corresponding period:
Amount Period ------- ------ $30,000,000.00 For the fiscal year ending June 30, 1997. $12,000.000.00 For the fiscal year ending June 30, 1998. $ 2,000,000 For the period beginning July 1, 1998 through the period ending October 15, l998. Capital Expenditures to Date Period ---------------------------- ------ $________________ $________________
EX-10.55 11 ASTROTECH - CIT GROUP LOAN AGREEMENT. 1 EXHIBIT 10.55 ASTROTECH SPACE OPERATIONS, INC. LOAN AND SECURITY AGREEMENT Dated: July 14, 1997 $15,000,000.00 THE CIT GROUP/EQUIPMENT FINANCING INC. 2 LOAN AND SECURITY THIS LOAN AND SECURITY AGREEMENT is made this 14th day of July, 1997, by and between THE CIT GROUP/EQUIPMENT FINANCING, INC. ("Lender"), a New York corporation with an office at 1211 Avenue of the Americas, 13th Floor, New York, New York 10036; and ASTROTECH SPACE OPERATIONS, INC. ("Borrower"), a Delaware corporation with its chief executive office and principal place of business at 12510 Prosperity Drive, Suite 100, Silver Spring, Maryland 20904. SECTION 1. GENERAL DEFINITIONS 1.1. Defined Terms. When used herein, the following terms shall have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa): Account - shall have the meaning ascribed to "account" under the Code. Adjusted LIBOR Rate - the interest rate per annum (rounded upwards, to the next 1/lOOth of 1 %) equal to the LIBOR Rate in effect under this Agreement from time to time. Adjustment Day - the first day of each month, commencing August 1, 1997. Adjusted Tangible Net Worth - as to any Person, its Consolidated Adjusted Tangible Net Worth before consolidation. Affiliate - a Person (other than a Subsidiary): (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, Borrower; (ii) which beneficially owns or holds 5% or more of any class of the voting Securities of Borrower; or (iii) 5% or more of the voting Securities (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by Borrower or a Subsidiary of Borrower. For purposes hereof, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the 3 management and policies of a Person, whether through the ownership of voting Securities, by contract or otherwise. Agreement - this Loan and Security Agreement. Alenia - Alenia Spazio, S.p.A., an Italian corporation and its successors and assigns. Applicable Law - all laws, rules and regulations applicable to the Person, conduct, transaction, covenant or Loan Document in question, including, but not limited to, (i) all applicable common law and equitable principles; (ii) all provisions of all applicable state and federal constitutions, statutes, rules, regulations and orders of governmental bodies; and (iii) all orders, judgments and decrees of all courts and arbitrators applicable to such Person. Board of Governors - the Board of Governors of the Federal Reserve Board. Business Day- a day on which the Federal Reserve Bank of New York is open for business in New York, New York. Cape Canaveral Leasehold Conditions - the following conditions: (i) Borrower shall have caused Guarantor to execute in favor of and delivered to Lender a first priority Mortgage in Guarantor's leasehold interest in its Cape Canaveral Location substantially in the form of the Mortgage (with appropriate modifications to reflect the nature of the leasehold interest to be mortgaged thereunder) executed by Borrower as of the Closing Date in connection with its Titusville, Florida location and such WCC-1 financing statements or statements satisfactory to Lender and sufficient to perfect Lender's security interest in the Equipment and fixtures at the Cape Canaveral Location as a first priority Lien thereon; (ii) Guarantor has caused the sublessor of Guarantor's Cape Canaveral Location to execute and deliver to Lender a Lessor's Agreement in substantially the form attached hereto as Exhibit F and such other consents as Lender may reasonably request; (iii) Lender shall have received a fully paid mortgagee title insurance policy (or binding commitment to issue title insurance policy, marked to Lender's satisfaction to evidence the form of such policy to be delivered after the funding of Loan No. 2), in standard ALTA form, issued by a title insurance company satisfactory to Lender, in an amount not less than the fair market value of Guarantor's interest in the real Property subject to such leasehold Mortgage, insuring that such Mortgage creates a valid Lien on all of Guarantor's interest in the Cape Canaveral Location with no exceptions which Lender shall not have approved in writing and no survey exception; (iv) evidence satisfactory to Lender that Guarantor's ownership, use and operation of the Cape Canaveral Location and the conduct of its business thereon does not violate any applicable zoning ordinance, rule or regulation; (v) Lender shall 4 have received three (3) copies of a current survey of each parcel of the real Property comprising the Cape Canaveral Location, certified to Lender by the registered land surveyor preparing such survey; and (vi) Borrower shall have remitted to Lender (or authorized deductions from the initial loan proceeds) amounts sufficient to pay all intangible or documentary taxes, filing fees and other taxes or charges in connection with the recordation IN THE PUBLIC records of such leasehold Mortgage. Cape Canaveral Location - the premises located in PORT CANAVERAL, Florida, leased by Guarantor from Eastern American Teak Corporation ("EAT") pursuant to a certain Agreement of Sublease Agreement, dated as of April 9, 1991, as amended, which constitutes a sublease of EAT's interest in such premises under a LEASE Agreement, dated February 1, 1991, as amended, between EAT and the Canaveral Port Authority. Capital Lease - any lease of Property which in accordance with GAAP would be capitalized on the lessee's balance sheet or for which the amount of the asset or liability thereunder, if so capitalized, should be disclosed in a note to such balance sheet. Capitalized Lease Obligation - any Indebtedness represented by obligations under a Capital Lease, and the amount of such Indebtedness shall be the capitalized amount of such obligations determined in accordance with GAAP. Charges - all federal, state, county, municipal, foreign or other taxes, assessments, levies, claims or charges upon Borrower, its income or sales, or any of its Properties. Chattel Paper - shall have the meaning ascribed to "chattel paper" under the Code. Closing Date - the date on which all of the conditions precedent in Section 8 are satisfied and Loan No. 1 is made hereunder. Code - the Uniform Commercial Code (or any successor statute) as adopted and in force in the State of New York, or when the laws of any other state govern the method or manner of the creation or perfection of any security interest in any of the Collateral, the Uniform Commercial Code (or any successor statute) of such state. Collateral - all of the Personal Property Collateral, the Real Property Collateral, and all other Property and interests in Property that now or hereafter secure the payment and performance of any of the Obligations. 5 Compliance Certificate - a Compliance Certificate in the form of EXHIBIT E annexed hereto. Consolidated - the consolidation in accordance with GAAP of the accounts or other items as to which such term applies. Consolidated Adjusted Net Earnings - with respect to any fiscal period, the net income of Borrower and Guarantor and their Subsidiaries less income tax expense for such fiscal period, on a Consolidated basis, all as reflected on the financial statement of Borrower, Guarantor and their Subsidiaries supplied to Lender pursuant to Section 7.1(~) hereof, but excluding: (i) any gain or loss arising from extraordinary or non-recurring items; (ii) any gain arising from any write-up of assets; (iii) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (iv) earnings of any Person substantially all the assets of which have been acquired in any manner by Borrower or Guarantor or any of their Subsidiaries, realized by such Person prior to the date of such acquisition; (v) net earnings of any Person (other than a Subsidiary) in which Borrower or Guarantor has an ownership interest unless such net earnings shall have actually been received by Borrower or Guarantor in the form of cash distributions; (vi) any portion of the net earnings of any Subsidiary which for any reason is unavailable for payment of dividends to Borrower or Guarantor; (vii) the earnings of any Person to which any assets of Borrower or Guarantor shall have been sold, transferred or disposed of, or into which Borrower or Guarantor shall have merged, or been a party to any consolidation or other form of reorganization, prior to the date of such transaction; (viii) any gain arising from the acquisition of any Securities of Borrower or Guarantor. Consolidated Adjusted Tangible Assets - as of any date of determination, all assets of Borrower and Guarantor and their Subsidiaries, on a Consolidated basis, except: (i) any surplus resulting from any write-up of assets subsequent to March 31, 1997; (ii) deferred assets, other than prepaid expenses and deferred loan costs and deferred mission costs; (iii) patents, copyrights, trademarks, trade names, non-compete agreements, franchises and other similar intangibles; (iv) good will; (v) unamortized debt discount and expense; (vi) assets located and notes due from obligers outside of the United States of America; (vii) receivables due from an obligor outside of the United States of America (unless such receivables arise out of a written agreement between Borrower and such obligor in connection with a space flight mission carrying Flight Hardware, and either (A) Borrower has collected from such obligor, prior to the launch of any vessel on such mission, not less than fifty percent (50%) of the total amounts payable to Borrower under such agreement, or (B) such obligor has delivered to Borrower an irrevocable letter of credit issued or confirmed by a bank and payable only in the United States of America and in Dollars, sufficient to cover the total amounts payable to Borrower under such agreement); and (viii) Accounts, notes and other receivables due from Affiliates or employees. 6 Consolidated Adjusted Tangible Net Worth - at any date, on a Consolidated basis, a sum equal to: (i) the Consolidated Adjusted Tangible Assets of Borrower, Guarantor and their Subsidiaries would be shown on a balance sheet at such date in accordance with GAAP, less (ii) the total liabilities (excluding deferred flight revenue) of Borrower and Guarantor and their Subsidiaries, on a Consolidated basis, as would be shown on such balance sheet in accordance with GAAP, and including as LIABILITIES ALL reserves for contingencies and other potential liabilities. Consolidated Cash Flow - for any period, (i) Consolidated Adjusted Net Earnings for such period, plus (ii) depreciation and amortization expenses of Borrower and Guarantor and their Subsidiaries, on a Consolidated basis, for such period, ~ (iii) income tax expense of Borrower and Guarantor and their Subsidiaries, on a Consolidated basis, for such period, all as determined in accordance with GAAP, less (iv) any Distributions by Guarantor declared or made during such period. Consolidated Funded Debt - on a Consolidated basis, all Indebtedness which would, in accordance with GAAP, constitute long term debt, including (a) any Indebtedness for borrowed money with a maturity more than one year after the creation thereof and (b) any Indebtedness for borrowed money which is renewable or extendible at the option of Borrower or Guarantor for a period of more than one year from the date of creation of such Indebtedness. Default - an event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, become an Event of Default. Default Rate - as defined in Section 3.1 of this Agreement. Distribution - in respect of any corporation means and includes: (i) the payment of any dividends or other distributions on capital stock of the corporation (except distributions in such stock) and (ii) the redemption or acquisition of Securities unless made contemporaneously from the net proceeds of the sale of Securities. Document - shall have the meaning ascribed to "documents" under the Code. Dollars - and the sign "$" shall refer to currency of the United States of America. Environmental Laws - all federal, state and local laws, rules, regulations, ordinances, programs, permits, guidances, orders and consent decrees relating to health, safety or environmental matters, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Equipment - all machinery, apparatus, equipment, fittings, furniture, fixtures and other tangible personal Property (other than Flight Hardware and 7 Inventory) of every kind and description owned by Borrower or in which Borrower has an interest, whether now owned or hereafter acquired by Borrower and wherever located, and all parts, accessories and special tools and all increases and accessions thereto and substitutions and replacements therefor. ERISA - the Employee Retirement Income Security Act of 1974 and all rules and regulations from time to time promulgated thereunder. Event of Default - as defined in Section 9.1 of this Agreement. Fixed Rate Effective Date - the Business Day next following Lender's receipt of payment by Borrower of the quarterly installment of principal and INTEREST DUE under the Notes if Lender, not less than five (5) Business Days prior to such payment date, shall have received a written election by Borrower for the Loans to bear interest at the fixed rate as provided in Section 3.1 of this Agreement. 8 Flight Hardware - all hardware and subsystems owned or leased by Borrower which are designed or acquired for space flight (including, but not limited, to flight modules, adapter rings, tunnel segments, multi-layer insulation blankets, cargo pallets and associated piece parts) and non-flight equipment directly supporting such hardware and subsystems (including, but not limited to, mechanical and electrical ground support, and flight training modules and equipment). GAAP - generally accepted accounting principles in the United States of America in effect from time to time. General Intangibles - shall have the meaning ascribed to "general intangibles" under the Code and shall include, without limitation, all chases in action, causes of action, corporate or other business records, deposit accounts, inventions, designs, patents, patent applications, trademarks, trade names, trade secrets, goodwill, copyrights, registrations, licenses, franchises, customer lists, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to Borrower to secure payment of any Account by an account debtor, all rights to indemnification and all other intangible property of every kind and nature (other than Accounts). Guarantor - SPACEHAB, Incorporated, a Washington corporation. Guarantor Mortgage - the leasehold mortgage or other instruments that may be executed by Guarantor after the date hereof in favor of Lender and by which Guarantor may grant and convey to Lender, as security for its guaranty of the Obligations, a first priority Lien upon Guarantor's leasehold interest in the real Property located in Brevard County, Florida described in such Guarantor Mortgage. Guarantor Security Agreement - the Security Agreement to be executed by Guarantor on or about the Closing Date in favor of Lender and by which Guarantor shall grant and convey to Lender, as security for its guaranty of the Obligations, a first priority Lien upon all of Guarantor's personal Property described in such Guarantor Security Agreement. Guarantor Security Documents - the Guarantor Mortgage, the Guarantor Security Agreement and all other instruments and agreements now or at any time hereafter securing the whole or any part of Guarantor's obligations under the Guaranty. Guaranty - that certain Continuing Guaranty AGREEMENT DATED THE DATE hereof from Guarantor in favor of Lender and by which Guarantor unconditionally guarantees payment of the Obligations. Indebtedness - as applied to a Person means, without duplication (i) all items which in accordance with GAAP would be included in determining total 9 liabilities as shown on the liability side of a balance sheet of such Person as at the date AS OF WHICH Indebtedness is to be determined, including, without limitation, Capitalized Lease Obligations, (ii) all obligations of other Persons which such Person has guaranteed and (iii) in the case of Borrower (without duplication), the Obligations. Instrument - shall have the meaning ascribed to "instrument" under the Code. Intercreditor Agreement - the Intercreditor Agreement to be entered into between Lender and Revolver Lender and by which Lender and Revolver Lender shall establish the relative priorities of their respective Liens in the Personal Property Collateral. Inventory - shall have the meaning ascribed to "inventory" under the Code and shall include, without limitation, all goods (other than Flight Hardware) intended for sale or lease by Borrower, or for display or demonstration; all work in process; all raw materials and other materials and supplies of every nature and description used or which might be used in connection with the manufacture, printing, packing, shipping, advertising, selling, leasing or furnishing of such goods or otherwise used or consumed in Borrower's business; and all documents evidencing and General Intangibles relating to any of the foregoing, whether now owned or hereafter acquired by Borrower. LIBOR Rate - the rate of interest per annum at which deposits in Dollars for a period of 1 month are offered to major banks in the London interbank market as of 11:00 a.m., London time, as reported on Telerate Page 3750 on the day that is two (2) London Banking Days preceding the applicable Adjustment Day. If such rate does not appear on the Telerate Page 3750, the rate for that Adjustment Day will be the last such rate that appeared on Telerate Page 3750; provided that if such rate did not appear on Telerate Page 3750 for a period of more than five (5) London Banking Days prior to that Adjustment Day, then the LIBOR Rate shall be determined from such source as Lender shall determine. Lien - any interest in Property securing an obligation owed to, or a claim by, a Person OTHER THAN THE owner of the Property, whether such interest is based on the common law, statute or contract, and including, but not limited to, the security interest, security title or lien arising from a security agreement, mortgage, deed of trust, deed to secure debt, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. Lloyd's - Lloyd's London Syndicates subscribing to Lloyd's policy No.846/C24642 and other insurers who own portions of the Lloyd's Debt. 10 Lloyd's Debt - the Indebtedness in the principal amount of $2,000,000 as of the date hereof owing by Borrower to Lloyd's. Loan Documents - this Agreement, the Other Agreements and the Security Documents. Loan No. 1 - the term loan described in Section 2.1(A) of this Agreement. Loan No. 2 - the term loan described in Section 2.1 (B) of this Agreement. Loan No. 3 - the term loan described in Section 2.1(C) of this Agreement. Loan No. 2 Conditions - with respect to a request by Borrower pursuant to Section 2.1(B) hereof for the funding of Loan No. 2, the following conditions: (i) Borrower has given to Lender written notice of a request for Loan No. 2 at least fifteen (15) Business Days prior to the date on which Borrower desires for Loan No. 2 to be funded, which request shall include a detailed description of the identity, type, value and location of additional Property offered by Borrower or Guarantor as collateral security of such requested loan; (ii) the amount of the requested loan does not exceed the loan-to-collateral ratios customarily utilized by Lender for loans of like type and size based on Lender's good faith valuations of additional collateral as may be offered by Borrower to support such requested loan; (iii) Borrower has executed and delivered to Lender Note No. 2 (with all blank provisions completed appropriately) to evidence Loan No. 2, together with evidence of corporate authority to deliver such note and any collateral in connection therewith; (iv) Borrower shall have delivered to Lender such other amendments to this Agreement, the Mortgages and other documents or agreement as Lender may reasonably request in connection with the perfection of Lender's Liens securing such requested loan and the cross-collateralization of such loan with the other Obligations of Borrower or Guarantor hereunder or under the Guaranty; and (v) if Borrower elects to have Guarantor offer a leasehold mortgage in the Cape Canaveral Location in connection with the request for Loan No. 2, the Cape Canaveral Leasehold Conditions shall have been satisfied. Loan No. 3 Conditions - with respect to a request by Borrower pursuant to Section 2.1(C) hereof for the funding of Loan No. 3, the following conditions: (i) Borrower has given to Lender written notice of a request for Loan No. 3 at least fifteen (15) Business Days prior to the date on which Borrower desires for Loan No. 2 to be funded, which request shall include a fair market and orderly liquidation valuation of Equipment owned by Borrower or Guarantor currently constituting as Collateral which valuation shall be conducted by an appraisal firm of national standing employing methodologies reasonably acceptable to Lender; (ii) the amount of the requested loan 11 does not exceed the loan-to-collateral ratios customarily utilized by Lender for loans of like type and size based on Lender's good faith valuations; (iii) Borrower has executed and delivered to Lender Note No. 3 (with all blank provisions completed appropriately) to evidence Loan No. 3, together with evidence of corporate authority to deliver such note; and (iv) Borrower shall have delivered to Lender such other amendments TO THIS AGREEMENT, the Mortgages and other documents or agreement as Lender may reasonably request in connection with the perfection of Lender's Liens securing such requested loan 12 and the cross-collateralization of such loan with the other Obligations of Borrower or Guarantor hereunder or under the Guaranty. Loan Year - a period commencing each calendar year on the same month and day as the date of this Agreement and ending on the same month and day in the immediately succeeding calendar year, with the first such period (4, the first Loan Year) to commence on the date of this Agreement. Loans - Loan No. 1, and, if funded pursuant to Section 2.1(B) of this Agreement, Loan No. 2, and, if funded pursuant to Section 2.1(C) of this Agreement, Loan No. 3. London Banking Day - any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London, England. Make-Whole Cost - the cost equal to the excess, if any, (i) of the present value of all remaining scheduled principal and interest payments due on the applicable Loan discounted to the date of prepayment at the Prepayment Discount Rate, over (ii) the aggregate unpaid principal amount of such Loan. The Make-Whole Cost shall in no event be less than zero. Material Adverse Effect - the effect of any event or condition which, alone or when taken together with other events or conditions occurring or existing concurrently therewith, (a) has or may be reasonably expected to have a material adverse effect upon the business, operations, Properties, condition (financial or otherwise) or business prospects of Borrower, Guarantor and any Subsidiary, taken together as a whole; (b) has or may be reasonably expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any of the other Loan Documents; (c) has or may be reasonably expected to have any material adverse effect upon any material portion of the Collateral, the Liens of Lender with respect to any of the Collateral or the priority of such Liens; or (d) materially impairs the ability of Borrower or Guarantor to perform its obligations under this Agreement, the Guaranty or any of the other Loan Documents or of Lender to enforce or collect the Obligations or realize upon any material portion of the Collateral in accordance with the Loan Documents and Applicable Law. Money Borrowed - as applied to Indebtedness, means (i) Indebtedness for borrowed money; (ii) Indebtedness, whether or not in any such case the same was for borrowed money, (A) which is represented by notes payable or drafts accepted that evidence extensions of credit, (B) which constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (C) upon which interest charges are customarily paid (other than accounts payable) or that was issued or assumed as full or partial payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease 13 Obligation; and (iv) Indebtedness under any guaranty of obligations that would constitute Indebtedness for Money Borrowed under clauses (i) through (iii) hereof. Mortgages - the mortgages, leasehold mortgages, security deeds, trust deeds or other instruments to be executed by Borrower or Guarantor on or after the Closing Date in favor of Lender and by which Borrower or Guarantor shall grant and convey to Lender, as security for the Obligations, a first priority Lien upon the Real Property Collateral owned by Borrower or a first priority Lien in Borrower's or Guarantor's leasehold interest in the Real Property Collateral leased by Borrower or Guarantor, as the case may be. Net Proceeds - proceeds received by Borrower in cash from the sale, lease, transfer or other disposition of any Property, including, without limitation, insurance proceeds and awards of compensation received with respect to the destruction or condemnation of all or part of such Property, net of: (i) the direct cost of such sale, lease, transfer or other disposition; (ii) reasonable costs and expenses incurred by Borrower in contesting any condemnation or similar proceed; (iii) any tax liability arising from such transaction; and (iv) amounts applied to repayment of Indebtedness (other than the Obligations) secured by a Permitted Lien on the Property of which disposition is made to the extent that such Lien has priority over the Liens of Lender with respect to such Property. Note No. 1 - the Secured Promissory Note to be executed by Borrower on or about the Closing Date in favor of Lender to evidence Loan No. 1, which shall be in the form of Exhibit A-1 attached hereto. Note No. 2 - the Secured Promissory Note to be executed by Borrower in favor of Lender to evidence Loan No. 2, which shall be in substantially the form of Exhibit A-2 attached hereto. Note No. 3 - the Secured Promissory Note to be executed by Borrower in favor of Lender to evidence Loan No. 3, which shall be in substantially the form of Exhibit A-3 attached hereto. Notes - Note No. 1 and, upon the funding of Loan No. 2, Note No. 2 and, upon the funding of Loan No. 3, Note No. 3. Obligations - the Loans and all other advances, debts, liabilities, obligations, covenants and duties owing, arising, due or payable from Borrower to Lender of any kind or nature, whether or not evidenced by any note, guaranty or OTHER instrument, whether arising under this Agreement or any of the other Loan Documents or otherwise and whether direct or indirect (including those acquired by assignment), absolute or contingent, primary or secondary, joint or several, due or to become due, now existing or hereafter arising and however acquired. The term includes, without 14 limitation, all interest, charges, expenses, fees, attorneys' fees and any other sums chargeable to Borrower under this Agreement or any of the other Loan Documents. Other Agreements - any and all agreements, instruments and documents (other than this Agreement and the Security Documents) heretofore, now or hereafter executed by Borrower in favor of or delivered to Lender in respect of the transactions contemplated by this Agreement, including, without limitation, the Notes and WCC-1 financing statements. Payment Items - all checks, drafts, or other items of payment payable to Borrower, including proceeds of any of the Collateral. Permitted Liens - any Lien of a kind specified in Section 7.2(E) of this Agreement. Person - an individual, partnership, corporation, joint stock company, trust, limited liability company, unincorporated organization, or other form of business entity or a government or agency or political subdivision thereof. Personal Property Collateral - all of the types and items of Property of Borrower described in Section 4.1 hereof. Plan - an employee benefit plan now or hereafter maintained for employees of Borrower that is covered by Title IV of ERISA. Prepayment Discount Rate - shall mean the sum of (i) the yield appearing on Telerate, Page 5 three (3) Business Days prior to the date of prepayment of a Loan as of the close of business, New York, New York time, equal to the monthly bid yield to maturity on direct, full faith credit obligations of the United States of America (as quoted on Telerate Page 5) with a remaining term equal to the applicable Weighted Average Life to Maturity, plus (ii) fifty (50) basis points. Prepayment Premium - an amount equal to 3 % of the principal amount of a Loan prepaid by Borrower pursuant to Section 2.4 of this Agreement. Properly Contested - in the case of any Indebtedness of Borrower (including, but not limited to, any Charges) that is not paid as and when due or payable by reason of Borrower's bona fide dispute concerning its liability to pay SAME OR CONCERNING THE amount thereof, provided that (i) such Indebtedness is being PROPERLY CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS PROMPTLY INSTITUTED AND DILIGENTLY CONDUCTED, (ii) BORROWER HAS ESTABLISHED APPROPRIATE RESERVES AS SHALL BE REQUIRED IN CONFORMITY WITH GAAP, (iii) THE NON-PAYMENT OF SUCH INDEBTEDNESS DURING THE PERIOD OF such contest will not have a Material Adverse Effect and will not result in a forfeiture of any assets of Borrower; (iv) no Lien is imposed upon any of 15 Borrower's assets with respect to such Indebtedness other than a Permitted Lien the priority of which is (except only with respect to statutory, non-consensual liens that have priority as a matter of Applicable Law of a state) at all times junior and subordinate to the Liens in favor of Lender; and (v) if such contest is abandoned, settled or determined adversely to Borrower, Borrower forthwith pays such Indebtedness and all penalties and interest in connection therewith. Property - any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. Purchase Money Lien - a Lien upon fixed assets which secures the payment of Indebtedness (other than the Obligations) for the payment of all or any part of the purchase price of such fixed assets incurred by Borrower in connection with its acquisition of such fixed assets, which Lien constitutes a purchase money security interest under the Code. Real Property Collateral - all of the real estate of Borrower and improvements thereon as referenced in Section 4.3 hereof and as more fully described in the Mortgages. Regulation D - Regulation D of the Board of Governors. Remaining Dollar-years - in respect of any Loan, the amount obtained by (i) multiplying the amount of each remaining quarterly principal installment of such Loan by the number of years (calculated at the nearest one-twelfth) which will lapse between the date of determination of the Weighted Average Life to Maturity and the date of the required payment, and (ii) totaling all the products obtained in (i). Revolver Documents - the Loan and Security Agreement, dated as of June 16, 1997, among Borrower, Guarantor and the Revolver Lender, and all instruments, documents and agreements executed or delivered in connection therewith. Revolver Lender - Signet Bank, a Virginia banking corporation. Security -shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. Security Documents - the Mortgages, the GUARANTY, THE GUARANTOR SECURITY Documents, any Subordination Agreement and all other instruments and agreements now or AT ANY TIME HEREAFTER SECURING THE WHOLE OR ANY PART OF THE OBLIGATIONS. Solvent - as to any Person, such Person (i) owns Property whose fair saleable value is greater than the amount required to pay all of such Person's 16 Indebtedness (including contingent debts), (ii) is able to pay all of its Indebtedness as such Indebtedness matures and (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage. Subordinated Debt - Indebtedness of Borrower that is expressly subordinated to the Obligations. Subordination Agreement - any debt subordination agreement executed in favor of Lender by a holder of Subordinated Debt. Subsidiary - any corporation of which a Person owns, directly or indirectly through one or more intermediaries, more than 50% of the voting Securities at the time of determination. Telerate Page - the display page so designated on the Dow Jones Telerate Service (or such other page as may replace that page on that service for the purpose of displaying rates comparable to the Treasury Rate or the LIBOR Rate, as the case may be, or such other publicly recognized service as may be nominated by Lender as the information vendor for the purpose of displaying rates or prices for U.S. deposits for 1 month or rates applicable to direct, full faith and credit obligations of the United Sates of America, as the case may be.) Treasury Rate - the rate per annum determined by Lender (rounded upwards to the nearest whole multiple of 1/lOOth of 1%) applicable to direct, full faith credit obligations of the United States of America in amounts equal to or comparable to the amount of the outstanding principal balance of the Loans and for a term comparable to that of the Loans at any date of determination as such rate appears on Telerate Page 5 as of 11:00 a.m. (New York time) on any date of determination. Value - for purposes of the provisions of this Agreement concerning mandatory prepayments of the Obligations and dispositions of Collateral, the fair market value or book value, whichever is greater, as of the date of such disposition, of the Collateral as to which value is determined. Vandenberg Clawback Conditions - the following conditions: (i) Borrower has executed in favor of and delivered to Lender a leasehold Mortgage in and to Borrower's leasehold interest in its Vandenberg Location in substantially the form and substance heretofore delivered to Borrower and such WCC-1 financing statements or statements satisfactory to Lender and sufficient to perfect Lender's security interest in the Equipment and fixtures at such location as a first priority Lien thereon; (ii) Borrower has caused the lessor of its Vandenberg Location to execute and deliver to Lender a Lessor's Agreement in substantially the form attached hereto as Exhibit G; (iii) Lender shall have received a fully paid mortgagee title insurance policy (or binding commitment to issue title insurance policy, marked to Lender's satisfaction to evidence the form of such policy to be delivered after the funding of Loan No. 2), in standard 17 ALTA form, issued by a title insurance company satisfactory to Lender, in an amount not less than the fair market value of the real Property Collateral subject to such leasehold Mortgage, insuring that such Mortgage creates a valid Lien on all of Borrower's leasehold interest in the Vandenberg Location with no exceptions which Lender shall not have approved in writing and no survey exception; (iv) evidence satisfactory to Lender Hat ownership, use and operation of the Vandenberg Location and the conduct of its business thereon does not violate any applicable zoning ordinance, rule or regulation; (v) Lender shall have received three (3) copies of a current survey of each parcel of the real Property comprising the Vandenberg Location, certified to Lender by the registered land surveyor preparing such survey; and (vi) Borrower shall have remitted to Lender sums sufficient to pay all intangible taxes, documentary taxes, filing fees, and other taxes or charges in connection with the recordation in the public records of the foregoing leasehold Mortgage. Vandenberg Location - the business premises located in Lompoc, California leased by Borrower from the Department of the Air Force pursuant to a certain Lease No. SPCVAN-2-94-0001, dated October 6, 1993, as amended. Weighted Average Life to Maturity - at the date of determination thereof, the number of years obtained by dividing the then Remaining Dollar-years of the applicable Loan by the then outstanding principal amount of such Loan. Work - the repair, replacement or restoration described in Section 2.3 of this Agreement. 1.2. ACCOUNTING AND OTHER TERMS. All accounting terms not specifically defined herein shall be construed in accordance with GAAP, and all financial data pursuant to the Agreement shall be prepared in accordance with such principles. All other terms contained in this Agreement shall have, when the context so indicates, the meanings provided for by the Code to the extent the same are used or defined therein. 1.3. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. The section titles, table of contents and list of exhibits appear as a matter of convenience only and shall not affect the interpretation of this Agreement. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. All references to any instruments or agreements, including, without limitation, references to this Agreement or the other Loan Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. SECTION 2. THE LOANS 18 2.1. TERM LOAN FACILITIES. (A) LOAN NO. 1. SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, Lender shall make a term loan to Borrower in the principal amount of $10,400,000.00 19 ("Loan No. In), which shall be evidenced by and repayable in accordance with the terms of Note No. 1 and shall be secured by the Collateral. (B) LOAN NO. 2. For so long as no Default or Event of Default exists, Lender shall, upon Borrower's written request during the period from the Closing Date through December 31, 1997, make a term loan to Borrower in a principal amount, which, together with the original principal balance of Loan No. 3, if made, not to exceed $4,600,000.00 ("Loan No. 2"), which shall be evidenced by and repayable in equal quarterly installments of principal over a term of five (5) years and otherwise in accordance with the terms of Note No. 2 and shall be secured by the Collateral. In no event shall Lender have any obligation to honor a request of Borrower for Loan No. 2 unless each of the Loan No. 2 Conditions is satisfied. (C) Loan No. 3.For so long as no Default or Event of Default exists, Lender shall, upon Borrower's written request during the period from the Closing Date through December 31, 1997, make a term loan to Borrower in a principal amount, together with the original principal balance of Loan No. 2, if made, not to exceed $4,600,000.00 ("Loan No. 3"), which shall be evidenced by and repayable in equal quarterly installments of principal in accordance with the terms of Note No. 3 and shall be secured by the Collateral. In no event shall Lender have any obligation to honor a request of Borrower for Loan No. 3 unless each of the Loan No. 3 Conditions is satisfied. 2.2. Use OF LOAN PROCEEDS. The proceeds of the Loans shall be used by Borrower solely to pay costs incurred by Lender that are to be reimbursed to Lender pursuant to Section 10.3 hereof and to make expenditures for other, lawful corporate purposes of Borrower to the extent such expenditures are not prohibited by this Agreement or Applicable Law. 2.3. MANDATORY PREPAYMENTS. (A) Proceeds of Sale of Certain Collateral. If Borrower sells any of the Collateral consisting of Equipment having, in the aggregate with all other Equipment sold during the consecutive twelve-month period ending on the date of disposition of such Equipment, a Value of $100,000 or more, or any Real Property Collateral, Borrower shall pay to Lender, as and when received by Borrower and as a mandatory prepayment of the Loans, a sum equal to the Net Proceeds received by Borrower from such sale. Nothing in this Section 2.3 SHALL AUTHORIZE BORROWER TO SELL ANY OF THE COLLATERAL WITHOUT Lender's prior written consent except as otherwise expressly provided IN THIS AGREEMENT OR IN THE MORTGAGES. (B) Insurance and Condemnation Proceeds. If Borrower shall receive any proceeds of insurance or any proceeds as a result of condemnation of any Collateral, Borrower shall promptly remit such proceeds to Lender for disposition as 20 hereinafter provided. All insurance or condemnation proceeds received by Borrower or Lender on account of any casualty to the Equipment or the Real Property Collateral shall be applied as follows: (i) If an Event of Default exists at the time of the receipt of such insurance or condemnation proceeds by Lender, all such proceeds shall be paid to, and applied by Lender as a mandatory prepayment of the Obligations in such order as Lender determines in its sole discretion; or (ii) If no Event of Default exists at the time of the receipt of such insurance or condemnation proceeds by Lender, Borrower may elect (by written notice delivered to Lender within ninety (90) days after the earlier of Borrower's or Lender's receipt of such insurance or condemnation proceeds to repair, replace or restore such Equipment or Real Property Collateral to substantially the same or better condition that existed prior to such damage, destruction, loss or condemnation. If Borrower gives notice of its election to so use such insurance or condemnation proceeds, such insurance proceeds shall be remitted by Lender to Borrower and applied by Borrower as described in Section 2.3(B)(iii). If Borrower does not elect to so use such insurance or condemnation proceeds, or if the cost to repair, replace or restore damaged Real Property Collateral exceeds the total of (1) available insurance proceeds, plus (2) other funds available to Borrower to pay for such Work, then Lender may apply such insurance or condemnation proceeds as a mandatory prepayment of the Obligations in such order as Lender determines in its sole discretion. (iii) If Borrower gives timely notice of its election to so use such insurance or condemnation proceeds: (A) All such insurance or condemnation proceeds of less than $100,000 in the aggregate with respect to any damage, destruction, loss or condemnation of Equipment and $500,000 in the aggregate with respect to any damage to or condemnation of the Real Property Collateral shall be released by Lender to Borrower for, and shall be promptly applied by Borrower to, Borrower's repair, replacement or restoration of the damaged, destroyed, lost or condemned Equipment or the damaged or condemned Real Property Collateral, as the case may be (hereinafter referred to as the "Work"). (B) If the cost for the Work, as estimated by Lender, is more than $100,000 in the aggregate with respect to any damage, destruction or loss of Equipment or $500,000 in the aggregate with respect to any damage to or condemnation of the Real Property Collateral, or if the Work involves structural work (my, involving supporting members of a building), then Borrower shall 21 promptly deliver to Lender a detailed and complete plan for the Work, including a cash flow and capital expenditures budget and projected time schedule for the implementation and completion of such plan and such other information as Lender may reasonably request. The Work shall be performed under the supervision and control of a licensed architect or engineer. After Lender's receipt of such plan, all such insurance proceeds of more than $100,000 in the aggregate with respect to any damage, destruction, loss or condemnation of Equipment and $500,000 in the aggregate with respect to any damage to Real Property Collateral received by Lender and necessary for the Work shall be released to or for the account of Borrower in accordance with the progress of the Work, upon Lender's receipt of a certificate of Borrower's principal financial officer stating that the Work for which payment is requested has been completed and that no Liens or claims of Liens in respect of the Work remain unsatisfied or of record. After the completion of the Work, Borrower will diligently pursue all certificates, permits, licenses and other documents necessary to the use or occupancy of the repaired, replaced or restored Equipment or Real Property Collateral have been obtained. Pending the release of such proceed to Borrower in accordance with the foregoing provisions, such proceeds shall be held by Lender (in such account as Lender may select, with interest thereon payable to Borrower, provided Borrower pays the costs of maintenance of such account). (C) If any portion of the insurance proceeds in excess of $100,000 in the aggregate with respect to any damage, destruction or loss of Equipment and $500,000 in the aggregate with respect to damage to Real Property Collateral received by Lender is not necessary for the Work, then Lender may apply such proceeds to the payment of the Obligations in such order as Lender may elect. (iv) If the insurance or condemnation proceeds made available to Borrower are for any reason insufficient to cover the costs of completion of the Work, then Borrower shall be solely responsible for funding such insufficiency. At Lender's request, whether prior to or after the commencement of the repair, replacement or restoration, Borrower shall provide to Lender evidence satisfactory to Lender of Borrower's unqualified access to such funds as a condition to the release of insurance proceeds hereunder. Nothing herein shall be deemed to supersede the provisions of Section 7.2(E) of this Agreement. (v) Completion of the Work shall be evidenced, in the case of the Real Property Collateral, by a final, unqualified certification of the architect or engineer employed, if any, and an unconditional certificate of occupancy, if applicable; and, in the case of Equipment and Real Property Collateral, such other certification as may be required by Applicable Law; or if none of the above is applicable, a written good faith determination of completion by Borrower reasonably satisfactory to Lender. (vi) All replacement Collateral shall be subject to Lender's duly perfected Lien therein and no other Liens except Permitted Liens that are not Purchase 22 Money Liens. Replacements of buildings shall be constructed on the sites of, and be of comparable size, quality and utility to the destroyed buildings. (C) Vandenberg Clawback. If Borrower shall fail to satisfy the Vandenberg Clawback Conditions on or before January 31, 1998, Borrower shall pay to Lender, as a mandatory prepayment of Loan No. 1, the amount of $2,827,500. 2.4. VOLUNTARY PREPAYMENTS. Borrower may, at its option, prepay the Loans, in whole or in part from time to time, without premium or penalty if (i) the aggregate amount of such prepayments made during any Loan Year is less than or equal to $1,000,000 or (ii) such prepayment occurs at any time after July 15, but prior to the Fixed Rate Effective Date. At any time prior to the Fixed Rate Effective Date, Borrower may, at its option, prepay the Loans, in whole or in part, in an aggregate amount exceeding $1,000,000 in any Loan Year ending on or before July 15, 1999, by paying the principal amount to be prepaid together with interest accrued and unpaid thereon to the date of prepayment together with a prepayment premium equal to 3 % of the principal amount prepaid in excess of $1,000,000 during any such Loan Year. At any time on or after the Fixed Rate Effective Date, Borrower may, at its option, prepay the Loans, in whole or in part, in an aggregate amount exceeding $1,000,000 in any Loan Year, by paying the principal amount to be prepaid together with interest accrued and unpaid thereon to the date of prepayment together with a prepayment premium equal to the Make-Whole Cost, if any, based on the principal amount prepaid in excess of $1,000,000 during any such Loan Year. Any voluntary prepayment permitted hereunder, in any single instance, shall be in amounts aggregating at least $750,000. Nothing contained in his Section 2.4 shall relieve Borrower of its duty to make full and complete payment of the Obligations. Borrower shall give written notice (or telephonic notice confirmed in writing) to Lender of any prepayment authorized hereinabove not less than three (3) Business Days prior to the prepayment of the Loans. 2.5. PAYMENT DATES; APPLICATION OF PAYMENT. If any payment by Borrower is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day. All Payment Items received by Lender by 4:00 p.m., New York, New York time, on any Business Day shall be deemed received on that Business Day. All Payment Items received after 4:00 p.m., New York, New York time, on any Business Day shall be deemed received on the following Business Day. Each mandatory prepayment of the Loans shall be applied first to accrued but unpaid interest on the portion of the principal balance prepaid and then to installments of principal in the inverse order of their maturities. Borrower irrevocably waives the right to direct the application of any and all payments and collections at any time or times hereafter received by Lender from or on behalf of Borrower, and Borrower does hereby irrevocably agree that Lender shall have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times hereafter by Lender or its agent against the Obligations, in such manner as Lender may deem advisable, notwithstanding any entry by Lender upon any of its books and records. SECTION 3. INTEREST, FEES AND CHARGES 23 3.1. Interest. Borrower agrees to pay interest in respect of the unpaid principal amount of the Loans from the date such principal amounts are advanced until paid (whether at stated maturity, on acceleration or otherwise) at a rate per annum equal to 3.0~o ~(Pound Sterling) the Adjusted LIBOR Rate. Notwithstanding the foregoing, at any time prior to July 14, 1999, if no Default or Event of Default then exists, Borrower shall be entitled to elect a fixed rate per annum in respect of the unpaid principal amount of the Loans. Such fixed rate per annum SHALL be equal to 3.0% plus the Treasury Rate in effect on the third Business Day prior the Fixed Rate Effective Date. The applicable Adjusted LIBOR Rate shall be increased or decreased, as the case may be, by an amount equal to any increase or decrease in the LIBOR Rate as of any Adjustment Day until the next following Adjustment Day, with such adjustments in the LIBOR Rate to be effective as of the opening of business as of any applicable Adjustment Day. Such determination of the applicable Adjusted LIBOR Rate shall, absent manifest error, be final, conclusive and binding on all parties and for all purposes. Upon and after the occurrence of an Event of Default, the principal amount of the Obligations shall automatically (without notice to or demand upon Borrower) bear interest, calculated daily (computed on the actual days elapsed over a year of 360 days), at a rate per annum equal to 3%, above the interest rate otherwise applicable thereto, but not to exceed in any event the maximum rate permitted under Applicable Law ("Default Rate"). 3.2. COMMITMENT FEE: ORIGINATION FEE. Lender acknowledges receipt of a commitment fee of $37,500, which was fully earned on issuance of Lender's proposal letter to Borrower, and of an origination fee of $37,500, which shall be deemed Filly earned at the closing of the transactions contemplated hereby. Neither the commitment fee nor the origination fee shall be subject to rebate except as may be required by Applicable Law. 3.3. MAXIMUM INTEREST. Regardless of any provision contained in this Agreement or in any of the other Loan Documents, in no contingency or event whatsoever shall the aggregate of all amounts deemed interest under this Agreement, the Notes or any of the other Loan Documents and charged or collected pursuant to the terms hereof, of the Notes or of any of the other Loan Documents exceed the highest rate permissible under Applicable Law. It is the intent of the parties hereof to comply with all Applicable Laws relating to interest and usury, and if Lender shall inadvertently charge or receive interest hereunder in excess of the highest applicable rate, Lender shall promptly refund such excess interest to Borrower and such rate shall automatically be reduced to the maximum rate permitted by Applicable Law. All interest paid or agreed to be paid to Lender shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread throughout the full term of the Notes until payment in full of the principal amount thereof so that interest on such principal amount for such full period will not exceed the maximum amount permitted by Applicable Law. 3.4. STATEMENTS OF ACCOUNT. Lender shall account to Borrower, no less frequently than quarterly, with a statement of charges and payments made pursuant to this Agreement and the Notes, and any such account rendered by Lender shall, absent manifest error, be deemed rebuttably conclusive upon Borrower unless Lender is notified by Borrower in writing to the contrary within forty five (45) days after the date each account is mailed to Borrower. Such notice shall only be deemed an objection to those items specifically objected to therein. 24 SECTION 4. COLLATERAL: GENERAL TERMS 4.1. SECURITY INTEREST IN PERSONAL PROPERTY COLLATERAL. To secure the prompt payment and performance to Lender of the Obligations, Borrower hereby grants to Lender a continuing security interest in and Lien upon all of the following Property and interests in Property of Borrower, whether now owned or existing or hereafter created, acquired or arising and wheresoever located: 25 (A) All Equipment; (B) All accessions to, substitutions for and all replacements, products and cash and non-cash proceeds of the items described in paragraphs (A) above, including, without limitation, all Accounts, Chattel Paper, Instruments and General Intangibles constituting proceeds of the Equipment and proceeds of and unearned premiums with respect to insurance policies insuring any of the Collateral; and (C) All books and records (including, without limitation, customer lists, credit files, computer programs, print-outs, and other computer materials and records) of Borrower pertaining to any of the items described in paragraphs (A) or (B) above. 4.2 REPRESENTATIONS. WARRANTIES AND COVENANTS -- COLLATERAL. To induce Lender to enter into this Agreement, Borrower represents and warrants to, and covenants with, Lender as follows: (A) The Collateral is now and will continue to be owned solely by Borrower. No other Person has or will have any right, title, interest, claim, or Lien therein, thereon or thereto other than a Permitted Lien. (B) Except for statutory, non-consensual Liens, the Liens granted to Lender shall be first and prior on the Collateral. No further action need be taken to perfect the Liens granted to Lender, other than the filing of continuation statements under the Code or other Applicable Law, continued possession by Lender of that portion of the Collateral constituting Instruments or Documents and the recording of the Mortgages. 4.3. LIEN ON REAL PROPERTY COLLATERAL. (A) The due and punctual payment and performance of the Obligations shall also be secured by first priority Liens created by the Mortgages upon all real Property of Borrower located in Brevard County and Florida, as more fully described in the respective Mortgages. Borrower agrees to execute for Lender's benefit the Mortgage and such leasehold mortgages, deeds of trust or other documents evidencing a collateral assignment of Borrower's interest in the Real Property Collateral as Lender may request. Such documents shall be recorded, at the expense of Borrower, with such filing offices as may be required to evidence Lender's Lien upon the real Property owned by BORROWER. (B) As additional security for the payment of the Obligations, Lender shall have the Liens granted and conveyed pursuant to the other Security Documents upon the Property described therein. 4.4. FINANCING STATEMENTS. Borrower agrees to execute WCC-1 financing statements PROVIDED FOR by the Code or other Applicable Law, together with any and all other instruments, assignments or documents, and shall take such other action as may be required to perfect or to continue the perfection and priority of Lender's security interest in and Liens upon the Collateral, including, without limitation, the execution at Lender's request of all 26 documents deemed necessary by Lender to cause Lender's Lien to be noted on any motor vehicle title 27 certificates for motor vehicles forming a part of the Collateral. Unless prohibited by Applicable Law, Borrower hereby authorizes Lender to execute and file any such financing statement on Borrower's behalf. 4.5. LOCATION OF EQUIPMENT. All Equipment will at all times be kept by Borrower at one or more of the business locations set forth in Exhibit C and shall not, without the prior written approval of Lender, be moved therefrom except dispositions of Equipment that are authorized by Section 5.2 hereof, and except that Borrower may move Equipment to a location in the United States other than those shown on Exhibit C hereto so long as Borrower has given Lender at least 30 Business Days' prior written notice of such new location and prior to moving any Equipment to such location Borrower has executed and delivered to Lender UCC- 1 financing statements and any other appropriate documentation to perfect or continue the perfection of Lender's Liens with respect to such Equipment and all products and proceeds thereof. 4.6. INSURANCE OF COLLATERAL. Borrower agrees to maintain and pay for insurance upon all Collateral, wherever located, covering casualty, hazard, public liability and such other risks and in such amounts and with such insurance companies as shall be customary in Borrower's business to insure Lender's interest in the Collateral. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than thirty (30) days prior written notice to Lender in the event of cancellation of the policy for any reason whatsoever and a clause that the interest of Lender shall not be impaired or invalidated by any act or neglect of Borrower or owner of the Property nor by the occupation of the premises for purposes more hazardous than are permitted by said policy. If Borrower fails to provide and pay for such insurance, Lender may, at Borrower's expense, procure the same, but shall not be required to do so. Borrower agrees to deliver to Lender, promptly as rendered, true copies of all reports made in any reporting forms to insurance companies. Borrower shall give to Lender promptly, and in any event within five (5) Business Days after Borrower obtains knowledge thereof, written notice of any damage, destruction or loss covered by any insurance. In addition to the insurance required hereinabove, Borrower will maintain, with financially sound and reputable insurers, insurance with respect to its other Properties and business against such casualties and contingencies of such type (including public liability, product liability, business interruption, larceny, embezzlement or other criminal misappropriation insurance) and in such amounts as is customary in the business in which Borrower is engaged. 4.7. ADVANCES TO PROTECT COLLATERAL. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, all taxes imposed by Applicable Law on any of the Collateral or in respect of the sale or use thereof, and all other PAYMENTS REQUIRED TO BE MADE BY LENDER TO ANY PERSON TO REALIZE UPON ANY COLLATERAL SHALL BE borne by Borrower. If Borrower fails to pay any portion thereof when due, except to the extent being Properly Contested, Lender may, at its option, but shall not be required to, pay the same and charge Borrower therefor. Lender may, at any time or times hereafter, in its SOLE DISCRETION, WITHOUT WAIVING OR RELEASING ANY OBLIGATIONS, OR ANY duty of Borrower under ANY of the Loan Documents, or any Event of Default, pay when due, acquire or accept an assignment of any Lien (other than, prior to an Event of Default, any Permitted Lien) or claim 28 asserted by any Person against any of the Collateral. All sums paid by Lender in respect thereof and all costs, fees and expenses, including, without limitation, attorneys' fees and court costs, which are incurred by Lender on account thereof, shall be payable, ON DEMAND, by Borrower to Lender together with interest accruing at the Default Rate from the date of demand until paid and shall be secured by the Collateral. Lender shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto or for any diminution in the value thereof except to the extent provided by Applicable Law. SECTION 5. PROVISIONS RELATING TO EQUIPMENT 5.1. REPRESENTATIONS. WARRANTIES AND COVENANTS. With respect to the Equipment, Borrower represents, warrants and covenants to and with Lender that the Equipment is in good operating condition and repair, and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved, reasonable wear and tear excepted. Borrower will not permit any of the Equipment to become affixed to any real Property leased to Borrower so that an interest arises therein under any Applicable Law unless the landlord of such real Property has executed a landlord waiver or leasehold mortgage in favor of Lender, and Borrower will not permit any of the Equipment to become an accession to any personal Property other than Equipment that is subject only to Permitted Liens. Immediately on request therefor by Lender, Borrower shall deliver to Lender any evidence of Borrower's ownership of any of the Equipment (including, without limitation, certificates of title and applications for title). Borrower shall maintain accurate records itemizing and describing the kind, type, quality, quantity and value of its Equipment and all dispositions made in accordance with Section 5.2 hereof, and shall furnish Lender with a current schedule containing the foregoing information on at least an annual basis and more often if requested by Lender after the occurrence of a Default or an Event of Default. 5.2. DISPOSITIONS OF EQUIPMENT. Borrower shall not sell, lease or otherwise dispose of or transfer any of the Equipment or any part thereof without the prior written consent of Lender; provided, however, that the foregoing restriction shall not apply, for so long as no Default or Event of Default exists, to (i) dispositions of Equipment in the ordinary course of Borrower's business which, in the aggregate during any consecutive twelve-month period, has a fair market value or book value, whichever is greater, of $100,000 or less, provided that all Net Proceeds thereof are turned over to Lender for application to the Obligations, (ii) dispositions of functionally obsolete Equipment, provided that all Net Proceeds thereof are turned over to Lender, or (iii) replacements of Equipment that is functionally obsolete or substantially worn or damaged with Equipment of like kind, function and value, provided that the replacement Equipment is acquired prior to, concurrently with or within thirty (30) Business Days after any disposition of the Equipment that is to be replaced, the replacement Equipment is free and clear of Liens (except for Permitted Liens that are not Purchase Money Liens), Lender is given at least five (5) Business Days' prior written-notice of such disposition. SECTION 6. REPRESENTATIONS AND WARRANTIES 29 6.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this Agreement and to make the Loans hereunder, Borrower warrants, represents and covenants to Lender that: (A) Borrower is a corporation duly organized and validly existing under the laws of the State of Delaware. Borrower has duly qualified and is authorized to do business and is in good standing as a foreign corporation in all states and jurisdictions failure to so qualify has had or would have a Material Adverse Effect. (B) Borrower has the power and is duly authorized to enter into, deliver and perform this Agreement and each of the other Loan Documents to which it is a party. The execution, delivery and performance of this Agreement and each of the other Loan Documents to which Borrower is a party have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the shareholders of Borrower; (ii) contravene Borrower's certificate of incorporation or by-laws; (iii) violate, or cause Borrower to be in default under, any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to Borrower; (iv) result in a breach of or constitute a breach under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which it or any of its Properties may be bound or affected; or (v) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by Borrower. This Agreement is, and each of the other Loan Documents when delivered under this Agreement will be, a legal, valid and binding obligation of Borrower enforceable against it in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally. (C) Borrower is not engaged principally, or as one of its important activities, in the business of purchasing or carrying "margin stock" (within the meaning of Regulation G or U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of the Loans will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock, or be used for any purpose which violates or is inconsistent with the provisions of Regulation X of said Board of Governors. (D) Borrower has all governmental consents, approvals, authorizations, permits, certificates, inspections, and franchises necessary to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now owned or leased by it (except to the extent that the failure to obtain such items has not had or would not reasonably be expected to have a Material Adverse Effect). (E) Except as set forth on Exhibit D attached hereto AND MADE A PART HEREOF, there are no actions, suits, proceedings or investigations pending, or to the knowledge of Borrower, threatened, against or affecting Borrower or any of its Properties in any court or 30 before any governmental authority or arbitration board or tribunal, and no action, suit, proceeding or investigation shown on Exhibit D will have a Material Adverse Effect. (F) Borrower has filed all federal, state and local tax returns and other reports it is required by Applicable Law to file and has paid, or made provision for the payment of, all Charges that are due and payable, except to the extent being Properly Contested. (G) Borrower has duly complied with, and its Properties and business operations are in compliance in all material respects with, the provisions of all Applicable Law (except to the extent that any non-compliance has not had or would not reasonably be expected to have a Material Adverse Effect), including, without limitation, all Environmental Laws. (H) No Default or Event of Default exists or will exist or result from the execution and delivery of this Agreement or Borrower's performance hereunder. (I) The Consolidated and consolidating balance sheets of Borrower, Guarantor and such other Persons described therein as of March 31, 1997, and the related statements of income, changes in stockholders' equity, and statements of cash flows for the period entered on such date, have been prepared in accordance with GAAP (except for changes in application in which Borrower's independent certified public accountants concur), and present fairly the financial position of Borrower and Guarantor at such date and the results of Borrower's and Guarantor's operations for such period. Since March 31, 1997, there has been no material change in the condition, financial or otherwise, of Borrower and Guarantor, taken together as a whole, except changes in the ordinary course of business, none of which individually or in the aggregate has been materially adverse to Borrower and Guarantor, taken as a whole. (I) Except for the fees of Harbor Securities, Inc., which shall be paid in full by Borrower and for which Lender has no responsibility or liability, there are no claims for brokerage commissions, finder's fees or investment banking fees in connection with the transactions contemplated by this Agreement. 6.2. SURVIVAL OF REPRESENTATIONS. Borrower warrants to Lender that all representations and warranties of Borrower contained in this Agreement or any of the other Loan Documents shall be true at the time of Borrower's execution of this Agreement and any of the other Loan Documents. SECTION 7. COVENANTS AND CONTINUING AGREEMENTS 7.1. AFFIRMATIVE COVENANTS. For so long as there are any Obligations outstanding, Borrower covenants that, unless otherwise consented to by Lender in writing, it shall: (A) Pay and discharge all Charges as and when such Charges are due and payable, except and to the extent only that such Charges are being Properly Contested. 31 Borrower shall also pay and discharge any lawful claims which, if unpaid, might become a Lien against any of the Collateral except for Permitted Liens. (B) File all federal, state and local tax returns and other reports Borrower is required by Applicable Law to file and maintain adequate reserves for the payment of all Charges. (C) Preserve and maintain its separate corporate existence and all rights, privileges, and franchises in connection therewith, and maintain its qualification and good standing in all states in which the failure to be qualified would have a Material Adverse Effect. (D) Maintain its Properties in good condition, ordinary wear and tear excepted, and make all necessary renewals, repairs, replacements, additions and improvements thereto. (E) Comply with all Applicable Law, including, without limitation, all Environmental Laws, and obtain and keep in force any and all licenses, permits, franchises, or other governmental authorizations, to the extent that any such failure to comply, obtain or keep in force would be reasonably likely to have a Material Adverse Effect. (F) At all times make prompt payment of contributions required to meet the minimum funding standards set forth in ERISA with respect to each Plan and furnish to Lender, promptly upon Lender's request therefor, such additional information concerning any Plan or any other such employee benefit plan as may be reasonably requested. (G) Keep adequate records and books of account with respect to its business activities in which proper entries are made in accordance with GAAP reflecting all its financial transactions. (H) Permit representatives of Lender, from time to time, as often as may be reasonably requested, but only during normal business hours, to visit and inspect any of the Collateral and inspect and make extracts from Borrower's books and records. (I) Cause to be prepared and furnished to Lender the following (all to be kept and prepared in accordance with GAAP applied on a consistent basis, unless Borrower's certified public accountants concur in any change therein and such change is disclosed to Lender and is consistent with GAAP): (i) as soon as possible, but not later than 120 days after the close of each fiscal year of Borrower, unqualified financial statements of Guarantor, Borrower and their Subsidiaries as of the end of such year, audited on a Consolidated basis and with consolidating entries and calculations detailed, all certified by a firm of independent certified public accountants of recognized national standing or otherwise acceptable to Lender; and (ii) AS SOON AS POSSIBLE, BUT NOT LATER than 90 days after the end of each fiscal quarter hereafter, unaudited INTERIM consolidated financial statements of Guarantor, Borrower and its Subsidiaries as of the end of such quarter and of the portion of Borrower's fiscal year then elapsed, on a Consolidated and consolidating basis, certified by the principal financial officer of Guarantor as prepared in accordance with GAAP and fairly presenting the consolidated 32 financial position and results of operations of Guarantor, Borrower and its Subsidiaries for such quarter and period. Concurrently with the delivery of the financial statements described in clause (i) of this Section 7.1(I), Borrower shall furnish to Lender a copy of the accountants' letter to Borrower's management that is prepared in connection with such financial statements. Concurrently with the delivery of the financial statements described in clauses (i) and (ii) of this Section 7.1(I), Borrower shall cause to be prepared and furnished to Lender a Compliance Certificate from the principal financial officer of Borrower. (J) At Lender's request, promptly execute or cause to be executed and deliver to Lender any and all documents, instruments and agreements deemed necessary by Lender to perfect or to continue the perfection of Lender's Liens or to facilitate collection of the Collateral. (K) Notify Lender in writing: (i) promptly after Borrower's learning thereof, of the commencement of any litigation affecting Borrower, the Collateral or any of Borrower's other Properties, whether or not the claim is considered by Borrower to be covered by insurance, and of the institution of any administrative proceeding which might reasonably be expected to have a Material Adverse Effect if determined adversely to Borrower; (ii) promptly after Borrower's learning thereof, of any material default by Borrower under any note, indenture, loan agreement, mortgage, lease, deed, guaranty or other similar agreement relating to any Indebtedness of Borrower exceeding $500,000; (iii) promptly after the occurrence thereof, of any Default or Event of Default; and (iv) promptly after the rendition thereof, of any judgment rendered against Borrower. (L) Permit Lender to communicate directly with any of the following Persons concerning Borrower, its business, the Collateral and the Loans (and Lender is irrevocably authorized to communicate with each such Persons) upon at least 24 hours' oral or written notice to Borrower (unless an Event of Default exists, in which event no notice shall be required): (a) any service bureau, warehousing service, landlords or trade creditors; (b) any Person employed by Borrower (but no prior notice shall be required for Lender to discuss any matters pertaining to Borrower, its business or the Collateral with any officer of Borrower or attorney for Borrower or any other Person designated by an officer of Borrower to deal on a day-to-day basis with Lender); and (c) Borrower's present and future independent public accountants, each of whom is authorized by Borrower to communicate with Lender and to disclose to Lender any and all matters relating to Borrower, its financial condition and business prospects, and the Collateral. for so long as no Event of Default shall exist, Borrower shall be entitled to have a representative present at any meeting requested by Lender under this subsection. (M) Furnish to Lender, promptly after the sending or filing thereof, as the case may be, copies of all regular, periodic and special reports and all registration statements which Borrower or Guarantor files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or with any national securities exchange. 33 7.2. NEGATIVE COVENANTS. For so long as there are any Obligations outstanding, Borrower covenants that, unless Lender has first consented thereto in writing, it will not: (A) Acquire all or any substantial part of the Properties of any Person nor merge or consolidate with any Person, except (1) a consolidation or merger involving only Borrower and one or more wholly owned Subsidiaries, or (2) a merger in which Borrower is the surviving corporation or such an acquisition of Properties, provided, in either case, that, immediately after the merger or acquisition and after giving affect thereto, no Default or Event of Default exists, and the Adjusted Tangible Net Worth of Borrower is not less than its Adjusted Tangible Net Worth immediately prior to such merger or acquisition, and provided further that the Consolidated Cash Flow for the most recently completed fiscal year of Borrower, when combined on a pro forma basis with the cash flow of the Person merged into Borrower or the cash flow attributable to the assets acquired by Borrower for such fiscal year period, would not have been less than the Consolidated Cash Flow for such prior fiscal year. (B) Make any loans or other advances of money (other than for salary, travel advances, advances against commissions and other similar advances in the ordinary course of business) to any Person other than unsecured loans to Guarantor for so long as Borrower shall not have received notice from Lender of the occurrence of an Event of Default. (C) Enter into any material transaction with any Affiliate or stockholder, except in the ordinary course of and pursuant to the reasonable requirements of Borrower's business and upon fair and reasonable terms which are no less favorable to Borrower than would obtain in a comparable arm's length transaction with a Person not an Affiliate or stockholder of Borrower. (D) Guarantee, assume, endorse or otherwise, in any way, become directly or contingently liable with respect to the Indebtedness of any Person except by endorsement of instruments or items of payment for deposit or collection. (E) Create or suffer to exist any Lien upon any Inventory, any Flight Hardware or any Collateral, except: (i) Liens at any time granted in favor of Lender; (ii) Liens for Charges (excluding any Lien imposed pursuant to any of the provisions of ERISA) not yet due or being Properly Contested; (iii) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons for labor, materials, supplies or rentals incurred in the ordinary course of Borrower's business, but only if the payment of such claims or demands is not at the time required or are being Properly Contested; (iv) Liens resulting from deposits made in the ordinary course of business in connection with workmen's compensation, unemployment insurance, social security and other like laws; (v) attachment, judgment and other similar non-tax Liens arising in connection with court proceedings, but only if and for so long as the execution or other enforcement of such Liens is and continues to be effectively stayed and bonded on appeal in a manner satisfactory to Lender for the full amount thereof, the validity and amount of the claims secured thereby 34 are being PROPERLY CONTESTED and such Liens do not, in the AGGREGATE, MATERIALLY DETRACT FROM THE VALUE of the Property of Borrower or materially impair the use thereof in the operation of Borrower's business; (vi) Liens incurred or deposits made in the ordinary course of business to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness for money borrowed), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts, provided that, to the extent any such Liens attach to any of the Collateral, such Liens are at all times subordinate and junior to the Liens upon the Collateral in favor of Lender; (vii) Liens listed as permitted encumbrances in the Mortgages; (viii) Purchase Money Liens; and (ix) Liens described in Exhibit B attached hereto. (F) Transfer its principal place of business or chief executive office, or open new manufacturing plants, or transfer existing manufacturing plants, to or at any locations other than those at which the same are presently kept or maintained, except upon at least sixty (60) days prior written notice to Lender and after the delivery to Lender of duly executed WCC-1 financing statements, if required by Lender, in form satisfactory to Lender to perfect or continue the perfection of Lender's Liens and security interest hereunder. (G) Sell, lease or otherwise dispose of any of the Collateral, including any disposition of any Collateral as part of a sale and leaseback transaction, to or in favor of any Person, except dispositions of Equipment authorized by Section 5.2 of this Agreement or sell, lease or otherwise dispose of any Inventory or Flight Hardware, including any disposition of any such items as part of a sale and leaseback transaction, except for the sale of Inventory in the ordinary course of business or the lease of Flight Hardware in the ordinary course of business. (H) Declare or make any Distributions; provided, however, that if Alenia shall convert all or any portion of the Subordinated Debt held by it into equity securities of Borrower, then for so long as no Default or Event of Default shall then exist, Borrower may make Distributions to Alenia to the extent permitted under Applicable Law. In no event, however, shall the amount of Distributions paid to Alenia during any fiscal year exceed the amount that would have been payable to Alenia during such year if Alenia had not so converted the Subordinated Debt held by it. (I) Hereafter create any Subsidiary or divest itself of any assets by transferring them to any Subsidiary. (K) Amend or modify in any respect the payment terms or maturities of the Lloyd's Debt as in effect as of the date hereof, amend or modify the terms of the Lloyd's Debt to provide for mandatory prepayment thereof or grant or give a Lien in any Property of Borrower as security for the payment of the Lloyd's Debt. 35 7.3. SPECIFIC FINANCIAL COVENANTS. For so long as there are any Obligations outstanding, Borrower covenants that, unless otherwise consented to by Lender in writing, it shall: (A) Minimum Consolidated Adjusted Tangible Net Worm. Maintain a Consolidated Adjusted Tangible Net Worth of not less than the amount shown below as of the date corresponding thereto:
Date Amount ------------------------------------------------------------ June 30, 1997 $75,000,000.00 June 30, 1998 The sum of $75,000,000.00, plus by an amount equal to 50% of Borrower's Consolidated Adjusted Net Earnings for the fiscal year ended June 30, 1998. As of the last day of each fiscal quarter The amount required as of June 30, quarter thereafter 1998, increased quarterly as of the last day of each fiscal quarter after June 30, 1998, by an amount equal to 50% of Borrower's Consolidated Adjusted Net Earnings, if any, for the fiscal quarter ending on such date.
(B) Consolidated Cash Flow to Current Portion of Consolidated Funded Debt. Maintain as of the last day of each fiscal year a ratio of Consolidated Cash Flow for the prior fiscal year to the current portion of Consolidated Funded Debt as of the last day of such fiscal year that is the date of determination of not less than 1.50 to 1.00. (C) Consolidated Indebtedness to Consolidated Adjusted Tangible Net Worth Ratio. Maintain a ratio of Consolidated Indebtedness to Consolidated Adjusted Tangible Net Worth of not more than 1.50 to 1.00 as of June 30, 1997, as of June 30, 1998, and as of the last day of each fiscal quarter thereafter. (D) Adjusted Tangible Net Worth. Maintain an Adjusted Tangible Net Worth, before consolidation of at least $1.00 at all times during the term hereof. SECTION 8. CONDITIONS PRECEDENT Notwithstanding any other provision of this Agreement or any of the other Loan Documents, and without affecting in any manner the rights of Lender under the other Sections of this Agreement, it is understood and agreed that Lender will not be obligated to fund Loan 36 No. 1 unless and until each of the following conditions has been satisfied in a manner satisfactory to Lender and its counsel: 8.1. DOCUMENTATION. Lender shall have received the following documents on or before July 30, 1997, each to be in form and substance satisfactory to Lender and its counsel: (A) Certified copies of Borrower's casualty insurance policies, together with loss payable endorsements on Lender's standard form of loss payee endorsement naming Lender as loss payee, and certified copies of BORROWER'S LIABILITY INSURANCE POLICIES, TOGETHER WITH endorsements naming Lender as a co-insured; (B) Copies of all filing receipts or acknowledgments issued by any governmental authority to evidence any filing or recordation necessary to perfect the Liens of 37 Lender in the Collateral and evidence in a form acceptable to Lender that such Liens constitute valid and perfected security interests and Liens; (C) Landlord or warehouseman agreements with respect to all premises leased or occupied by Borrower; (D) A copy of the Articles or Certificate of Incorporation of Borrower, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation; (E) Good standing certificates for Borrower, issued by the Secretary of State or other appropriate official of Borrower's jurisdiction of incorporation and each jurisdiction where the conduct of Borrower's business activities or the ownership of its Properties necessitates qualification; (F) A closing certificate signed by the President and principal financial officer of Borrower dated as of the date hereof, stating that (i) the representations and warranties set forth in Section 6 hereof are true and correct in all material respects on and as of such date, (ii) Borrower is on such date in compliance with all the terms and provisions set forth in this Agreement and (iii) on such date no Default or Event of Default has occurred or is continuing; (G) The Other Agreements duly executed and delivered by Borrower and each other signatory thereto; (H) The Security Documents duly executed by Borrower, Guarantor and each other signatory thereto; (I) The favorable written opinion of Dewey Ballantine, counsel to Borrower and Guarantor, regarding Borrower and Guarantor, this Agreement, the other Loan Documents, the Guaranty and the Guarantor Security Documents and the transactions contemplated by this Agreement and any of the other Loan Documents, in form and content satisfactory to Lender and its counsel; (I) A fully paid mortgagee title insurance policy (or binding commitment to issue title insurance policy, marked to Lender's satisfaction to evidence the form of such policy to be delivered after the Closing Date), in standard ALTA form, issued by a title insurance company satisfactory to Lender, in an amount not less than the fair market value of the Real Property Collateral subject to the Mortgages, insuring that the Mortgages create valid Liens on all such Real Property Collateral with no exceptions which Lender shall not have approved in writing and no survey exception; (K) Evidence satisfactory to Lender that the ownership, use and operation of Borrower's real Property and the conduct of Borrower's business THEREON DOES NOT VIOLATE ANY applicable zoning ordinance, rule or regulation; 38 (L) Three (3) copies of a current survey of each parcel of the Real Property Collateral, certified to Lender by the registered land surveyor preparing such survey; (M) The Intercreditor Agreement duly executed by the Revolver Lender; (N) Such other documents, instruments and agreements as Lender shall reasonably request in connection with the foregoing matters; (O) No Default or Event of Default shall exist at the time of, or shall result from, the funding of Loan No. 1; (P) Since June 30, 1996, except for changes which are reflected on the March 31, 1997, financial statements prepared by management and submitted to Lender, there shall not have occurred any material adverse change in the business, financial condition or results of operations of Borrower and Guarantor taken together as a whole, or the existence or value of any Collateral, or any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect; (Q.) No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages from any Person in respect of, the consummation of the transactions contemplated hereby or which, in Lender's sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement, the Guaranty or any of the other Loan Documents; (R) Lender shall have received assurances satisfactory to it that the Liens granted to Lender in the Collateral are free and clear of all Liens except Permitted Liens; (S) Lender shall have received assurances including, without limitation, a Phase I environmental report, satisfactory to it, that the Real Estate Collateral, and Borrower's ownership and use thereof, are in compliance with all Environmental Laws; (T) Lender shall have received appraisals that reflect fair market, orderly liquidation and auction valuations of the Collateral which are acceptable to Lender; (U) Lender shall have received evidence, satisfactory to it and its counsel, that Borrower and Guarantor have received all third party consents necessary to permit Borrower and Guarantor to consummate the transactions contemplated by this Agreement or any of the other Loan Documents, without violation of any other agreements to which Borrower or Guarantor is a party or by which either of their respective Properties are bound; and (V) Revolver Lender and Borrower shall HAVE ENTERED INTO A REVOLVING CREDIT facility having a maximum loan amount of not less than $7,500,000, and all conditions 39 precedent to Borrower's entitlement to obtain revolving credit loans thereunder shall have been satisfied. SECTION 9. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT 9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following events or conditions shall constitute an "Event of Default": (A) Borrower shall fail to pay any installment of principal, interest or premium, if any, owing on the Notes on the due date thereof (whether due at stated maturity, upon acceleration or otherwise); (B) Borrower shall fail to pay any of the Obligations that are not evidenced by the Notes on the due date thereof (whether due at stated maturity, on demand, upon acceleration or otherwise); (C) any warranty, representation, or other statement made or furnished to Lender by or on behalf of Borrower or Guarantor or in any instrument, certificate or financial statement furnished in compliance with or in reference to this Agreement or any of the other Loan Documents proves to have been false or misleading in any material respect when made or furnished; (D) Borrower shall fail or neglect to perform, keep or observe (i) any covenant contained in Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 5.2, 7.1(A), 7.1(H), 7.1(I), 7.1(J), 7.1(K), 7.1(L), 7.2 or 7.3 of this Agreement or (ii) any other covenant contained in this Agreement (other than a covenant a default in the performance or observance of which is dealt with specifically elsewhere in this Section 9.1) and the breach of such other covenant is not cured to Lender's satisfaction within thirty (30) days after the sooner to occur of Borrower's receipt of notice of such breach from Lender or the date on which such failure or neglect becomes known to any officer of Borrower; (E) any event of default shall occur under, or Borrower or Guarantor shall default in the performance or observance of any term, covenant, condition or agreement contained in, any of the Security Documents, the Other Agreements, the Other Loan Documents or the Revolver Documents and such default shall continue beyond any applicable period of grace; (F) there shall occur any default or event of default on the part of Borrower under any agreement, document or instrument to which Borrower is a party or by which Borrower or any of its Property is bound, creating or relating to any Indebtedness having an unpaid balance of $500,000 or more if the payment or maturity of such Indebtedness is accelerated in consequence of such event of default or if demand for payment of such Indebtedness is made; (G) any material loss, theft, damage or destruction of Collateral not fully covered by insurance (as required by this Agreement and subject to such deductibles as Lender shall have agreed to in writing), or the making of any levy, seizure, or attachment thereof or thereon; (H) there shall occur any material adverse change in the financial condition or business prospects of Borrower and Guarantor taken together as a whole; (I) Borrower or Guarantor shall cease to be Solvent or shall suffer the appointment of a receiver, trustee, custodian or similar fiduciary, or shall make an assignment for the benefit of creditors, or any petition for an order for relief shall be filed by or against Borrower or Guarantor under the Bankruptcy Code (if against Borrower or Guarantors, the continuation of such proceeding for more than thirty (30) days), or Borrower or Guarantor shall make any offer of settlement, extension or composition to their respective unsecured creditors generally, or any motion, complaint or other pleading is filed in any bankruptcy case of any Person other than Borrower and such motion, complaint or pleading seeks the consolidation of Borrower's or Guarantor's assets and liabilities with the assets and liabilities of such Person; (J) Guarantor shall cease to own and control, beneficially and of 40 record, at least one hundred percent (100%) of the issued and outstanding capital stock of Borrower; (K) Guarantor shall revoke or attempt to revoke the Guaranty, or shall dispute Guarantor's liability under the Guaranty, or shall refuse to confirm in writing, at Lender's request, the ongoing validity and enforceability of the Guaranty as to all Obligations; or (L) the prepayment of any of the Lloyd's Debt (whether mandatory or voluntary or payment upon acceleration). 9.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the obligation of Borrower to pay any portion of the Obligations made payable on demand pursuant to the terms of this Agreement or any of the other Loan Documents, upon or at any time after the occurrence of an Event of Default and for so long as such Event of Default shall exist, Lender may in its discretion declare all of the Obligations then outstanding (whether under this Agreement, any of the other Loan Documents or otherwise), to be, whereupon the same shall become, without further notice or demand by Lender of any kind (all of which further notice and demand Borrower expressly waives), forthwith due and payable and Borrower shall forthwith pay to Lender, the entire principal of and interest accrued on the Loans and the other Obligations plus reasonable attorneys' fees not to exceed fifteen percent (15%) of the Obligations if the same are collected by or through an attorney at law. Notwithstanding the foregoing, upon the occurrence of an Event of Default specified in Section 9.1(I) hereof all of the Obligations shall become automatically due and payable without declaration, notice or demand by Lender. Nothing herein or in any of the other Loan Documents shall be construed to permit Lender to charge or collect any unaccrued or unearned interest. 9.3. Remedies. Upon or at any time after the occurrence of an Event of Default, Lender shall have and may exercise from time to time the following rights and remedies (which shall be in addition to any other rights or remedies contained in this Agreement or any of the other Loan Documents or under an Applicable Law): (A) All of the rights and remedies of a secured party under the Code or under other Applicable Law, and all other legal and equitable rights to which Lender may be entitled, all of which rights and remedies shall be cumulative, and none of which shall be exclusive. (B) The right to take immediate possession of the Equipment, and (i) to require Borrower to assemble the Equipment, at Borrower's expense, and make it available to Lender at a place in the continental United States designated by Lender, at Borrower's expense, and (id) to enter any of the premises of Borrower or wherever any of the Equipment shall be located, and to keep and store the same on said premises until sold (and if said premises be the Property of Borrower, Borrower agrees not to charge Lender for storage thereof). (C) The right to sell or otherwise dispose of all or any of the Personal Property Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as Lender, in its sole discretion, may deem advisable. Borrower AGREES that ten (10) days written notice to Borrower of any public or private sale or other 41 disposition of such Personal Property Collateral shall be reasonable notice thereof; Provided, however, that no notice of Lender's intended disposition of Personal Proper Collateral shall be required with respect to any portion of the Personal Property Collateral that is perishable, threatens to decline speedily in value or is of a type customarily sold on a recognized market, nor shall any such notice be required hereunder if not otherwise required under Applicable Law, and such sale shall be at such locations as Lender may designate in said notice. Lender shall have the right to conduct such sales on Borrower's premises, without charge therefor, and such sales may be adjourned from time to time in accordance with Applicable Law. Lender shall have the right to sell, lease or otherwise dispose of such Personal Property Collateral, or any part thereof, for cash, credit or any combination thereof, and Lender may purchase all or any part of such Personal Property Collateral at public or, if permitted by Applicable Law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations. (D) The right at any time or times, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, or provisional or final) at any time held and other indebtedness at any time owing by Lender to or for the credit or the account of Borrower against any and all of the Obligations, irrespective of whether or not Lender shall have made any demand under any Loan Document and whether or not any of the Obligations may be unmatured. (E) The right to foreclose upon the Real Property Collateral encumbered by the Mortgages in accordance with the terms thereof and Applicable Law. Lender is hereby granted a license or other right to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in advertising for sale and selling any Collateral and Borrower's rights under all licenses and all franchise agreements shall inure to Lender's benefit. The proceeds realized from the sale of any Collateral may be applied, after allowing two (2) Business Days for collection, first to the reasonable costs, expenses and attorneys' fees and expenses incurred by Lender for collection and for acquisition, completion, protection, removal, storage, sale and delivery of the Collateral; secondly, to interest due upon any of the Obligations; and thirdly, to the principal of the Obligations. If any deficiency shall arise, Borrower and Guarantor shall remain liable to Lender therefor. 9.4. REMEDIES CUMULATIVE: NO WAIVER. All covenants, conditions, provisions, warranties, guaranties, indemnities, and other undertakings of Borrower contained in this Agreement and the other Loan Documents, or in any document referred to herein or contained in any agreement supplementary hereto or in any schedule given to Lender or contained in any other agreement between Lender and Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of Borrower herein contained. The failure or DELAY OF Lender to exercise or enforce any rights, Liens, powers, or remedies hereunder or under any of 42 the aforesaid agreements or other documents or security or Collateral shall not operate as a waiver of such Liens, rights, powers and remedies, but all such Liens, rights, powers, and remedies shall continue in full force and effect until the Loans and all other Obligations owing or to become owing from Borrower to Lender shall have been fully satisfied, and all Liens, rights, powers, and remedies provided for herein and in the other Loan Documents are cumulative and none are exclusive. SECTION 10. MISCELLANEOUS 10.1. INDEMNITY. Borrower hereby agrees to indemnify Lender and hold Lender harmless from and against any liability, loss, damage, suit, action or proceeding ever suffered or incurred by Lender as the result of Borrower's failure to observe, perform or discharge Borrower's duties hereunder. Without limiting the generality of the foregoing, this indemnity shall extend to any claims at any time asserted against Lender by any Person under any Environmental Laws. Additionally, if any taxes (excluding taxes imposed upon or measured by the net income of Lender and Lender's corporate franchise taxes or similar state taxes imposed on Lender, but including, without limitation, any intangibles taxes, stamp taxes, recording taxes, documentary taxes or other franchise taxes) shall be payable by Lender, Borrower or Guarantor on account of the execution, delivery, issuance or recording of any of the Loan Documents, or the granting of any Liens or the creation of any of the Obligations thereunder, by reason of any existing or hereafter enacted federal or state statute, Borrower will pay all such taxes, including, but not limited to, any interest and penalties thereon, and will indemnify and hold Lender harmless from and against liability in connection therewith. The obligations of Borrower under this Section 10.1 shall survive the payment in full of the Obligations and the termination of this Agreement. 10.2. MODIFICATION OF AGREEMENT: Sale of Interest. This Agreement may not be modified, altered or amended, except by an agreement in writing signed by Borrower and Lender. Lender may at any time grant to one or more banks or other institutions participating interests in the Loans. Lender may at any time assign to one or more banks or other institutions all, or a proportionate part, of its rights and obligations under this Agreement, with and subject to the consent of the Borrower (which consent shall not be unreasonably withheld or delayed). 10.3. REIMBURSEMENT OF EXPENSES. If, at any time or times prior or subsequent to THE date hereof, regardless of whether or not an Event of Default then exists or any of the transactions contemplated hereunder are concluded, Lender employs counsel for advice or other representation, or incurs legal expenses or other costs or out-of-pocket expenses in connection with: (A) the negotiation and preparation of this Agreement or any of the other Loan Documents; (B) any amendment of or modification of this Agreement or any of the other Loan Documents; (C) the filing or recording of this Agreement or any of the other Loan Documents (including, without limitation, filing fees, recording fees, documentary stamps and recording taxes); (D) the administration of this Agreement or any of the other Documents and the transactions contemplated hereby and thereby; (E) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Lender, Borrower, Guarantor or any other Person) in any way relating to the Collateral, this Agreement, the Guaranty or any of the other Loan Documents or Borrower's affairs; (I;) any attempt to enforce any rights or remedies of Lender 43 against Borrower, Guarantor or any other Person which may be obligated to Lender by virtue of this Agreement, the Guaranty or any of the other Loan Documents, including, without limitation, any account debtors; or (G) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon any of the Collateral; then, in any such event, the attorneys' fees arising from such services and all expenses, costs, charges and other fees of such counsel or of Lender or relating to any of the events or actions described in this Section shall be payable, ON DEMAND, by Borrower to Lender, and shall be additional Obligations hereunder secured by the Collateral. 10.4. INDULGENCES NOT WAIVERS. Lender's failure, at any time or times hereafter, to require strict performance by Borrower of any provision of this Agreement shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance therewith. Any suspension or waiver by Lender of an Event of Default by Borrow or this Agreement or any of the other Loan Documents shall not suspend, waive or affect any other Event of Default by Borrower under this Agreement or any of the other Loan Documents, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of Borrower contained in this Agreement or any of the other Loan Documents and no Event of Default by Borrower under this Agreement or any of the other Loan Documents shall be deemed to have been suspended or waived by Lender, unless such suspension or waiver is by an instrument in writing specifying such suspension or waiver and is signed by a duly authorized representative of Lender and directed to Borrower. 10.5. SEVERABILITY. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 10.6. SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and the Security Documents shall be binding upon and inure to the benefit of the successors and assigns of Borrower and Lender; provided, however, that Borrower may not sell, assign or transfer any interest in this Agreement or any of the other Loan Documents, or any portion thereof, including, without limitation, Borrower's rights, title, interests, remedies, powers and duties hereunder and thereunder. 10.7. CUMULATIVE EFFECT. The provisions of the Other Agreements and the Security Documents are hereby made cumulative with the provisions of this Agreement. 10.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed IN ANY NUMBER OF counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. 44 10.9. Notice. All notices, requests and demands to or upon a party hereto shall be in writing and shall be sent by certified or registered mail, return receipt requested, personal delivery against receipt or by telecopier or other facsimile transmission and, unless otherwise expressly provided herein, shall be deemed to have been validly served, given or delivered when delivered against receipt or three (3) Business Days after deposit in the U.S. mail, postage prepaid, or, in the case of facsimile transmission, when received at the office of the noticed party, addressed as follows: (A) If to Lender: The CIT Group/Equipment Financing, Inc. Suite 600 900 Ashwood Parkway Atlanta, Georgia 30338 Attention: Vice President of Credit Telecopier No.: 770-551-7866 (B) If to Borrower: Astrotech Space Operations, Inc. 12510 Prosperity Drive, Suite 100 Silver Spring, Maryland 20904 Attention: Margaret E. Grayson Telecopier No.: 703-448-0719 or to such other address as each party may designate for itself by like notice given in accordance with this Section. Any written notice that is not sent in conformity with the provisions hereof shall nevertheless be effective on the date that such notice is actually received by the noticed party. 10.10. ENTIRE AGREEMENT. This Agreement and the other Loan Documents, together with all other instruments, agreements and certificates executed by the parties in connection therewith or with reference thereto, embody the entire understanding and agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and inducements, whether express or implied, oral or written. 10.11. LENDER'S CONSENT. Unless otherwise expressly provided in this Agreement, whenever Lender's consent is required to be obtained under this Agreement or any of the other Loan Documents, as a condition to any action, inaction, condition or event, Lender shall be authorized to give or withhold such consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral security for the Obligations, the payment of money or any other matter. 10.12. GOVERNING LAW. This Agreement has been delivered at, and shall be effective when accepted by Lender in, New York, New York, whereupon this Agreement shall be deemed a contract made in New York and shall be governed by and construed in accordance with the laws of the State of New York; provided, however, that if any of THE COLLATERAL SHALL BE LOCATED in any jurisdiction other than New York, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of Lender's Lien upon such Collateral and 45 the enforcement of Lender's other remedies in respect of such Collateral to THE EXTENT THAT THE LAWS of such jurisdiction are different from or inconsistent with the laws of New York. 10.13. Consent to Forum. As part of the consideration for new value received, and regardless of any present or future domicile or principal place of business of Borrower or Lender, Borrower hereby consents and agrees that the United States District Court for the Southern District of New York, New York Division, shall have jurisdiction to hear and determine any claims or disputes between Borrower and Lender pertaining to this Agreement or to any matter arising out of or related to this Agreement; provided, however, Lender may, at its option, commence any action, suit or proceeding in any other appropriate forum or jurisdiction to obtain possession of or foreclosure upon any Collateral, to obtain equitable relief, to enforce any judgment or order obtained by Lender against Borrower or with respect to any Collateral, to enforce any other right or remedy under this Agreement or Applicable Law or to obtain any other relief deemed necessary or appropriate by Lender. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection which Borrower may have based upon lack of personal jurisdiction, improper venue or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaint and other process issued in any such action or suit and agrees that service of such summons, complaint and other process may be made by registered or certified mail addressed to Borrower at the address set forth in this Agreement and that service so made shall be deemed completed upon the earlier of Borrower's actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid. Nothing in this Agreement shall be deemed or operate to affect the right of Lender to serve legal process in any other manner permitted by Applicable Law. 10.14. GENERAL WAIVERS BY BORROWER. Borrower waives (i) presentment, demand and protest and notice of presentment, protest, default, non payment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper and guaranties at any time held by Lender on which Borrower may in any way be liable and hereby ratifies and confirms whatever Lender may do in this regard; (ii) notice prior to Lender's taking possession or control of any of the Collateral or any bond or security which might be required by any court prior to allowing Lender to exercise any of Lender's remedies, including the issuance of an immediate writ of possession; (iii) the benefit of all valuation, appraisement and exemption laws; and (iv) notice of Lender's acceptance hereof. 10.15. JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVER IS A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVER IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS 46 JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 47 IN WITNESS WHEREOF, this Agreement has been duly executed under seal on the day and year specified at the beginning hereof. ATTEST: ASTROTECH SPACE OPERATIONS, INC. ("borrower") /s/ William S. Dawson By: /s/ Margaret E. Grayson Secretary Margaret E. Grayson, Vice President [CORPORATE SEAL] THE CIT GROUP EQUIPMENT FINANCING, INC. ("Lender") BY: Title: Vice President 48 EXHIBIT A-1 SECURED PROMISSORY NOTE (NOTE NO. 1) $10,400,000.00 July 14, 1997 FOR VALUE RECEIVED, the undersigned ASTROTECH SPACE OPERATIONS, INC. (hereinafter "Borrower"), a Delaware corporation, hereby promises to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York corporation (hereinafter "Lender"), in such coin or currency of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, the principal sum of TEN MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($10,400,000.00), together with interest from and after the date hereof on so much of the principal balance hereof as may be outstanding and unpaid from time to time at the rate of interest in effect from time to time pursuant to Section 3.1 of the Loan Agreement (as hereafter defined). This Secured Promissory Note (this "Note") is "Note No. 1" referred to in, and is issued pursuant to, that certain Loan and Security Agreement ("Loan Agreement"), dated the date hereof, between Borrower and Lender, the provisions of which are by this reference incorporated herein, and is entitled to all of the benefits and security of the Loan Agreement and the other Loan Documents. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement. . Interest hereunder shall be computed on the basis of actual days elapsed over a period of a 360-day year unless reference to a 365 or a 366-day year is necessary in order not to exceed the highest rate of interest that may be charged or collected under Applicable Law. Upon and after the occurrence of an Event of Default, the outstanding principal balance of this Note shall bear interest at a rate per annum equal to the Default Rate. In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under Applicable Law. It is the intent hereof that Borrower not pay or contract to pay, and that Lender not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by Borrower under Applicable Law. Any acceleration of indebtedness, if elected by Lender, shall be subject to all Applicable Law, including laws relating to rebate and refund of unearned charges. The principal amount and accrued interest of this Note shall be due and payable on the dates and in the manner hereinafter set forth: (a) Interest shall be due and payable quarterly, in arrears, on the first day of each quarter, commencing on October 1, 1997, and continuing until such time as the full 49 principal BALANCE HEREOF, TOGETHER WITH ALL OTHER AMOUNTS OWING HEREUNDER, SHALL HAVE SEEN PAID IN FULL; (b) Principal shall be due and payable commencing on October 1, 1997, and continuing on the first day of each quarter thereafter to and including the first day of April, 2002, in installments of $519,710.00) each; and (c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder shall be due and payable on July 1, 2002. If any payment is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day, and interest shall continue to accrue on the principal amount of such payment until paid. The acceptance of payment of any installment hereof by Lender after the date on which such installment becomes due as set forth herein shall not be held to establish a custom or to constitute a waiver of any rights of Lender to enforce prompt payment of any further installment. Borrower shall prepay this Note as provided in Section 2.3 of the Loan Agreement. Borrower may not voluntarily prepay this Note except to the extent permitted by Section 2.4 of the Loan Agreement. The occurrence of an Event of Default, including, without limitation, Borrower's failure to pay any installment of principal or interest on this Note in full on the due date thereof, shall constitute an event of default under this Note and shall entitle Lender, at its option, upon or at any time after the occurrence and during the continuance of any such event of default, to declare the then outstanding principal balance and accrued interest hereof to be, and the same shall thereupon become, immediately due and payable without notice to or demand upon Borrower, all of which Borrower hereby expressly waives. If this Note is collected by or through an attorney at law, then Borrower shall be obligated to pay, in addition to the principal balance and accrued interest hereof, reasonable attorney's fees, not to exceed fifteen percent (15 %) of such principal and interest, and court costs. To the fullest extent permitted by Applicable Law, Borrower, for itself and its legal representatives, successors and assigns, expressly waives presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, diligence in collection, and the benefit of any exemption or insolvency laws. Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under Applicable Law, but if any provision of this Note shall be prohibited or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining PROVISIONS OF THIS NOTE. NO DELAY OR FAILURE ON THE PART OF LENDER IN THE EXERCISE OF ANY RIGHT or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by Lender of any right or 50 remedy preclude any other right or remedy. Lender, at its option, may enforce its rights against any collateral securing this Note without enforcing its rights against Borrower, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to Borrower. Borrower agrees that, without releasing or impairing Borrower's liability hereunder, Lender may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party secondarily liable for the indebtedness evidenced by this Note. This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, and is intended to take effect as an instrument under seal. BORROWER WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY COUNTERCLAIM OR SET-OFF OF ANY KIND IN ANY ACTION, SUIT OR PROCEEDING RELATING TO THIS NOTE. IN WITNESS WHEREOF, Borrower has caused dais Note to be duly executed, sealed and delivered on the date first above written. ATTEST: ASTROTECH SPACE OPERATIONS, INC., ("Borrower") Secretary By: Name: Title: [CORPORATE SEAL] 51 EXHIBIT A-2 SECURED PROMISSORY NOTE (NOTE NO. 2) $_____________________ ________ __, 1997 FOR VALUE RECEIVED, the undersigned ASTROTECH SPACE OPERATIONS, INC. (hereinafter "Borrower"), a Delaware corporation, hereby promises to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York corporation (hereinafter "Lender"), in such coin or currency of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, the principal sum of __________________ AND____/100THS DOLLARS ($___________ ), together with interest from and after the date hereof on so much of the principal balance hereof as may be outstanding and unpaid from time to time at the rate of interest in effect from time to time pursuant to Section 3.1 of the Loan Agreement (as hereafter defined). This Secured Promissory Note (this "Note") is "Note No. 2" referred to in, and is issued pursuant to, that certain Loan and Security Agreement ("Loan Agreement"), dated July 14, 1997, between Borrower and Lender, the provisions of which are by this reference incorporated herein, and is entitled to all of the benefits and security of the Loan Agreement and the other Loan Documents. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement. Interest hereunder shall be computed on the basis of actual days elapsed over a period of a 360-day year unless reference to a 365 or a 366-day year is necessary in order not to exceed the highest rate of interest that may be charged or collected under Applicable Law. Upon and after the occurrence of an Event of Default, the outstanding principal balance of this Note shall bear interest at a rate per annum equal to the Default Rate. In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under Applicable Law. It is the intent hereof that Borrower not pay or contract to pay, and that Lender not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by Borrower under Applicable Law. Any acceleration of indebtedness, if elected by Lender, shall be subject to all Applicable Law, including laws relating to rebate and refund of unearned charges. The principal amount and accrued interest of this Note shall be due and payable on the dates and in the manner hereinafter set forth: (d) Interest shall be due and payable quarterly, in arrears, on the FIRST DAY OF each , commencing on , 1997, and continuing until such TIME AS the full principal 52 balance hereof, together with all other amounts owing hereunder, shall have been paid in full; 53 (e) Principal shall be due and payable commencing on, 1997, and continuing on the first day of each quarter thereafter to and including the first day of , 2002, in installments of $ ) each; and (f) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder shall be due and payable on the maturity date of Loan No. 1. If any payment is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day, and interest shall continue to accrue on the principal amount of such payment until paid. The acceptance of payment of any installment hereof by Lender after the date on which such installment becomes due as set forth herein shall not be held to establish a custom or to constitute a waiver of any rights of Lender to enforce prompt payment of any further installment. Borrower shall prepay this Note as provided in Section 2.3 of the Loan Agreement. Borrower may not voluntarily prepay this Note except to the extent permitted by Section 2.4 of the Loan Agreement. The occurrence of an Event of Default, including, without limitation, Borrower's failure to pay any installment of principal or interest on this Note in full on the due date thereof, shall constitute an event of default under this Note and shall entitle Lender, at its option, upon or at any time after the occurrence and during the continuance of any such event of default, to declare the then outstanding principal balance and accrued interest hereof to be, and the same shall thereupon become, immediately due and payable without notice to or demand upon Borrower, all of which Borrower hereby expressly waives. If this Note is collected by or through an attorney at law, then Borrower shall be obligated to pay, in addition to the principal balance and accrued interest hereof, reasonable attorney's fees, not to exceed fifteen percent (15 %) of such principal and interest, and court costs. Time is of the essence of this Note. To the fullest extent permitted by Applicable Law, Borrower, for itself and its legal representatives, successors and assigns, expressly waives presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, diligence in collection, and the benefit of any exemption or insolvency laws. Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under Applicable Law, but if any provision of this Note shall be prohibited or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note. No delay or failure on the part of Lender in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by Lender of any right or remedy preclude any other right or remedy. Lender, at its option, may enforce its rights against any collateral 54 securing this Note without enforcing its rights against Borrower, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to Borrower. Borrower agrees that, without releasing or impairing Borrower's liability hereunder, Lender may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party secondarily liable for the indebtedness evidenced by this Note. This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, and is intended to take effect as an instrument under seal. BORROWER WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY COUNTERCLAIM OR SET-OFF OF ANY KIND IN ANY ACTION, SUIT OR PROCEEDING RELATING TO THIS NOTE. IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed, sealed and delivered on the date first above written. ATTEST: ASTROTECH SPACE OPERATIONS, INC., ("Borrower") By: Secretary Name: Title: [CORPORATE SEAL] 55 EXHIBIT A-3 SECURED PROMISSORY NOTE (NOTE NO. 3) $________________ __________ __, 1997 FOR VALUE RECEIVED, the undersigned ASTROTECH SPACE OPERATIONS, INC. (hereinafter "Borrower"), a Delaware corporation, hereby promises to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York corporation (hereinafter "Lender"), in such coin or currency of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment the principal sum of __________________ AND____/100THS DOLLARS ($___________ ), together with interest from and after the date hereof on so much of the principal balance hereof as may be outstanding and unpaid from time to time at the rate of interest in effect from time to time pursuant to Section 3.1 of the Loan Agreement (as hereafter defined). This Secured Promissory Note (this "Note") is "Note No. 3" referred to in, and is issued pursuant to, that certain Loan and Security Agreement ("Loan Agreement"), dated July 14, 1997, between Borrower and Lender, the provisions of which are by this reference incorporated herein, and is entitled to all of the benefits and security of the Loan Agreement and the other Loan Documents. All capitalized terms used herein, unless otherwise specifically defied in this Note, shall have the meanings ascribed to them in the Loan Agreement. Interest hereunder shall be computed on the basis of actual days elapsed over a period of a 360-day year unless reference to a 365 or a 366-day year is necessary in order not to exceed the highest rate of interest that may be charged or collected under Applicable Law. Upon and after the occurrence of an Event of Default, the outstanding principal balance of this Note shall bear interest at a rate per annum equal to the Default Rate. In no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permissible under Applicable Law. It is the intent hereof that Borrower not pay or contract to pay, and that Lender not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by Borrower under Applicable Law. Any acceleration of indebtedness, if elected by Lender, shall be subject to all Applicable Law, including laws relating to rebate and refund of unearned charges. The principal amount and accrued interest of this Note shall be due and payable on the DATES and in the manner hereinafter set forth: (d) Interest shall be due and payable quarterly, in arrears, on the first day of each , commencing on , 1997, and continuing until such time as the full principal balance hereof, together with all other amounts owing hereunder, shall have been paid in full; 56 (e) Principal shall be due and payable commencing on , 1997, and continuing on the first day of each quarter thereafter to and including the first day of , 2002, in installments of $ ) each; and (f) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder shall be due and payable on the maturity date of Loan No. 1. If any payment is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day, and interest shall continue to accrue on the principal amount of such payment until paid. The acceptance of payment of any installment hereof by Lender after the date on which such installment becomes due as set forth herein shall not be held to establish a custom or to constitute a waiver of any rights of Lender to enforce prompt payment of any further installment. Borrower shall prepay this Note as provided in Section 2.3 of the Loan Agreement. Borrower may not voluntarily prepay this Note except to the extent permitted by Section 2.4 of the Loan Agreement. The occurrence of an Event of Default, including, without limitation, Borrower's failure to pay any installment of principal or interest on this Note in full on the due date thereof, shall constitute an event of default under this Note and shall entitle Lender, at its option, upon or at any time after the occurrence and during the continuance of any such event of default, to declare the then outstanding principal balance and accrued interest hereof to be, and the same shall thereupon become, immediately due and payable without notice to or demand upon Borrower, all of which Borrower hereby expressly waives. If this Note is collected by or through an attorney at law, then Borrower shall be obligated to pay, in addition to the principal balance and accrued interest hereof, reasonable attorney's fees, not to exceed fifteen percent (15%) of such principal and interest, and court costs. Time is of the essence of this Note. To the fullest extent permitted by Applicable Law, Borrower, for itself and its legal representatives, successors and assigns, expressly waives presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice of protest, presentment for the purpose of accelerating maturity, diligence in COLLECTION, and the benefit of any exemption or insolvency laws. Wherever possible each provision of this Note shall be interpreted in such a manner as to be effective and valid under Applicable Law, but if any provision of this Note shall be prohibited or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or remaining provisions of this Note. No delay or failure on the part of Lender in the exercise of any right or remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise by Lender of any right or remedy preclude any other right or remedy. Lender, at its option, may enforce its rights against any collateral securing this Note without enforcing its rights against Borrower, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to 57 Borrower. Borrower agrees that, without releasing or impairing Borrower's liability hereunder, Lender may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party secondarily liable for the indebtedness evidenced by this Note. This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, and is intended to take effect as an instrument under seal. BORROWER WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY COUNTERCLAIM OR SET-OFF OF ANY KIND IN ANY ACTION, SUIT OR PROCEEDING RELATING TO THIS NOTE. 58 IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed, sealed and delivered on the date first above written. ATTEST: ASTROTECH SPACE OPERATIONS, INC., ("Borrower") By: Secretary Name: Title: [CORPORATE SEAL] 59 EXHIBIT B PERMITTED LIENS
ITEM(S) INCEPTION TERM ORIGINAL LIEN LESSOR DATE (IN MONTHS) AMOUNT COVERS - ---------------------------------------------------------------------------------- Copelco Credit Corp. Jan-97 36 19,450 Copier/Fax Copelco Credit Corp. Jan-97 35 23,151 Copier/Fax Caterpillar Financial Sep-94 60 24,232 Forklift Nations Bank Dealer Leasing Jun-94 8 19,067 Pick up Truck Finova Capital Corp. Jul-94 84 249,490 Computer & Software MARCO Leasing Aug-95 80 56,722 Flatbed Truck Raymond Leasing Jun-94 80 57,465 Reach Trucks Grentree Vendor Services Apr-96 24 15,339 Fire Bend Test Machine Great American Leasing Sep-96 24 7,776 Computer Great American Leasing Oct-96 12 4,197 Computer Great American Leasing Nov-96 12 4,897 Computer Raymond Leasing Jun-94 60 28,732 Reach Trucks Ikon Capital Jan-96 48 13,964 Copier/Fax Mita Financial Services Apr-96 48 11,568 Copier/Fax Commercial Equipment Leasing Aug-97 60 45,538 4 Copiers Toyota Motor Credit Jul-97 36 12,077 Pick up Truck
60 EXHIBIT C BUSINESS LOCATIONS Borrower has the following business locations: 1. Astrotech Space Operations, Inc. 12510 Prosperity Drive Suite 100 Silver Spring, Maryland 20904 2. Astrotech Space Operations, Inc. 1515 Chaffee Drive Titusville, Florida 3. Astrotech Space Operations, Inc. P.O. Box 5097 Tangair Road at Red Road Vandenburg Air Force Base, California 93437 61 EXHIBIT D LITIGATION The following is a description of all pending and overtly threatened litigation against Borrower or any of its Properties: None. 62 EXHIBIT E COMPLIANCE CERTIFICATE SPACEHAB, Incorporated 1595 Spring Hill Road Suite 360 Vienna, Virginia 22182 _______ _, 199_ TO: The CIT Group/Equipment Financing, Inc. 1211 Avenue of the Americas 13th Floor New York, New York 10036 Attention: The undersigned, the chief financial officer of ASTROTECH SPACE OPERATIONS, INC. ("Borrower"), gives this certificate to THE CIT GROUP/EQUIPMENT FINANCING, INC. ("Lender") in accordance with the requirements of Section 7.1 (I) of that certain Loan and Security Agreement, dated July _, 1997, between Borrower and Lender ("Loan Agreement"). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement: (1) Based upon my review of the balance sheets and statements of income of Borrower for the month ending , 199_, copies of which are attached hereto, I hereby certify that: (a) The Adjusted Tangible Net Worth is ________$ (b) The Coverage Ratio is __________ to 1; and (c) The ratio of total Indebtedness to Adjusted Tangible Net Worth is __________ to 1. (2) No Default exists on the date hereof, other than: _______________________ (if none, so state); and (3) No Event of Default exists on the date hereof, other than: ______________ (If none, so state). Very truly yours, Name: Title: 63 EXHIBIT G Prepared by and after recording return to: Robert A. Crosby, Esq. Parker, Hudson, Rainer & Dobbs LLP 1500 Marquis Two Tower 285 Peachtree Center Avenue, N.E. Atlanta, Georgia 30303 LESSOR'S AGREEMENT Re: Lease no. SPCVAN-2-94-0001 dated October 6, 1993, recorded in the Office of the of Santa Barbara County, California, at Deed Book ______, Page _____ In consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which the undersigned hereby acknowledges, the undersigned hereby certifies and agrees with Lender as follows: 1. Definitions. For purposes of this Agreement, the following terms shall be defined as set forth below: Lender. The CIT Group/Equipment Financing, Inc., a New York corporation, and its successors and assigns. Lender's Address: The CIT Group/Equipment Financing, Inc. 600 Ashwood Parkway 6th Floor Atlanta, Georgia 30338 Attention: Vice President of Credit Collateral. All equipment, furniture and fixtures of Lessee, now owned OF hereafter acquired, and all substitutions and replacements thereof, in which Lessee has granted a security interest to Lender to secure the financial accommodations under the Loan Agreement, some of which Collateral is or may be located from time to time on the Property. Lessor. Department of the Air Force. Lease. The above-referenced Lease Agreement between Lessor and Lessee, together with the amendments thereto as of the date hereof Leasehold Deed of Trust. That certain deed of trust and security agreement to be executed by Lessee and to be delivered to Lender conveying the Property. Property. All that tract or parcel of land located at Vandenberg Air Force Base, Lompoc, Santa Barbara County, California, and being more particularly described in Exhibit ~A" hereto attached and incorporated herein by this reference. 64 Lessee. Astrotech Space Operations, Inc., a Delaware corporation, as successor to AstroTech Space Operations, L.P. 2. Lender's Security Interest in Collateral. Lessor consents to Lender's security interest in the Collateral. Lender's security interests in the Collateral shall be superior to any interest which the Lessor may at any time have therein. For so long as Lender has a security interest in any of the Collateral, Lessor will not assert against any of the Collateral any statutory, common law, contractual or possessory lien, including, without limitation, any right of levy or distraint for rent, all of which Lessor hereby subordinates in favor of Lender. Lessor agrees that none of the Collateral shall be deemed a fixture or a part of the Property, but shall at all times be considered personal property, and Lessor disclaims any interest in the Collateral as fixtures. Lessor agrees that Lender may enter upon the Property at any time or times, during normal business hours, to inspect or remove any of the Collateral therefrom, without charge. Lender shall repair any physical damage directly caused to the Property by such removal. Lessor will not hinder Lender's actions in enforcing its liens and remedies with respect to the Collateral. Lessor agrees that Lender may conduct public or private sales of Collateral at the Property and that interested parties will be permitted access to the Property during normal business hours for the purpose of inspecting the Collateral prior to any such sale. 3. Consent to Leasehold Deed of Trust. Lessor hereby consents to the execution and delivery by Lessee of the Leasehold Deed of Trust and other collateral documents executed in accordance therewith. Lessor agrees that such conveyance or assignment and any sale of the Lease and of Lessee's rights in any proceedings for the foreclosure of the Leasehold Deed of Trust, or the transfer of the Lease and Lessee's rights in lieu of foreclosure shall not constitute or result in the occurrence of a default or event of default under the Lease. Lender or any other acquirer of Lessee's rights pursuant to foreclosure, transfer in lieu of foreclosure or other proceeding or pursuant to a New Lease (as hereinafter defined) may, without consent of Lessor, sell and assign the Lease and the Lessee's rights on such terms and to such persons or entities as are acceptable to Lender or such acquirer and thereafter shall be relieved of all obligations under the Lease. 4. Limited Obligations of Lender. Lessor acknowledges and agrees that in the event Lender shall succeed to Lessee's interest under the Lease, Lender shall not be responsible or liable for curing any defaults arising under or with respect to the Lease prior to the date on which Lender so succeeds to Lessee's interest. Further, Lender shall be liable only for those obligations of Lessee under the Lease arising and accruing during the period Lender is the owner of Lessee's interest (other than security interest) in the Lease. 5. Notice and Opportunity to Cure. If Lessee defaults under the Lease, Lessor shall, prior to taking any action to remove Lessee from the Property or otherwise exercising its remedies under the Lease, first give written notice to Lender at Lender's Address of such default, and Lessor will allow Lender, at Lender's option, without obligation, sixty (60) days after Lender's receipt of such notice within which to cure or cause Lessee to cure such default. If Lender elects not to cure such default, Lessor will not terminate the Lease or take any action to remove Lessee from the Property so long as the regular installments of rent under the Lease are paid and Lender is diligently prosecuting foreclosure proceedings under the Leasehold Deed of Trust. Lender shall be deemed to be diligently prosecuting such foreclosure proceedings during the pendency of any bankruptcy stay relating to Lessee if Lender diligently seeks a lifting of such stay in order to enable it to undertake and prosecute such foreclosure proceedings to completion. 6. Options to Occupy Property and Enter into New Lease. In the event of termination of the Lease, Lessor shall, in addition to providing the notice of default as required above, provide Lender 65 with written notice that the Lease has been terminated, together with a statement of all sums which would at that time be due under the Lease but for such termination, and of all other defaults, if any, then known to Lessor. At Lender's option, Lessor will: a. permit the Collateral to remain on the Property for a period of up to ninety (90) days following receipt by Lender of such notice of termination from Lessor, subject, however, to the payment to Lessor by Lender of the regular installments of rent due under the Lease for the period of time during which Lender shall elect to use or occupy the Property or elect to keep the Collateral thereon without abandoning same, which rent shall be pro-rated on a per diem basis determined on a 30-day month. Lender shall not be deemed to have assumed nor shall it be liable for any unperformed or unpaid obligations of Lessee under the Lease, other than for the payment of rent described in the preceding sentence; and b. enter into a new lease ("New Lease") of the Property with Lender or its designee for the remainder of the term of the Lease, effective as of the date of termination, at the rent and additional rent, and upon the terms, covenants, and conditions (including all options to renew but excluding requirements which are not applicable or which have already been fulfilled) of the Lease, provided: i. Lender shall make written request upon Lessor for such New Lease within sixty (60) days after the date Lender receives Lessor's notice of termination of the Lease. ii. Lender or its designee shall pay or cause to be paid to Lessor at the time of the execution and delivery of such New Lease any and all sums which would at the time of the termination of the Lease have been due pursuant to the Lease but for such termination; provided, however, that Lender shall have no obligation to pay or cause to be paid any rent, additional rent, or other payment for which Lessor did not give written notice of nonpayment to Lender within thirty (30) days of the date first due. iii. The lessee under any New Lease shall have the same right, title, and interest in and to the Property and the buildings and improvements thereon as Lessee had under the Lease. The lessee under any such New Lease shall be liable to perform the obligations imposed on the lessee by such New Lease only during the period such person or entity has ownership of such leasehold estate. iv. Either (a) any New Lease made pursuant to this paragraph shall be prior to any deed to secure debt, mortgage or other lien, charge, or encumbrance on the Property, or (b) Lessor shall provide to the lessee under the New Lease an instrument reasonably acceptable to such lessee by which the holder of any such deed to secure debt, mortgage, lien or encumbrance shall agree not to terminate or disturb such lessee's possession of the Property except pursuant to the terms of the New Lease. 7. No Merger. So long as the Leasehold Deed of Trust is in existence, the fee title to the Property and the leasehold estate of Lessee created by any Lease shall not merge, but shall remain separate and distinct, notwithstanding the acquisition of said fee title and said leasehold estate by Lessor or by Lessee or by a third party, by purchase or otherwise. 66 8. Miscellaneous. This agreement shall remain in full force and effect until all obligations of Lessee to Lender have been paid and satisfied in full and Lender has terminated its financing agreements with Lessee. The provisions of this agreement may not be modified or terminated orally and shall be binding upon the successors, assigns and representatives of the Lessor, and upon any successor owner or transferee of the Property, and shall inure to the benefit of the Lender and its successors and assigns. This agreement constitutes the entire understanding and agreement of the parties hereto on the subject matter hereof Lessor hereby waives notice of acceptance of this agreement by Lender. IN WITNESS WHEREOF, the undersigned Lessor has caused this instrument to be executed by its duly authorized of officers to be affixed hereto as of , 1997. DEPARTMENT OF THE AIR FORCE ("Lessor") By: Name: Title: STATE OF: COUNTY OF: Before me, , a Notary Public of said County and State, personally appeared , with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), and who, upon oath, acknowledged himself to be the (or other officer authorized to execute the instrument) of the within-named bargainor, a corporation, and that he as such executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as WITNESS my hand and Notarial Seal at office, on this _ day of , 1997. Notary Public My Commission Expires: [NOTARIAL SEAL] 67 EXHIBIT F Prepared by and after recording return to: Robert A. Crosby, Esq. Parker, Hudson, Rainer & Dobbs LLP 1500 Marquis Two Tower 285 Peachtree Center Avenue, N.E. Atlanta, Georgia 30303 LESSOR'S AGREEMENT Re: Sublease Agreement dated April 9, 1991, recorded in the Office of the Clerk of the Circuit Court of Brevard County, Florida, at Deed Book 3123, Page 1776 In consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which the undersigned hereby acknowledges, the undersigned hereby certifies and agrees with Lender as follows: 1. Definitions. For purposes of this Agreement, the following terms shall be defined as set forth below: Lender. The CIT Group/Equipment Financing, Inc., a New York corporation, and its successors and assigns. Lender's Address: The CIT Group/Equipment Financing, Inc. 600 Ashwood Parkway 6th Floor Atlanta, Georgia 30338 Attention: Vice President of Credit Collateral. All equipment, furniture and fixtures of Lessee, now owned or hereafter acquired, and all substitutions and replacements thereof, in which Lessee has granted a security interest to Lender to secure the financial accommodations under the Loan Agreement, some of which Collateral is or may be located from time to time on the Property. Lessor. Eastern American Teak Corporation. Lease. The above-referenced Sublease Agreement between Lessor and Lessee, together with the amendments thereto as of the date hereof. Leasehold Deed of Trust. That certain deed of trust and security agreement to be executed by Lessee and to be delivered to Lender conveying the Property. Property. All that tract or parcel of land located at Brevard County, Florida, and being more particularly described in Exhibit "A" hereto attached and incorporated herein by this reference. Lessee. Spacehab, Incorporated, a Washington corporation. 2. Lender's Security Interest in Collateral. Lessor consents to Lender's security interest in the Collateral. Lender's security interests in the Collateral shall be superior to any interest which the Lessor may at any time have therein. For so long as Lender has a security interest in any of the 68 Collateral, Lessor will not assert against any of the Collateral any statutory, common law, contractual or possessory lien, including, without limitation, any right of levy or distraint for rent, all of which Lessor hereby subordinates in favor of Lender. Lessor agrees that none of the Collateral shall be deemed a fixture or a part of the Property, but shall at all times be considered personal property, and Lessor disclaims any interest in the Collateral as fixtures. Lessor agrees that Lender may enter upon the Property at any time or times, during normal business hours, to inspect or remove any of the Collateral therefrom, without charge. Lender shall repair any physical damage directly caused to the Property by such removal. Lessor will not hinder Lender's actions in enforcing its liens and remedies with respect to the Collateral. Lessor agrees that Lender may conduct public or private sales of Collateral at the Property and that interested parties will be permitted access to the Property during normal business hours for the purpose of inspecting the Collateral prior to any such sale. 3. Consent to Leasehold Deed of Trust. Lessor hereby consents to the execution and delivery by Lessee of the Leasehold Deed of Trust and other collateral documents executed in accordance therewith. Lessor agrees that such conveyance or assignment and any sale of the Lease and of Lessee's rights in any proceedings for the foreclosure of the Leasehold Deed of Trust, or the transfer of the Lease and Lessee's rights in lieu of foreclosure shall not constitute or result in the occurrence of a default or event of default under the Lease. Lessor has obtained all consents, approvals and agreements necessary to the full exercise of Lender's rights hereunder, including, without limitation, any necessary consent, approval or agreement (including a non-disturbance agreement) of the Canaveral Port Authority of Cape Canaveral. Lender or any other acquirer of Lessee's rights pursuant to foreclosure, transfer in lieu of foreclosure or other proceeding or pursuant to a New Lease (as hereinafter defined) may, without consent of Lessor, sell and assign the Lease and the Lessee's rights on such terms and to such persons or entities as are acceptable to Lender or such acquirer and thereafter shall be relieved of all obligations under the Lease. 4. Limited Obligations of Lender. Lessor acknowledges and agrees that in the event Lender shall succeed to Lessee's interest under the Lease, Lender shall not be responsible or liable for curing any defaults arising under or with respect to the Lease prior to the date on which Lender so succeeds to Lessee's interest. Further, Lender shall be liable only for those obligations of Lessee under the Lease arising and accruing during the period Lender is the owner of Lessee's interest (other than security interest) in the Lease. 5. Notice and Opportunity to Cure. If Lessee defaults under the Lease, Lessor shall, prior to taking any action to remove Lessee from the Property or otherwise exercising its remedies under the Lease, first give written notice to Lender at Lender's Address of such default, and Lessor will allow Lender, at Lender's option, without obligation, sixty (60) days after Lender's receipt of such notice within which to cure or cause Lessee to cure such default. If Lender elects not to cure such default, Lessor will not terminate the Lease or take any action to remove Lessee from the Property so long as the regular installments of rent under the Lease are paid and Lender is diligently prosecuting foreclosure proceedings under the Leasehold Deed of Trust. Lender shall be deemed to be diligently prosecuting such foreclosure proceedings during the pendency of any bankruptcy stay relating to Lessee if Lender diligently seeks a lifting of such stay in order to enable it to undertake and prosecute such foreclosure proceedings to completion. 6. Options to Occupy Property and Enter into New Lease. ~ the event of termination of the Lease, Lessor shall, in addition to providing the notice of default as required above, provide Lender with written notice that the Lease has been terminated, together with a statement of all sums which 69 would at that time be due under the Lease but for such termination, and of all other defaults, if any, then known to Lessor. At Lender's option, Lessor will: a. permit the Collateral to remain on the Property for a period of up to ninety (90) days following receipt by Lender of such notice of termination from Lessor, subject, however, to the payment to Lessor by Lender of the regular installments of rent due under the Lease for the period of time during which Lender shall elect to use or occupy the Property or elect to keep the Collateral thereon without abandoning same, which rent shall be pro-rated on a per diem basis determined on a 30-day month. Lender shall not be deemed to have assumed nor shall it be liable for any unperformed or unpaid obligations of Lessee under the Lease, other than for the payment of rent described in the preceding sentence; and b. enter into a new lease ("New Lease") of the Property with Lender or its designee for the remainder of the term of the Lease, effective as of the date of termination, at the rent and additional rent, and upon the terms, covenants, and conditions (including all options to renew but excluding requirements which are not applicable or which have already been fulfilled) of the Lease, provided: i. Lender shall make written request upon Lessor for such New Lease within sixty (60) days after the date Lender receives Lessor's notice of termination of the Lease. ii. Lender or its designee shall pay or cause to be paid to Lessor at the time of the execution and delivery of such New Lease any and all sums which would at the time of the termination of the Lease have been due pursuant to the Lease but for such termination: provided, however, that Lender shall have no obligation to pay or cause to be paid any rent additional rent, or other payment for which Lessor did not give written notice of nonpayment to Lender within thirty (30) days of the date first due. iii. The lessee under any New Lease shall have the same right, title, and interest in and to the Property and the buildings and improvements thereon as Lessee had under the Lease. The lessee under any such New Lease shall be liable to perform the obligations imposed on the lessee by such New Lease only during the period such person or entity has ownership of such leasehold estate. iv. Either (a) any New Lease made pursuant to this paragraph shall be prior to any deed to secure debt, mortgage or other lien, charge, or encumbrance on the Property, or (b) Lessor shall provide to the lessee under the New Lease an instrument reasonably acceptable to such lessee by which the holder of any such deed to secure debt, mortgage, lien or encumbrance shall agree not to terminate or disturb such lessee's possession of the Property except pursuant to the terms of the New Lease. 7. No Merger. So long as the Leasehold Deed of Trust is in existence, the fee title to She Property and the leasehold estate of Lessee created by any Lease shall not merge, but shall remain separate and distinct, notwithstanding the acquisition of said fee tide and said leasehold estate by Lessor or by Lessee or by a third party, by purchase or otherwise. 70 8. Miscellaneous. This agreement shall remain in full force and effect until all obligations of Lessee to Lender have been paid and satisfied in full and Lender has terminated its financing agreements with Lessee. The provisions of tills agreement may not be modified or terminated orally and shall be binding upon the successors, assigns and representatives of She Lessor, and upon any successor owner or transferee of She Property, and shall inure to the benefit of the Lender and its successors and assigns. This agreement constitutes the entire understanding and agreement of the parties hereto on The subject matter hereof. Lessor hereby waives notice of acceptance of this agreement by Lender. IN WITNESS WHEREOF, The undersigned Lessor has caused this instrument to be executed by its duly authorized officers and its corporate seal to be affixed hereto as of ~ 1997. EASTERN AMERICAN TEAK CORPORATION ("Lessor") By: Print Name: Title: 71 STATE OF FLORIDA ) ) COUNTY OF BREVARD ) Before me, , a Notary Public of said County and State, personally appeared , with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), and who, upon oath, acknowledged himself to be the ____________________ (or other officer authorized to execute the instrument) of Eastern American Teak Corporation the within named bargainor, a corporation, and that he as such ___________ executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as ____________________________________. WITNESS my hand and Notarial Seal at office, on this day of , 1997. Notary Public Print Name: My Commission Expires: [NOTARIAL SEAL] EX-10.56 12 HARRISON EMPLOYMENT AGREEMENT. 1 EXHIBIT 10.56 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT This Employment and Non-Interference Agreement (this "Agreement"), is dated as of April 1, 1997 (the "Effective Date"), by and between Dr. Shelley A. Harrison (the "Executive") and SPACEHAB, Incorporated, a Washington corporation (the "Company"). WITNESSETH: WHEREAS, the Company wishes to retain the future services of Executive for the Company; WHEREAS, Executive is willing, upon the terms and conditions set forth in this Agreement, to provide services hereunder; and WHEREAS, the Company wishes to secure Executive's non-interference, upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Nature of Employment Subject to Section 3, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined in Section 3(a)), as Chief Executive Officer of the Company and to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Chairman, Board of Directors of the Company, or such other appropriately authorized or designated executive officer of the Company, provided however, that nothing herein shall require Executive to relocate his principal residence from the Long Island, New York area. 2. Extent of Employment (a) During the Term of Employment, Executive shall perform his obligations hereunder faithfully and to the best of his ability under the direction of the Board of Directors of the Company, or such other appropriately authorized or designated executive officer of the Company, and shall abide by the rules, customs and usages from time to time established by the Company. (b) During the Term of Employment, Executive shall devote such business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations under this Agreement (except for vacation periods 1 2 and reasonable periods of illness or other incapacity), consistent with past practices and norms with respect to similar positions, provided however, that the Company acknowledges that Employee is a General Partner in several venture capital funds and is a director, consultant and/or advisor to certain companies and associations. The Company specifically agrees that such current and future activities of the same general type and scope are permitted under the terms of this Agreement and are not in derogation of Employee's duties and obligations under this Agreement. (c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority. Executive shall act in accordance with the laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority. 3. Term of Employment; Termination (a) The "Term of Employment" shall commence on the Effective Date and shall continue for a term ending on March 31, 2000 (the "Initial Term"), subject to automatic annual renewal for one-year terms thereafter (the "Additional Term"), unless either the Company or Executive notifies the other party of its intent not to renew within ninety (90) days prior to the end of the Initial Term. Should Executive's employment by the Company be earlier terminated pursuant to Section 3(b), the Term of Employment shall end on the date of such earlier termination. (b) Subject to the payments contemplated by Section 3(d), the Term of Employment may be terminated at any time by the Company: (i) upon the death of Executive; (ii) in the event that because of physical or mental disability, Executive is unable to perform and does not perform his duties hereunder, for a continuous period of 90 days, and an experienced, recognized physician specializing in such disabilities certifies as to the foregoing in writing; (iii) for Cause or Material Breach (each as defined in Section 3(d)); (iv) upon the continuous poor or unacceptable performance of Executive's duties to the Company, in the sole judgment of the Board of Directors of the Company, which has remained uncured for a period of 90 days after the delivery of notice by the Company to the Executive of such dissatisfaction with Executive's performance; or 2 3 (v) for any other reason not referred to in clauses (i) through (iv), or for no reason, such that this Agreement shall be construed as terminable at will by the Company. Executive acknowledges that no representations or promises have been made concerning the grounds for termination or the future operation of the Company's business, and that nothing contained herein or otherwise stated by or on behalf of the Company modifies or amends the right of the Company to terminate Executive at any time, with or without Material Breach or Cause. Termination shall become effective upon the delivery by the Company to Executive of notice specifying such termination and the reasons therefor, subject to the requirements for advance notice and an opportunity to cure provided in this Agreement, if and to the extent applicable. (c) Subject to the payments contemplated by Section 3(d), the Term of Employment may be terminated at any time by Executive: (i) upon the death of Executive; (ii) in the event that because of physical or mental disability, Executive is unable to perform and does not perform his duties hereunder, for a continuous period of 90 days, and an experienced, recognized physician specializing in such disabilities certifies as to the foregoing in writing; (iii) as a result of the Company's material reduction in Executive's authority, perquisites, position, title or responsibilities (other than such a reduction by the Company because of a temporary illness or disability or such a reduction which affects all of the Company's senior executives on a substantially equal or proportionate basis as a result of financial results, conditions, prospects, reorganization, workout or distressed condition of the Company), or the Company's willful, material violation of its obligations under this Agreement, in each case, after 30 days' prior written notice by Executive to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation within such 30 days; or (iv) voluntarily or for any reason not referred to in clauses (i) through (iii), or for no reason, in each case, after 90 days' prior written notice to the Company and its Board of Directors. 3 4 (d) For the purposes of this Section 3: "Cause" shall mean any of the following: (i) Executive's conviction of any crime or criminal offense involving the unlawful theft or conversion of substantial monies or other property or any other felony (other than a criminal offense arising solely under a statutory provision imposing criminal liability on the Executive on a per se basis due to the offices held by the Executive); or (ii) Executive's conviction of fraud or embezzlement. "Material Breach" shall mean any of the following: (i) Executive's breach of any of his fiduciary duties to the Company or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company; (ii) Executive's willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by Sections 1 and 2 (other than arising solely due to physical or mental disability); (iii) Executive's habitual drunkenness or substance abuse which materially interferes with Executive's ability to discharge his duties, responsibilities or obligations prescribed by Sections 1 and 2; (iv) Executive's willful, continual and material breach of any noncompetition or confidentiality agreement with the Company, including without limitation, those set forth in Sections 8 and 9 of this Agreement; and (v) Executive's gross neglect of his duties and responsibilities, as determined by the Company's Board of Directors; in each case, for purposes of clauses (i) through (v), after the Company or the Board of Directors has provided Executive with 30 days' written notice of such circumstances and the possibility of a Material Breach, and Executive fails to cure such circumstances and Material Breach within those 30 days. (i) In the event Executive's employment is terminated pursuant to Section 3(b)(i) [death], 3(b)(ii) [disability] or 3(b)(v) [any other reason or no reason] or 3(c)(i) [death], 3(c)(ii) [disability] or 3(c)(iii) [material reduction], the Company will: (A) pay to Executive (or his estate or representative) the full amounts to which the Executive would be entitled to under Section 4(a) for the period from effectiveness of termination through the eighteenth month anniversary of termination; and (B) pay to Executive (or his estate or representative) the benefits described in Section 6 through the eighteenth month anniversary of termination. Payment of the amounts and provision of the benefits described above will be made in accordance with the timetable and schedule for such payments contemplated therefor as if such termination did not occur, and will be subject to the other provisions of this Agreement, including Section 3(g) and Sections 8 and 9. If the Company makes the payments required by this Section 3(d)(i), such payments will constitute severance and liquidated damages, and the Company will not be obligated to pay any further amounts to Executive under this Agreement or otherwise be liable to Executive in connection with any termination. 4 5 (ii) In the event Executive's employment is terminated pursuant to Section 3(b)(iii) [Cause or Material Breach], 3(b)(iv) [poor performance], or 3(c)(iv) [voluntary], the Company will not be obligated to pay any further amounts to Executive under this Agreement. (e) In the event the Term of Employment is terminated and the Company is obligated to make payments to Executive pursuant to Section 3(d)(i), Executive shall not be under a duty to seek to obtain alternative employment; and if Executive thereafter obtains alternative employment, the Company's payment obligations under Section 3(d)(i), including its obligation to provide insurance coverage, if any, will not be mitigated or reduced by Executive's compensation under such alternative employment. (f) In the event the Term of Employment is terminated and the Company is obligated to make payments pursuant to Section 3(d)(i), Executive hereby waives any and all claims against the Company and its respective officers, directors, employees, agents, or representatives, stockholders and affiliates relating to his employment during the term hereof and this Agreement. (g) Termination of the Term of Employment will not terminate Sections 3(d), 3(f), and 8 through 22. 4. Compensation During the Term of Employment, the Company shall pay to Executive: (a) As base compensation for his services hereunder, in bi-monthly installments, a base salary at a rate in the first year of this Agreement of $275,000 per annum, in the second year of the Agreement of $300,000 per annum and in the third year of the Agreement of $325,000. Such amounts may be increased (but not decreased) annually at the discretion of the Compensation Committee of the Board of Directors based upon an annual review by the Compensation Committee of the Board of Directors of Executive's performance. (b) An annual bonus, if any, based on Executive's performance as determined and approved by the Compensation Committee of the Board of Directors. 5. Reimbursement of Expenses During the Term of Employment, the Company shall pay all expenses, including without limitation, transportation, lodging and food for Executive to travel between his home and the Company's headquarters and to any of its other offices, to attend conventions, conferences and meetings that the Company determines are necessary or in the best interest of the Company, and for any ordinary and reasonable expenses incurred by Executive in the conduct of the Business of the Company. 5 6 6. Benefits During the Term of Employment, Executive shall be entitled to benefits (including health, disability, pension and life insurance benefits consistent with Company policy, or as increased from time to time), in each case, in accordance with guidelines or established from time to time, by the Board of Directors for senior executives of the Company. 7. Stock Options As a condition of entering into this Agreement, outstanding stock options held by Executive will be treated as follows: 1. On January 20, 1997, the 120,000 options granted to Executive in October 1995 were cancelled and an additional 60,000 options were issued at an exercise price of $5.75. These options were vested immediately. The Company also committed that an additional 60,000 options will be granted to Executive at the Compensation Committee meeting to be held in August 1997 when annual grants of options to employees are to be considered. The exercise price for these options will be at fair market value at the time of grant and they will be immediately vested. 2. With reference to the 331,000 options granted in April and August 1996, said options shall remain outstanding and an additional 231,700 options shall be granted to Executive on April 25, 1997 with an exercise price equal to the closing market price on that date. On that date said options shall be fully vested. 6 7 8. Confidential Information (a) Executive acknowledges that his employment hereunder gives him access to Confidential Information relating to the Company's Business and its customers which must remain confidential. Executive acknowledges that this information is valuable, special, and a unique asset of the Company's Business, and that it has been and will be developed by the Company at considerable effort and expense, and if it were to be known and used by others engaged in a Competitive Business, it would be harmful and detrimental to the interests of the Company. In consideration of the foregoing, Executive hereby agrees and covenants that, during and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for Executive's own benefit or for the benefit of anyone other than the Companies, Confidential Information (as defined in Section 11), whether prepared by Executive or not; provided, however, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in Section 11). Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use his best efforts to cause all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; provided, however, that in the event disclosure is required by applicable law, Executive shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that the Company may seek an appropriate protective order. At the request of the Company, Executive agrees to deliver to the Company, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptly disclose such Confidential Information to the Company and perform all actions reasonably requested by the Company to establish and confirm such exclusive ownership. (b) In the event that Executive breaches his obligations in any material respect under this Section 8, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to Executive under this Agreement. (c) The terms of this Section 8 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor. 9. Non-Interference 7 8 (a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Company and its Confidential Information and the capabilities of individuals employed by or affiliated with the Company, and that interference in these relationships would cause irreparable injury to the Company. In consideration of this Agreement, Executive covenants and agrees that: (i) During the Restricted Period (which shall not include any period of violation of this Agreement by the Executive), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, in any Competitive Business without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of Executive referred to above occur or are performed within or without the Market or (C) whether Executive resides, or reports to an office, within or without the Market; provided, however, that (x) Executive may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with a successor company to the Company. (ii) During the Restricted Period (which shall not include any period of violation of this Agreement by Executive), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person which has a business relationship with the Company or had a business relationship with the Company within the twenty-four (24) month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Company, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within six months prior to the date Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Company. Notwithstanding the foregoing, nothing herein shall prevent Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity. 8 9 (iii) The scope and term of this Section 9 would not preclude him from earning a living with an entity that is not a Competitive Business. (b) The terms of this Section 9 shall survive termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor. 10. Inventions (a) Each invention, improvement or discovery made or conceived by Executive, either individually or with others, during the term of his employment with the Company, which invention, improvement or discovery is related to any of the lines of business or work of the Companies, any projected or potential activities which the Companies have investigated or hereinafter investigates, or which result from or are suggested by any service performed by Executive for the Company, whether patentable or not, shall be promptly and fully disclosed by Executive to the Company. Executive assigns each such invention, improvement or discovery, and the patents thereof, or related thereto, to the Company. Executive shall, during the term of his employment with the Company and thereafter without charge to the Company, but at the request and expense of the Company, assist the Company in obtaining or vesting in itself patents upon such improvements and inventions. All such inventions, improvements or discoveries shall at all times become and remain the exclusive property of the Company. Executive represents that he does not claim ownership of any inventions, improvements, formulae or discoveries which are excluded from this Agreement. (b) In the event that Executive breaches his obligations in any material respect under Sections 8, 9 or this Section 10, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to Executive under this Agreement. 11. Definitions "Business" means (a) the design, manufacture, lease and operation of pressurized habitable space capsules and those other businesses and activities that are described in the Company's Form 10-K for the fiscal year ended June 30, 1996, or (b) any similar, incidental or related business conducted or pursued by, or engaged in, or proposed to be conducted or pursued by or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment. "Cause" is defined in Section 3(d). "Companies" means the Company and any of its direct or indirect subsidiaries, now existing or hereafter existing. "Company" is defined in the introduction. 9 10 "Competitive Business" means any business which competes, directly or indirectly, with the Business in the Market. "Confidential Information" means any trade secret, confidential study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how", trade secrets, customer lists, details of client or consultant contracts, pricing policies, sales techniques, confidential information relating to suppliers, information relating to the special and particular needs of the Companies' customers operational methods, marketing plans or strategies, products and formulae, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, research or technical data, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records, documents and other evidence thereof. The term "Confidential Information" does not include, and there shall be no obligation hereunder with respect to, information that is or becomes generally available to the public other than as a result of a disclosure by Executive not permissible hereunder. "Executive" means the individual identified in the first paragraph of this Agreement, or his or her estate, if deceased. "Market" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted or pursued by, engaged in by the Companies prior to the date hereof or is conducted or engaged in or pursued, or is proposed to be conducted or engaged in or pursued, by the Companies at any time during the Term of Employment. "Material Breach" is defined in Section 3(d). "Non-Interference Period" means the period commencing on the date of this Agreement and continuing through the twelfth month anniversary of the termination of the Term of Employment. "Prior Employment Agreement" is defined in Section 13(a). "Restricted Period" means the period commencing on the date of this Agreement and continuing through the twelfth month anniversary of the termination of the Term of Employment. "Subsidiary" means any corporation, limited liability company, joint venture, limited and general partnership, joint stock company, association or any other type of business entity of which the Company owns, directly or indirectly through one or more intermediaries, more than fifty percent (50%) of the voting securities at the time of determination. 10 11 "Term of Employment" is defined in Section 3(a). 12. Notice Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner): If to Executive: Dr. Shelley A. Harrison 5 Norma Lane Dix Hills, NY 11746 If to Company: SPACEHAB, Incorporated 1595 Spring Hill Road, Suite 3600 Vienna, Virginia 22182 Attention: President with a copy to: Frank E. Morgan II Dewey Ballantine 1301 Avenue of the Americas New York, New York 10019 Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued. 13. Previous Agreements; Executive's Representation (a) Attached hereto as Annex A are all previous employment or severance agreements, if any, by and between Executive and the Company (collectively, the "Prior Employment Agreements"). Executive and the Company hereby cancel, void and render without force and effect all Prior Employment Agreements, and the Executive releases and discharges the Company from any further obligations or liabilities thereunder. Notwithstanding the foregoing, the terms and provisions in any Prior Employment Agreement relating to any grants of stock options or other derivative securities for the purchase of the Company's common stock, no par value per share, shall remain in full force and effect and shall not be amended in any manner as a result of the execution of this Agreement. (b) Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors as Executive considers appropriate in connection with this Agreement, is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive's prior employment, which would be 11 12 breached or violated by Executive's execution of this Agreement or by Executive's performance of his duties hereunder. 14. Other Matters Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none of the Companies' stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof. 15. Validity If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby. 16. Severability Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of Section 9 or any other provision hereof is unenforceable because of the power to reduce the scope or duration of such provision, as the case may be and, in its reduced form, such provision shall then be enforceable. 17. Waiver of Breach; Specific Performance The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its rights under this breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of Sections 8, 9 and 10 of this Agreement and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement against the other party, the party against whom judgement is rendered in such action shall pay the prevailing party's costs and expenses, including but not limited to, attorneys' fees, incurred in such action. 12 13 18. Assignment; Third Parties Neither Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive's agreements set forth in Sections 8, 9 and 10. 19. Amendment; Entire Agreement This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior Agreements, understandings and commitments with respect to such subject matter. 20. Litigation THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF VIRGINIA, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 21, EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE COURTS OF THE COMMONWEALTH OF VIRGINIA OR THE UNITED STATES DISTRICT COURTS IN THE NORTHERN DISTRICT OF VIRGINIA. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 20 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION. 21. Arbitration EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR 13 14 IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION SHALL TAKE PLACE IN ARLINGTON, VIRGINIA, AND SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF VIRGINIA. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE CONCLUSION OF ARBITRATION, EXECUTIVE OR THE COMPANY MAY APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 20 TO ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. IN CONNECTION WITH THE FOREGOING, THE PARTIES HEREBY WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER. 22. Further Action Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisions hereof. 23. Counterparts This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14 15 IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above. EXECUTIVE: /s/ Dr. Shelley A. Harrison ------------------------------------ Dr. Shelley A. Harrison SPACEHAB, INCORPORATED By: /s/ Chester M. Lee --------------------------------- Chester M. Lee President 15 16 ANNEX A None. 16 EX-10.57 13 LOUNGE EMPLOYMENT AGREEMENT. 1 EXHIBIT 10.57 ACCOUNTANTS' CONSENT The Board of Directors SPACEHAB, Incorporated: We consent to incorporation by reference in the registration statements (Nos. 333-3634, 333-3636, and 333-3638) on Forms S-8 of SPACEHAB, Incorporated of our report dated August 15, 1997, relating to the consolidated balance sheets of SPACEHAB, Incorporated and subsidiary as of June 30, 1996 and 1997, and the related consolidated statements of income, stockholder's equity (deficit), and cash flows for the year ended September 30, 1995, the nine month period ended June 30, 1996 and the year ended June 30, 1997, which report appears in the June 30, 1997, annual report on Form 10-K of SPACEHAB, Incorporated. KPMG PEAT MARWICK LLP McLean, VA September 11, 1997 EX-10.58 14 LOUNGE INDEMNIFICATION AGREEMENT. 1 EXHIBIT 10.58 INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT, dated as of October 22, 1996 (this "Agreement"), and between SPACEHAB, Incorporated, a Washington corporation (the "Company"), and John M. Lounge ("Indemnitee"). WITNESSETH WHEREAS, highly competent persons are becoming more reluctant to sense publicly-held corporations as directors, executive officers, or in other capacities unless they are provided with adequate protection through insurance and indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation; and WHEREAS, the current difficulties or virtual impossibility of obtaining adequate insurance and uncertainties relating to indemnification have increased the difficulty of attracting and retaining such persons; and WHEREAS, the Board of Directors of the Company has determined that the inability to attract and retain such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; and WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and WHEREAS, the Shareholders of the Company have adopted the Amended and Restated Articles of Incorporation of the Company (the "Articles") and the Amended and Restated Bylaws of the Company (the "Bylaws") providing for the indemnification of the directors, officers, agents and employees of the Company to the full extent permitted by the Washington Business Corporation Act (the "Act"). The Articles, the Bylaws and Act specifically provide that they are not exclusive, and thereby contemplate that contracts may be entered into between the Company and the members of its Board of Directors and its executive officers with respect to indemnification of such directors and executive officers: and WHEREAS, this Agreement is being entered into as part of Indemnitee's total compensation for serving as a director and/or an executive officer, as the case may be; NOW THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows: 2 SECTION I. Service by Indemnitee. Indemnitee agrees to serve as director of the Company and/or executive officer of the Company if so designated by the Company and appointed by the Board of Directors, and agrees to the indemnification provisions provided for herein. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or other obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in any such position. SECTION II. Indemnification. The Company shall indemnify Indemnitee to the fullest extent permitted by applicable law in effect on the date hereof, notwithstanding that such indemnification is not specifically authorized by this Agreement, the Articles, the Bylaws, the Act or otherwise. In the event of any change, after the date of this Agreement, in any applicable law, statute or rule regarding the right of a Washington corporation to indemnify a member of its board of directors or an officer, such changes, to the extent that they would expand Indemnitee's rights hereunder, shall be within the scope of Indemnitee's rights and the Company's obligations hereunder, and, to the extent that they would narrow Indemnitee's rights hereunder, shall be excluded from this Agreement; provided, however, that any change that is required by applicable laws, statutes or rules to be applied to this Agreement shall be so applied regardless of whether the effect of such change is to narrow Indemnitee's rights hereunder. Without diminishing the scope of the indemnification provided by this Section 2, the rights of indemnification of Indemnitee provided hereunder shall include indemnification in respect of the Company's initial public offering of Common Stock pursuant to its Registration Statement on Form S-1 (File No. 33-97812) and shall further include any other public offerings of securities by the Company, and shall not be limited to those rights set forth hereinafter, except to the extent expressly prohibited by applicable law. SECTION III. Action or Proceeding Other Than an Action by or in the Right of the Company. Indemnitee shall be entitled to the indemnification rights provided in this Section 3 if he is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, other than an action by or in the right of the Company, by reason of the fact that he is or was a director, officer, employee, agent or fiduciary of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, partner, trustee or fiduciary of any other entity (a "Related Company") or by reason of anything done or not done by him in any such capacity. Pursuant to this Section 3, Indemnitee shall be indemnified against reasonable costs and expenses (including, but not limited to, counsel fees, costs, judgments, penalties, fines, ERISA excise taxes, and amounts paid in settlement) (collectively, "Damages") actually and reasonably incurred by him connection with such action, suit or proceeding (including, but not limited to, the investigation, defense or appeal thereof), if, in the case of conduct in his official capacity with the corporation, he acted in good faith and in the Company's best interests, and in all other cases, he acted in good faith and was at least not opposed to the Company's best interests, and with respect to any criminal action or proceeding had no reasonable cause to believe his conduct was unlawful, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged to be liable for (i) negligence or misconduct in the performance of his duty to the Company unless and only to the extent that the court in which such action or suit was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly 2 3 and reasonably entitled to indemnity for such expenses as such court shall deem proper or (ii) the indemnification does not relate to any liability arising under Section 16(b) of the Securities Exchange Act of 1934, as amended, or any of the rules or regulations promulgated thereunder. Notwithstanding the foregoing, the Company shall be required to indemnify an officer or director in connection with an action, suit or proceeding initiated by such person only if such action, suit or proceeding was authorized by the Board or a committee thereof. No indemnity pursuant to this Agreement shall be provided by the Company for Damages that have been paid directly to Inductee by an insurance carrier under a policy of directors' and officers' liability insurance maintained by the Company. SECTION IV. Actions by or in the Right of the Company. Indemnitee shall be entitled to the indemnification rights provided in this Section 4 if he is or was made a party or is threatened to be made a party to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative brought by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, agent or fiduciary of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, partner, trustee or fiduciary of any other entity by reason of anything done or not done by him in any such capacity. Pursuant to this Section 4, Indemnnitee shall be indemnified against Damages (as deemed in Section 3 of this Agreement) actually and reasonably incurred by him in connection with such action or suit (including, but not limited to the investigation, defense, settlement or appeal thereof) if, in the case of conduct in his official capacity with the corporation, he acted in good faith and in the Company's best interests, and in all other cases, he acted in good faith and was at least not opposed to the Company's best interests, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged to be liable for (i) negligence or misconduct in the performance of his duty to the Company unless and only to the extent that the court in which such action or suit was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper or (ii) the indemnification does not relate to any liability arising under Section 16(b) of the Securities Exchange Act of 1934, as amended, or any of the rules or regulations promulgated thereunder. Notwithstanding the foregoing, the Company shall be required to indemnify an officer or director in connection with an action, suit or proceeding initiated by such person only if such action, suit or proceeding was authorized by the Board or a committee thereof. No indemnity pursuant to this Agreement shall be provided by the Company for Damages that have been paid directly to Indemnitee by an insurance carrier under a policy of directors' and officers' liability insurance maintained by the Company. SECTION V. Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the other provisions of this Agreement, to the extent that Indemnitee has served as a witness on behalf of the Company or has been successful, on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Section 3 and Section 4 hereof, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all reasonable costs, charges, and expenses (including counsel fees) actually and reasonably incurred by him or on his behalf in connection therewith. 3 4 SECTION VI. Partial Indemnification. If Indemnitee is only partially successful in the defense, investigation, settlement or appeal of any action, suit, investigation or proceeding described in Section 3 or Section 4 hereof, and as a result is not entitled under Section 5 hereof to indemnification by the Company for the total amount of reasonable Damages actually and reasonably incurred by him, the Company shall nevertheless indemnify Indemnitee, as a matter of right pursuant to Section 5 hereof, to the extent Indemnitee has been partially successful. SECTION VII. Determination of Entitlement to Indemnification. Upon written request by Indemnitee for indemnification pursuant to Section 3 or Section 4 hereof, the entitlement of Indemnitee to indemnification pursuant to the terms of this Agreement shall be determined by the following person or persons who shall be empowered to make such determination: (a) the Board of Directors of the Company by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined); or (b) if such a quorum is not obtainable or, even if obtainable, if the Board of Directors by the majority vote of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (c) by the stockholders, but shares owned by or voted under the control of directors, including the Indemnitee, who are at the time parties to the proceeding may not be voted on the determination. Such Independent Counsel shall be selected by the Board of Directors and approved by Indemnitee. Upon failure of the Board of Directors to so select such Independent Counsel or upon failure of Indemnitee to so approve, such Independent Counsel shall be selected by any state or federal court situated in the State of Virginia. Such determination of entitlement to indemnification shall be made no later than sixty (60) days after receipt by the Company of a written request for indemnification. Such request shall include documentation or information which is necessary for such determination and which is reasonably available to Indemnitee. Any Damages incurred by Indemnitee in connection with his request for indemnification hereunder shall be borne by the Company. The Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom irrespective of the outcome of the determination of Indemnitee's entitlement to indemnification. If the person making such determination shall determine that Indemnitee is entitled to indemnification as to part (but not all) of the application for indemnification, such person shall reasonably prorate such partial indemnification among such claims, issues or matters. SECTION VIII. Presumptions and Effect of Certain Proceedings. The Secretary of the Company shall, promptly upon receipt of Indemnitee's request for indemnification, advise in writing the Board of Directors or such other person or persons empowered to make the determination as provided in Section 7 that Indemnitee has made such request for indemnification. Indemnitee shall be presumed to be entitled to indemnification hereunder and the Company shall have the burden of proof in the making of any determination contrary to such presumption. If the person or persons so empowered to make such determination shall have failed to make the requested indemnification within 60 days after receipt by the Company of such request, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be absolutely entitled to such indemnification, absent actual and material fraud in the request for indemnification. The termination of any action, suit, investigation or proceeding described in Section 3 or Section 4 hereof by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself (a) create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of 4 5 the Company, and, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful or (b) otherwise adversely affect the rights of Indemnitee to indemnification except as may be provided herein. SECTION IX. Advancement of Expenses and Costs. All reasonable expenses and costs incurred by Indemnitee who is party to a proceeding (including counsel fees, retainers and advances of disbursements required of Indemnitee) (collectively, the "Expense Advance") shall be paid by the Company in advance of the final disposition of such action, suit or proceeding at the request of Indemnitee within twenty (20) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time. Such statement or statements shall reasonably evidence the expenses and costs incurred by him in connection therewith. The Company's obligation to provide an Expense Advance is subject to the following conditions: (i) If the proceeding arose in connection with Indemnitee's service as a director and/or executive officer of the Company (and not in any other capacity in which Indemnitee rendered service, including service to any related company), then the Indemnitee or his representative shall have executed and delivered to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee's financial ability to make repayment, by or on behalf of Indemnitee to repay all Expense Advance if and to the extent that it shall ultimately be determined by a final, unappealable decision rendered by a court having jurisdiction over the parties and the question that Indemnitee is not entitled to be indemnified for such Expense Advance under this Agreement or otherwise; (ii) Indemnitee shall give the Company such information and cooperation as it may reasonably request and as shall be within Indemnitee's power; and (iii) Indemnitee shall furnish, upon request by the Company and if required under applicable law, a written affirmation of Indemnitee's good faith belief that any applicable standards of conduct have been met by Indemnitee. Indemnitee's enticement to such Expense Advance shall include those incurred in connection with any proceeding by Indemnitee seeking an adjudication pursuant to this Agreement. In the event that a claim for an Expense Advance is made hereunder and is not paid in full within twenty (20) days after written notice of such claim is delivered to the Company, Indemnitee may, but need not, at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. SECTION X. Remedies of Indemnitee in Cases of Determination not to Indemnify or to Advance Expenses. In the event that a determination is made that Indemnitee is not entitled to indemnification hereunder or if payment has not been timely made following a determination of entitlement to indemnification pursuant to Sections 7 and 8, or if expenses are not advanced pursuant to Section 9, Indemnitee shall be entitled to a final adjudication in an appropriate court of the State of Washington or any other court of competent jurisdiction of his entitlement to such indemnification or advance. The Company shall not oppose Indemnitee's right to seek any such adjudication or any other claim. Such judicial proceeding shall be made de novo and Indemnitee shall not be prejudiced by reason of a determination (if so made) that he is not entitled to indemnification. If a determination is made or deemed to have been made pursuant to the terms of Section 7 or Section 8 hereof that Indemnitee is entitled to indemnification, the Company shall be bound by such determination and is precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding and enforceable. The Company further agrees to stipulate in any such court that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary. If the court shall determine that Indemnitee is entitled to any indemnification hereunder, the Company shall pay all reasonable Damages actually incurred by 5 6 Indemnitee in connection with such adjudication (including, but not limited to, any appellate proceedings). SECTION XI. Other Rights to Indemnification. The indemnification and advancement of expenses (including counsel fees) and costs provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may now or in the future be entitled under any provision of the By-laws, provisions of the Articles, vote of stockholders or Disinterested Directors, provision of law or otherwise. SECTION XII. Counsel Fees and Other Expenses to Enforce Agreement. In the event that Indemnitee is subject to or intervenes in any proceeding in which the validity or enforceability of this Agreement is at issue or seeks an adjudication or award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, Indemnitee, if he prevails in whole or in part in such action, shall be entitled to recover from the Company, and shall be indemnified by the Company against, any reasonable expenses for counsel fees and disbursements actually and reasonably incurred by him. SECTION XIII. Duration of Agreement. This Agreement shall continue until and terminate upon the later of (a) 10 years after Indemnitee has ceased to occupy any of the positions or have any of the relationships described in Section 3 or Section 4 of this Agreement or (b) the final termination of all pending or threatened actions, suits, proceedings or investigations with respect to Indemnitee. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors, administrators or other legal representatives. SECTION XIV. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. SECTION XV. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. 6 7 SECTION XVI. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. SECTION XVII. Definitions. For purposes of this Agreement: A. "Disinterested Director" shall mean a director of the Company who is not or was not a party to the action, suit, investigation or proceeding in respect of which indemnification is being sought by Indemnitee. B. "Independent Counsel" shall mean a law firm or a member of a law firm that neither is presently nor in the past five years has been retained to represent (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the action, suit, investigation or proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's right to indemnification under this Agreement. SECTION XVIII. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. SECTION XIX. Mutual Acknowledgment. The Company and Indemnitee acknowledge that, in certain instances, federal law or public policy may override applicable state law and prohibit the Company from indemnifying Indemnitee under this Agreement or otherwise. For example, the Company and Indemnitee acknowledge that the U.S. Securities and Exchange Commission (the "SEC") has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations. Furthermore, Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee. SECTION XX. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter which may be subject to indemnification covered hereunder, whether civil, criminal or investigative. 7 8 SECTION XXI. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or if (ii) mailed by certified or registered mail with postage prepaid on the third business day after the date on which it is so mailed, to the following addresses: A. to Indemnitee: John M. Lounge 4323 Parkmead Drive Seabrook, TX 77586 B. to the Company: SPACEHAB, Incorporated 1595 Spring Hill Road Vienna,Virginia 22182 Attention: President or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. SECTION XXII. Other Agreements. This Agreement restates and supersedes, but does not limit or negate, any indemnification, rights or interests of Indemnitee under any prior agreements between the Company and Indemnitee. SECTION XXIII. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Washington. IN WITNESS WHEREOF, the parties hereto have executed this, Agreement on the day and year first above written. SPACEHAB, INCORPORATED By: /s/ Chester M. Lee ----------------------- Chester M. Lee President INDEMNITEE: By: /s/ John M. Lounge ----------------------- John M. Lounge 8 EX-10.59 15 MACKLIN CONSULTING AGREEMENT. 1 EXHIBIT 10.59 Consulting Agreement AGREEMENT, made this 15th day of August, 1997, between SPACEHAB, INC., a corporation organized under the laws of Washington with its principal place of business at 1595 Spring Hill Road, Vienna, Virginia 22182 (hereinafter referred to as "SPACEHAB") and Gordon S. Macklin with offices at 8212 Burning Tree Road, Bethesda, Maryland 20817 ("Consultant"). WHEREAS, Consultant desires to provide certain consulting services to SPACEHAB and SPACEHAB desires to obtain such services from Consultant in a capacity in which Consultant may receive or contribute confidential or proprietary information; NOW, THEREFORE, in consideration of such Consulting Services, and other good and valuable consideration given or to be given, SPACEHAB and Consultant hereby AGREE: 1. Consultant shall render workmanlike consulting services for SPACEHAB in connection with potential strategic acquisition opportunities and investor relations support, as more fully described in Exhibit A attached hereto and incorporated by this reference ("Consulting Services") for a term of one year from the above referenced date. Consultant recognizes that all information regarding such strategic acquisitions and/or investor relations (as well as all other SPACEHAB related business information) which (i) may be or shall have been imparted to Consultant by SPACEHAB or its agents, or (ii) is created or obtained by Consultant while performing, or as a result of performing (directly or indirectly) Consulting Services, is confidential and proprietary to SPACEHAB. Furthermore, the identity and character of services and products required by SPACEHAB'S customers, as well as all actual or potential business acquisitions, joint ventures, alliances and other business arrangements of any kind constitute confidential and/or proprietary business information of SPACEHAB. 2. The attached Confidentiality and Nondisclosure Agreement between Consultant and SPACEHAB shall be executed simultaneously with this Agreement and shall govern Consultant's rights and responsibilities with respect to all SPACEHAB confidential and/or proprietary information disclosed to or otherwise obtained by Consultant as noted in Paragraph I above. It is understood that the success of SPACEHAB requires that SPACEHAB exert extraordinary measures to safeguard the confidentiality of all such information, and Consultant agrees to abide by all such measures established by SPACEHAB. 3. Consultant shall be directed by Shelley A. Harrison and Margaret Grayson (respectively, SPACEHAB's Chief Executive Officer and Chief Financial Officer) in performance of the Consulting Services. Mr. Harrison and Ms. Grayson shall request and direct the specific Consulting Services tasks hereunder. 4. For the Consulting Services, SPACEHAB agrees to pay Consultant a retainer fee of $2,000/month for the term hereof, and an Option to purchase 10,000 shares of SPACEHAB Common Stock at an exercise price per share corresponding to the price of SPACEHAB Common Stock on the NASDAQ market as of close of business August 15, 1997. The Options shall vest immediately upon their granting. Actual expenses for travel, hotel accommodations and automobile rental incurred by Consultant during performance of Consulting Services tasks hereunder shall be reimbursed by SPACEHAB within 30 days of submittal of expense documents to the company. 2 5. Either Consultant or SPACEHAB may terminate this Agreement, without cause, with three days notice to the other party. 6. Upon termination of the Consulting Services, Consultant shall promptly deliver to SPACEHAB all ( of whatever media, including but not limited to written, digital or other computerized media, tape, disk, CD, etc.) all documents and media, including all copies thereof, and any other materials of a proprietary or confidential nature relating to SPACEHAB's business and which are in the possession or under the control of Consultant. Consultant shall promptly return to SPACEHAB any information, of whatever nature, that relates to, or is generated by any, actual or potential, customer of SPACEHAB's services, or any actual or potential business acquisition or other relationship (including but not limited to joint ventures, alliances and partnerships). SPACEHAB shall pay Consultant for the days actually worked by Consultant up to the date of termination (including any partial day on a pro-rata basis). 7. The parties hereto desire and agree that any controversy or claim arising out of, or relating to this Agreement, or breach thereof, shall be settled by arbitration in Tysons Corner, Virginia, in accordance with the rules of the American Arbitration Association, and final judgment upon award rendered may be entered in any court having jurisdiction thereof. 8. This Agreement constitutes the complete agreement and understanding with respect to the subject matter hereof between the parties and supersedes all previous or contemporaneous written or oral representations, agreements, contracts, etc. of whatever kind or nature. CONSULTANT SPACEHAB, INC. By: /s/ GORDON S. MACKLIN By: /s/ MARGARET E. GRAYSON --------------------------- ------------------------------ Name: Gordon S. Macklin Name: Margaret E. Grayson ------------------------- ---------------------------- Title: Title: Vice President-Finance ------------------------ --------------------------- 3 EXHIBIT A MACKLIN CONSULTING AGREEMENT CONSULTING SERVICES A. Investor Relations Support - Work for continued improvement and expansion of the investor relations program - Work to improve skills and contracts of investor relations officer, while continuing to expand and enhance the CFO's exposure in the financial community - General advice regarding investment community requirements B. Investment Community Introductions - Expand SPACEHAB market visibility - Expand coverage of company by analysts - Help identify and recruit additional market makers and possible financing sources - Continue to add to the company's creditability and acceptance in the financial community C. Potential Strategic Acquisitions Opportunities/Information In SPACEHAB's Strategic Targeted Markets, Including Aerospace, Biotechnology, General Hi-Technology And Software Integration - Introduction to potential partners/acquisitions - Leads regarding potential opportunities - Facilitate potential partnerships/acquisitions - Help review future acquisition candidates D. Corporate Governance - Help implement appropriate corporate governance practices - Work to expand board procedures and effectiveness E. Be Available For Additional Assignments As Appropriate 4 CONFIDENTIALITY & NONDISCLOSURE AGREEMENT This Confidentiality and Nondisclosure Agreement ("Agreement") is entered into by and between SPACEHAB, Inc., a Washington State corporation, having its corporate headquarters at 1595 Spring Hill Road, Vienna, Virginia 22182 (hereinafter "SPACEHAB"), and Gordon S. Macklin, having offices at 8212 Burning Tree Road, Bethesda, Maryland 20817 (hereinafter "Consultant"). WHEREAS, SPACEHAB desires to provide and CONSULTANT desires to receive sensitive and proprietary information, including technical, marketing and/or financial data, relating to certain SPACEHAB business pursuits and activities in order for CONSULTANT to perform consulting services for SPACEHAB; and WHEREAS, SPACEHAB, seeks to fully protect such confidential proprietary information from any and all unauthorized use, reproduction, or disclosure; NOW, THEREFORE, the parties hereto agree as follows: 1. "Proprietary Information" shall mean any and all information regarding SPACEHAB's business activities, competitors, customers, trade secrets, industrial and technical knowledge, etc. (including but not limited to marketing, technical, financial and other business data or information) however disclosed by SPACEHAB or its agents (including but not limited to written, oral, visual, magnetic recording or any other machine readable form) which is directly or indirectly related to any consulting or other services requested by SPACEHAB to be provided by CONSULTANT, unless SPACEHAB explicitly exempts such information or data in writing from coverage by this Agreement. 2. CONSULTANT agrees that it, as well as all its directors, officers, employees and agents, will protect from unauthorized use, reproduction, and disclosure and will not disclose to any person or entity outside CONSULTANT or to any person within CONSULTANT not having a need to know for the purposes of the Agreement and will not use or reproduce, except for the purposes of this Agreement, any and all Proprietary Information disclosed by SPACEHAB or its agents. 3. CONSULTANT shall not be liable for disclosure of certain Proprietary Information if CONSULTANT obtains the prior written approval of SPACEHAB to disclose such Proprietary Information. 4. Any and all Proprietary Information received by CONSULTANT hereunder shall be fully protected as required by this Agreement for a period of five (5) years from the date of CONSULTANT's receipt thereof. 5 5. CONSULTANT shall not be liable for the inadvertent or accidental disclosure of Proprietary Information received hereunder provided that it has exercised the same degree of care in protecting such Proprietary Information as it normally exercises to protect its own proprietary and confidential information (provided such degree of care is no less than a reasonable degree under the circumstances) and provided, further, that immediately upon discovering the loss or unauthorized disclosure of such Proprietary Information received under this Agreement, it notifies SPACEHAB thereof and takes all reasonable steps to retrieve, and prevent further unauthorized disclosure of such Proprietary Information. 6. This Agreement shall not restrict disclosure or use of Proprietary Information which: (1) was in the public domain at the time of disclosure or thereafter enters the public domain through no breach of this Agreement by CONSULTANT; (2) was, at the time of receipt, otherwise known to CONSULTANT without restrictions as to use or disclosure; (3) becomes known to CONSULTANT from a source other than SPACEHAB or its agents without breach of this Agreement by CONSULTANT; (4) is developed independently by CONSULTANT without the use of Proprietary Information disclosed to it hereunder; or (5) is disclosed more than five years after it is first received hereunder. 8. Nothing contained in this Agreement shall be construed as granting or conferring rights by license or otherwise in any Proprietary Information disclosed under this Agreement. 9. The respective address and point of contact for each party to which all correspondence and notices hereunder are to be sent is as follows: If to SPACEHAB: If to CONSULTANT: Attn.: William Dawson Attn.: Gordon S. Macklin General Counsel 8212 Burning Tree Road SPACEHAB, Inc. Bethesda, Maryland 20817 1595 Spring Hill Road. Suite 360 Vienna,VA 22182 Each party may change its respective address or point of contact by delivering a written notice thereof to the other party. 10. This Agreement is not intended to, and shall not, constitute, create, give effect to, or otherwise recognize a joint venture, partnership, pooling arrangement or formal business entity between the parties of any kind. The rights and obligations of the parties shall be limited to those expressly set forth herein. Nothing herein shall be construed as providing for the sharing of profits or losses arising out of the efforts of either or both parties. Each party shall act as an independent contractor and not as an agent of the other for any purpose 6 whatsoever and neither party shall have any authority to bind the other party except as specifically set forth herein. Neither party shall be liable to the other for any of the costs associated with the other party's efforts or compliance in connection with this Agreement. 11. This Agreement shall become effective on the date on which it is signed by the last of the parties hereto to sign, and it shall expire one (l) year thereafter, at which time all proprietary information received hereunder (and any copies thereof) shall be returned to the providing party unless a different arrangement has been entered into between the parties in writing. Expiration of the term of this Agreement, however, shall have no effect on the obligations imposed on the party with respect to the protection of proprietary information received hereunder for the full period of time required by Paragraph 4 of this Agreement. 12. This is the entire agreement between the parties concerning the exchange and protection of Proprietary Information, and it supersedes any prior written or oral agreements relating thereto and may not be amended or modified except by subsequent agreement in writing signed by a duly authorized officer or representative of each party. l3. Each signatory, by signing below, certifies that he or she has authority to bind to this Agreement the respective party for which he or she signs. 7 14. This Agreement does not contemplate export from the United States of any "technical data" (as defined by the regulation of the Office of Defense Trade Controls, United States Department of State) related to items on the U.S. Munitions List. If the parties determine that the export of any "technical data" is necessary, the Parties will seek the necessary license or approval prior to the export of any such "technical date". IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly executed in duplicate originals by its respective duly authorized representative as follows: CONSULTANT SPACEHAB, Inc. By: /s/ GORDON S. MACKLIN By: /s/ MARGARET E. GRAYSON --------------------------- ------------------------------ Name: Gordon S. Macklin Name: Margaret E. Grayson ------------------------- ---------------------------- Title: Title: Vice President-Finance ------------------------ --------------------------- Date: 8/14/96 Date: 8/14/96 ------------------------- ---------------------------- EX-10.60 16 CSP ASSOCIATES CONSULTING AGREEMENT EXTENSION. 1 EXHIBIT 10.60 [CSP ASSOCIATES, INC. LETTERHEAD] MEMORANDUM TO: DAVID ROSSI, SPACEHAB FROM: Brad Meslin, CSP SUBJECT: CONSULTANT AGREEMENT CONTRACT EXTENTION DATE: AUGUST 18, 1997 CC: Peg Grayson, Spacehab Dear David: The purpose of this memo is to extend our current Consultant Agreement, as the prior extension expired on June 30, 1997. I would propose that we extend the existing Agreement through the end of Spacehab's fiscal year, to June 30, 1998, with a not-to-exceed value of $150,000 plus actual and reasonable expenses - the same terms as the prior extension. (Under the prior extension, we expended approximately $95,000, not including separately funded tasks such as Astrotech or the value pricing evaluation.) As in the prior Agreement, funding may only be expended by CSP in response to tasks specifically requested by Spacehab. This proposed contract extension and associated funding is unrelated to CSP's provision of certain acquisition advisory services, for which separate compensation arrangements may be made between Spacehab and CSP. Please indicate your concurrence with the above contract extension by executing and returning a copy of this memorandum for our files. Sincerely, Brad M. Meslin, Ph.D. Agreed and Accepted /s/ Brad M. Meslin, Ph.D. /s/ David Rossi - ---------------------------- ------------------------------- Brad M. Meslin, Ph.D. David Rossi Managing, Director Senior Vice President Spacehab, Inc. EX-10.61 17 HARBOR SECURITIES CONSULTING AGREEMENT. 1 EXHIBIT 10.61 [HARBOR SECURITIES LETTERHEAD] October 24, 1996 Ms. Margaret E. Grayson Vice President Finance and Chief Financial Officer SPACEHAB, Incorporated Suite 360 1595 Spring Hill Road Vienna, Va. 22182 Dear Ms. Grayson: This letter sets forth the terms pursuant to which Harbor Securities, Inc. (the "Agent") and its affiliates will be the exclusive financial advisor to SPACEHAB, Incorporated and its subsidiaries (hereinafter known as "SPACEHAB" or the "Company" for the purposes of this agreement) for the structuring and placement of financing for (i) certain acquisitions and (ii) the development of a double science module (the "Financing"). 1. Scope of the Engagement. In connection with this engagement, the Agent's services will include, but not be limited to: assisting in due diligence; structuring the Financing(s); drafting the placement memorandum(a) (the "Memorandum(a)"); privately placing the Financing(s); negotiating the terms of the Financing(s); and closing the Transaction(s). All of the above are subject to the approval of SPACEHAB. 2. Compensation. In consideration of the Agent's services rendered hereunder, SPACEHAB agrees to pay the Agents placement fees as outlined below, payable at closing in cash.
TYPE OF FINANCING FEE AS % OF PRINCIPAL AMOUNT Senior Debt 1% Subordinated Debt 2% Equity* 3%
*Equity may or may not constitute a part of the Financing(s) During the engagement, SPACEHAB will pay, at the first of each month, a non refundable monthly retainer of $20,000 (such monthly retainer to be offset against the placement fee), plus reasonable out of pocket expenses. The first monthly retainer is due and payable on signing of this letter. 3. Confidentiality. Any information furnished to the Agent by the Company, unless such information is available to the public or otherwise available to the Agent, without 2 restriction or breach of any confidentiality agreement, will be held by the Agent in confidence and will not be disclosed by the Agent without the Company's prior approval. 4. Indemnification. SPACEHAB will indemnify and hold harmless the Agent and its affiliates, directors, officers, agents and employees against any claims, actions, proceedings, demands, liabilities, damages, judgments, assessments, losses and costs, including fees and expenses, arising out of or in connection with services rendered by the Agent under this agreement, and will reimburse the Agent for all such fees and expenses, including fees of counsel, as they are incurred by the Agent in connection with pending litigation whether or not the Agent is a party. The Company will not, however, be responsible for any claims, liabilities, losses, damages or expenses that are determined by final judgment of a court of competent jurisdiction to have resulted primarily from the Agent's gross negligence or bad faith. SPACEHAB also agrees that the Agent shall have no liability for claims, liabilities, damages, losses or expenses, including legal fees incurred by SPACEHAB unless they are determined by final judgment of a court of competent jurisdiction to have primarily resulted from the Agent's gross negligence or bad faith. 5. Termination. Either SPACEHAB or the Agent may terminate this agreement at any time by notifying the other party in writing. If SPACEHAB terminates the Agent and then subsequently consummates a financing which is similar in nature to that which is contemplated under this agreement within, a 12 month period following termination, with any financial institution or other potential investor contacted by the Agent on behalf of SPACEHAB and identified by the Agent prior to or at the time of termination, the Agent will be entitled to the fees defined in Paragraph 2. The Agent will keep SPACEHAB informed on its progress. This engagement will begin on the date of signing this letter agreement and the receipt by the Agent of the first month's retainer fee. Please confirm that this letter agreement is in accordance with our understanding by signing and returning to the Agent an executed copy of this letter agreement which shall constitute a binding agreement. Very truly yours, Accepted and Agreed: Harbor Securities, Inc. SPACEHAB, Incorporated By: /s/ Robert W. Wright By: /s/ Margaret E. Grayson ----------------------------- -------------------------------- Robert W. Wright Ms. Margaret E. Grayson President Vice President Finance and Chief Financial Officer Date: Date: --------------------- ------------------------- EX-10.62 18 UNITED SPACE ALLIANCE TEAMING AGREEMENT. 1 EXHIBIT 10.62 AGREEMENT Between UNITED SPACE ALLIANCE, LLC and SPACEHAB, INCORPORATED MAY 29, 1997 2 AGREEMENT THIS AGREEMENT, entered into this __ day of_________________ by and between UNITED SPACE ALLIANCE, LLC,(hereinafter "USA"), a Delaware limited liability company, having its principal office at 1150 Gemini Avenue, Houston, Texas 77058, and SPACEHAB, INCORPORATED, a Washington Corporation, having its principal office at 1595 Spring Hill Road, Suite 360, Vienna, Virginia 22182, (hereinafter "SHI"). WITNESSETH: WHEREAS, USA has unique Space Shuttle operations expertise and is the industry manager of privatized Space Shuttle operations; WHEREAS, SHI has unique commercial payload expertise and privately owned hardware capable of supporting microgravity research on the Space Shuttle; WHEREAS, the respective capabilities of the parties are complimentary; and WHEREAS, the parties are committed to establishment of a non NASA market for the use of space (the "Program"); NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth herein, it is agreed as follows: 1. OBJECTIVE OF THE TEAM (a) The parties agree to pursue a joint initiative to establish a non NASA market for microgravity science and/or production that will support at least one commercial Space Shuttle mission per year. The program effort shall be prepared by the parties in connection with this Agreement and include the following: (1) Specific roles and responsibilities for USA and SHI, Initial business plan, Detailed plan of action and assignments. The above plans will be completed in time to support a June 1997 meeting. 2. EXPENSES Each party hereto agrees to bear all of its own expenses incurred in connection with the Program incurred under this Agreement. Expenses incurred between the announcement of contract award and the contract start are the responsibility of each party. 3 3. INDEPENDENT CONTRACTORS This Agreement shall not constitute, create, or in any way be interpreted as a joint venture, partnership, or formal business organization of any kind. Except for the preparation and submission of proposals and obligations set forth herein, and the mutual support to be provided between the parties hereto toward attainment of the contract for the Program, no actions, obligations or commitments of any nature of either of the parties hereto shall be binding upon the other party. 4. ASSIGNMENT Neither party may assign nor transfer its interest herein without the prior written consent of the other; provided however, that the parties may assign their respective interest in this agreement to any new wholly owned entities that may be created for the purpose of performing efforts on the program. 5. DISCLOSURE AND PROTECTION OF INFORMATION (a) "Proprietary Information" for purpose of the Agreement, shall be defined as text, tables, and drawings and other written data which have been identified as such by (1) appropriate markings on the documents or drawings involved, or (2) written notice, with attached copies of all documents and complete summaries of all oral disclosures to which the notice relates, delivered within two (2) weeks of disclosure to the person designated by either party as a recipient of proprietary data. (b) The receiving party agrees that it will protect the proprietary nature of such information and use such information only during the currency of this Agreement and only in connection with the preparation of the proposal for the Program. Such party will use its best efforts to distribute proprietary information only to those persons within its organization who have a need to know, and notwithstanding that this Agreement shall have terminated or expired, to prevent the disclosure thereof for three (3) years subsequent to such termination or expiration to any person or persons outside its organization(as may be required for the proposal effort, provided the appropriate, protective legend is utilized). Information shall be excluded from the protection of this paragraph when it: (1) was in the public domain at the time it was disclosed; or (2) was known to the receiving party at the time of receipt; or (3) is disclosed with the written approval of the other party; or (4) is disclosed inadvertently despite the exercise of the same degree of care as the receiving party takes to preserve and safeguard its own proprietary information; or 4 (5) is disclosed pursuant to judicial action or Government regulations or requirements and the receiving party has notified the disclosing party prior to such disclosure and has used its reasonable efforts in a legal manner to contest and avoid such disclosures; or (6) becomes known to the receiving party from any source other than the other party hereto, provided such information was not disclosed to the public or any other party by way of a breach of the Agreement. (d) As and between USA and SHI, the foregoing restrictions as to disclosure and use of proprietary information all expire three (3) years from the date of Agreement, except, that that in the event a subsequent contract or Agreement is executed by SHI and USA prior to the expiration of such period, the terms of such subcontract relating to such type of information shall supersede the provisions of this Article. (e) Neither the execution of this Agreement nor the furnishing of any information hereunder shall be construed as granting, either expressly or by implication, estoppel or otherwise, any license under any patent which is owned by or controlled by the party furnishing the information. 6. GOVERNING LAW This Agreement shall be governed by the laws of the State of Texas. 7. DURATION OF AGREEMENT This Agreement and all rights and duties hereunder, except for those specifically set forth in Article 5 hereof, shall cease and terminate upon the first to occur of the following events: (a) Upon the mutual written agreement of the parties hereto. (b) The expiration of one (1) year from the effective date of this Agreement. (c) The execution of a subsequent contract or Agreement between USA and SHI for the efforts specifically described in the product of the Agreement. IN WITNESS WHEREOF the parties hereto have, through duly authorized representatives, caused this Agreement to be executed as of the day and year first above written. UNITED SPACE SPACEHAB, INC. ALLIANCE BY: /s/ Ann Halligan BY: /s/ Chester M. Lee ------------------------- ----------------------------- Ann Halligan Chester M. Lee Title: Director Contract Title: President Management and Pricing EX-10.63 19 RSC ENERGIA AGREEMENT. 1 EXHIBIT 10.63 [SPACEHAB, INC. LETTERHEAD] Letter Agreement Page 1 of 3 DRAFT LETTER AGREEMENT To: RSC-Energia Address: 4A Lenin Street Korolev, Moscow Region Russia 141070, RSC-Energia Attn: A. Derechine Contracts Administrator RSC-Energia Dear Mr. Y. P. Semenov: 1. Pursuant to this letter agreement ("Letter Agreement") SPACEHAB, Inc. ("SPACEHAB"), agrees to contract with RSC-Energia (hereinafter referred to as "Energia" or "Seller"), to develop flight qualified Unpressurized Cargo Pallets ("UCP") and associated test and support equipment in accordance with the Statement of Work ("SOW") attached hereto as Exhibit A and incorporated herein by this reference. 2. This Letter Agreement is for all activities required to complete a Preliminary Design Review ("PDR") for the UCP (which will be a discreet element of the Initial Integrated Cargo Carrier System ("IICC") being developed by SPACEHAB), as well as for long lead material orders or schedule protection activities that must be accomplished prior to PDR in order to complete the full UCP build program on a schedule to support delivery of the IICC flight hardware inclusive of the UCP to SPACEHAB in June of 1999. It is expected that a full-scale development and production contract ("Production Contract") for the build and delivery of flight qualified UCP hardware will be negotiated and executed no later than 31 December 1997. It is agreed that the following items will be excluded from the Production Contract: 1) Transportation of the UCP hardware items 2) Travel costs It is also agreed that the following items are included in the Production Contract: 1) Translation costs 2) Customs costs 2 Letter Agreement Page 2 of 3 The parties agree to promptly begin good faith negotiation of the terms of the Production Contract. Energia agrees that the fixed price for the Production Contract, based on the current definition of the UCP (and assuming no special provisions for equity or revenue sharing) shall not exceed $2.4 Million (U.S. Dollars). 3. RSC-Energia shall provide the UCP and the design of the cargo integration on the UCP per SPACEHAB requirements. SPACEHAB has contracted with Daimler-Benz Aerospace ("DASA") of Bremen, Germany, for production of the Keel Yoke Assembly and Engagement Mechanism Assembly, and for integration of the IICC into the Space Shuttle. RSC-Energia is expected to work directly and informally with DASA engineers as required for integration of the UCP into the IICC system. However, all interface specifications, technical direction and contract deliverables under this Letter Agreement shall be dictated solely by SPACEHAB. 4. The fixed price to be paid to Energia for the products and services under this Letter Agreement is $150,000 (U.S. Dollars). This amount is to be paid in three payments. First payment (20% of fixed price) to be paid upon execution of this Letter Agreement. Second payment (30% of fixed price) to be paid upon acceptance by SPACEHAB of the comparative analysis report (deliverable item # 4 of Section 4.1 of the attached SOW) due sixty (60) days after execution of this Letter Agreement. The final 50% payment shall be made at successful completion of the PDR (defined as closing out of all PDR review items and actions) fifteen (15) days after the PDR milestone. All payments shall be made by wire transfer to the account listed in Exhibit B attached hereto and shall be completed within 30 days of written ratification of completion of the associated payment milestone by the SPACEHAB ICC Program Manager. 5. Reimbursement for Travel Expenses: The fixed price in Section 4 above is for provision of the products and services associated with the attached SOW, with the sole exception of travel costs in support of program reviews, technical interchange meetings and other activities approved in advance by SPACEHAB. SPACEHAB shall reimburse RSC-Energia for actual pre-approved transportation and hotel expenses, and on a per diem basis for meals and other expenses. The per diem allowance shall be at the rate of $58 per day. 6. Period of performance: From date of execution of this Letter Agreement through 31 December 1997. 7. Technical Direction: Seller shall accept technical direction from one of the following SPACEHAB individuals only: Prime Contact - Pete Gadsby, ICC Program Manager Alternate Contact - Clark Thompson, Director, Product Development 8. Provisions for Execution: Seller and SPACEHAB shall execute two (2) copies of this Letter Agreement in English and two (2) copies in Russian, one original in each language for each party. 9. Intellectual Property Rights: All worldwide Intellectual Property rights (including but not limited to patents, copyrights, trademarks, service marks and trade secrets) created under 3 Letter Agreement Page 3 of 3 this Letter Agreement and the Production Contract shall be the sole property of SPACEHAB. Energia agrees to reasonably assist SPACEHAB in securing such rights through patent, copyright and tradename applications in various worldwide jurisdictions. All Intellectual Property utilized in the performance of this Letter Agreement or the subsequent Production Contract shall remain the exclusive property of the party(s) who had the rights in the IP prior to this Letter Agreement. 10. Confidentiality: Per the Nondisclosure Agreement between the parties dated December 23, 1996, which terms and conditions are incorporated herein by this reference. 11. Document Translation: All textual documents provided by the Seller shall be in English. Graphical documents (drawings) may be provided in Russian. Any textual document, fax, or letter, five (5) pages or less in size, may be exchanged in native language. 12. Local transportation, meeting facilities, and interpreter services shall be provided by the host party. SPACEHAB will provide ground transportation (to and from DASA) for Energia personnel while jointly at DASA's facilities for business meetings. 13. All provisions herein and performance hereunder shall be governed by the laws of the Commonwealth of Virginia. 14. Any and all disputes hereunder shall be resolved by arbitration in the Washington, D.C. metropolitan area pursuant to the arbitration rules of the International Chamber of Commerce. The parties hereby agree that any arbitration findings hereunder may be enforced in any U.S. Federal Court in Washington D.C. or Virginia and the parties hereby consent to the jurisdiction of such courts for such purpose. SPACEHAB, INC. RSC-ENERGIA By: By: ----------------------------------- ------------------------------ Typed Name: Nelda Wilbanks Typed Name: -------------------------- -------------------- Title Contracts Administrator Title: -------------------------- -------------------- Date: Date: -------------------------- -------------------- EX-10.64 20 MCDONNELL DOUGLAS 7/28/95 AGREEMENT CANCELLATION. 1 EXHIBIT 10.64 June 10, 1997 Mr. R. Gale Schluter Vice President & General Manager Space & Defense Systems McDonnell Douglas Aerospace Group McDonnell Douglas Corporation 5301 Bolsa Avenue Huntington Beach, CA 92647-2048 Subject: Memorandum of Agreement Dear Gale: This is to confirm in writing our mutual understanding, reached by Dr. Harrison, the undersigned and you in previous meetings regarding the subject, that the Memorandum of Agreement between McDonnell Douglas Corporation and SPACEHAB, Incorporated dated 28, July, 1995 is null and void and of no effect. Please confirm this understanding by returning an executed copy of this letter at your convenience. Sincerely, /s/ Chester M. Lee Acknowledged & - ---------------------------- Approved By: /s/ R. Gale Schluter Chester M. Lee ------------------------ President R. Gale Schluter Date: 20 January 1997 CML/jam Enclosure(s) 2 MEMORANDUM of AGREEMENT between McDONNELL DOUGLAS CORPORATION and SPACEHAB INCORPORATED 28 July 1995 3 MEMORANDUM OF AGREEMENT This Agreement concurred upon on July 14,1995, is between McDonnell Douglas Corporation ("MDC"), acting through its McDonnell Douglas Aerospace - -Huntsville component, with an address at 689 Discovery Drive, Huntsville, AL 35806-2804, and SPACEHAB, Inc. ("SHI") with an address at 1215 Jefferson Davis Highway, Suite 1501, Arlington, VA 22202-4302, collectively "the Parties". WHEREAS: A. SHI has entered into contracts with NASA, hereinafter referred to as "Use Contracts," for the lease and operational services of pressurized habitable Shuttle Middeck Augmentation modules. MDC is SPACEHAB's sole subcontractor on such activity. B. The Use Contracts have established the following four major marketing assets for SHI and MDC: 1. Low cost, reconfigurable modules for a variety of space business applications; 2. Valuable integration and operational services experience and knowledge base; 3. A successful commercialization example and; 4. A powerful alliance between SHI and MDC for extensive penetration of the domestic and international Space Industry Market and potentially other technology markets. C. By leveraging on the Use Contract success and experience, the parties can create many new space business opportunities in the future. D. SHI is an entrepreneurial commercial firm with international strategic partners pursuing a strategy of excellent service and of providing private investment to incrementally displace public investment funding and, therefore, engaged in the marketing, commercial development, financing, conceptual design, operation, and leasing of crew-tended space systems. E. MDC is an aerospace corporation engaged in providing the systems management, design, development, integration, production and operation of crewtended space systems, including those for SHI. THEREFORE: The Parties intending to be legally bound agree: 1. During the term of this agreement SHI will grant to MDC a right of first refusal to perform as prime contractor to SHI for the commercial provision and support of all crew-tended and support space systems including, but not limited to, the following, should they become SHI contracts: 4 i. CMAM-type science missions; ii. International Space Station Alpha (hereinafter referred to as ISSA) Phase 1 docking mission with the Mir Space Station; iii. ISSA Centrifuge/Life Sciences Module; and, iv. All production, integration, and operation work to provide crew tended space systems and all logistics and operation of the ISSA or Shuttle or derivatives thereof. (a) MDC intends to support SHI in such business pursuits as described in items 1 (i) to 1 (iv) above in its traditional role and relationship with SHI, and will continue the nature of past relationships in the pursuit and conduct of the scope of business as identified. Where MDC elects to pursue these business opportunities as a prime, MDC will make reasonable best efforts to structure and present opportunities to customers utilizing SHI and its commercial service approach to satisfying customer's requirements. (b) MDC may exercise its right of first refusal hereunder for the specific project(s) covered by the right of first refusal by delivery of a notice of acceptance to SHI within 30 days of SHl's notice of the right of first refusal to MDC. (c) SHI will not contract with any party other than MDC for the performance of all or any of the work described in items 1 (i) to 1 (iv) above unless MDC has failed to exercise its right of first refusal within 30 days of the notice of said right, including an outline of reasonable principal terms, given by SHI to MDC. In the event that MDC does not exercise its right of first refusal within said time period, SHI shall be entitled to contract with one or more parties on terms no more favorable than those offered MDC, but only for the project(s) or product(s) covered by the right of first refusal written notice delivered to MDC. (d) Notwithstanding an exercise of the right of first refusal by MDC, for any individual proposal effort should the customer direct in writing, despite the reasonable efforts of the parties to convince the customer of the benefit of the teaming arrangement, a different contractor and subcontractor relationship, then SHI will not be obligated to honor MDC's right of first refusal for said proposal effort. 2. The Parties recognize that third parties may be brought into association from time to time in order to maximize international and/or domestic funding, support, acceptability, and competitiveness. The parties will perform this necessary accretion of associates cooperatively. In those cases where MDC exercises its right of first refusal the contractual relationship of the third party will be as sub contractor to MDC. The parties recognize that from time to time a direct contract between SHI and a third party may be necessary in order to maximize international and/or domestic funding, support, acceptability, and competitiveness. In those cases where the parties wish to proceed with a direct contract with a third party each party agrees to negotiate a mutually acceptable third party arrangement. 3. This Agreement shall terminate automatically upon the earliest of the following events to occur: (i) the expiration of 10 years following the date hereof, (ii) the debarment or suspension of either party by the Government, (iii) mutual agreement in writing by the parties. This agreement may be extended for 10 additional years in 5 year increments by mutual agreement of the parties in writing. 5 4. Subject to Lloyd's concurrence, MDC agrees to amend the Amended and Restated Credit Agreement dated December 29, 1993, signed by the Parties to extend the Revolving Credit Commitment Termination and Final Maturity dates until December 31, 1998. The Revolving Credit Commitment (RCC) amount will be reduced to $6 million as of January 1, 1996. 5. This Agreement shall not be assignable by either party without the prior written consent of the other and shall not be modified by any trade usage or prior course of dealing between the parties or in any way other than by a writing signed by the party to be charged therewith. This Agreement shall be governed by the laws of Missouri. 6. This Agreement shall not constitute, create, give effect to or otherwise imply a joint venture, pooling arrangement, partnership, or formal business organization of any kind. The rights and obligations of the parties shall be limited to these expressly set forth herein. Nothing herein shall be construed as providing for the sharing of profit or loss arising out of the efforts of either or both parties. Neither party shall be liable to the other for any of the costs, expenses, risks or liabilities arising out of the other's efforts in connection with the performance of this Agreement, except to the extent provided for under any subcontract contemplated herein. 7. Either Party by affixing an appropriate legend may identify any documented information furnished by it to the other party during the period of this agreement as the proprietary information of the furnishing party. The receiving party shall not use the identified information for any purpose other than the performance of the agreed tasks and shall not, without the written approval of the other party, disclose the identified information to others, except that this limitation on use or disclosure shall not apply to (i) information that the receiving party can prove was already known to it or subsequently becomes known to it from a source other than the furnishing party, (ii) information that has fallen into the public domain other than through disclosure by the receiving party, (iii) an inadvertent disclosure by the receiving party that occurs despite its exercise of reasonable diligence to prevent such disclosure, (iv) use of disclosure that occurs later than five (5) years after the date of this agreement, or (v) any disclosure by either party to NASA for NASA'a use under contract. Upon any termination of this Agreement, each party at the request of the other shall return to the other all documents reflecting information identified by the other as its proprietary information. 8. Any invention made by the parties jointly during performance of precontract proposal activities where the parties are each responsible for their own proposal costs shall be their joint property and they shall share equally in the cost of obtaining patent protection in the U. S. and such foreign countries as may be agreed. Neither party shall license any such joint invention without the written approval of the other party. 9. Neither party shall make any news releases about or disclose the contents of the Agreement without prior written consent of the other party except as may be required by law. 6 10. Any notice, consent, demand, or request required or permitted by this Agreement shall be in writing, and shall be deemed to have been sufficiently given when personally delivered or received by confirmed telephonic facsimile (FAX) or deposited in the United States registered mail, return receipt requested, and addressed as follows: For SHI: For MDC: M. E. Grayson P. J. Nohalty C. F. O. Director, Business Management Spacehab, Inc. McDonnell Douglas Aerospace - Huntsville 1215 Jefferson Davis Highway 689 Discovery Drive Suite 1501 Arlington, Virginia 22202 Huntsville, Alabama 35608 11. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations and understandings of the parties. SPACEHAB.INC, McDonnell Douglas Corporation By By Richard P. Hora R. D. Goodman President and CEO Director of Contracts and Pricing SPACEHAB, Inc. McDonnell Douglas Aerospace EX-10.65 21 UMBI ROYALTY AGREEMENT. 1 EXHIBIT 10.65 ROYALTY AGREEMENT This agreement (hereinafter "Agreement") is entered into this 1st day of May, 1997 (hereinafter "Effective Date") by and between SPACEHAB, Incorporated, a Washington State corporation, located at 1595 Springhill Road, Suite 360, Vienna, VA 22182, and University of Maryland Biotechnology Institute (hereinafter "UMBI")located at 4321 Hartwick Road, Suite 500, College Park, MD 20740. RECITALS WHEREAS, SPACEHAB will fly the Commercial Refrigerator/Incubator Module (CRIM) containing the Crystals by Vapor Diffusion Apparatus (CVDA) aboard its SPACEHAB Module during National Aeronautics and Space Administration (NASA) space shuttle mission, STS-84, currently scheduled to be flown May 15, 1997, and WHEREAS, UMBI desires to reserve and use eight (8) chambers in the CVDA during STS-84 to fly eight (8) Protein Crystal Growth Solutions, and WHEREAS, it is foreseeable that UMBI may, subsequent to the STS-84 mission, develop any Products as defined in Section 1.1 below, for which UMBI will license and receive royalty payments, and WHEREAS, SPACEHAB desires to receive royalties on all future sales of Products as defined in Section 1.1, rather than require UMBI pay SPACEHAB the customary $220,000 fair market value for flying the Protein Crystal Growth Solutions aboard the CVDA, and WHEREAS, both parties desire that UMBI pay SPACEHAB royalties on all future payments it receives for the sale of the Protein Crystal Growth Solutions, or derivative products thereof, in exchange, and as consideration for SPACEHAB's foregoing the $220,000 otherwise payable by UMBI to SPACEHAB for flying the Protein Crystal Growth Solutions aboard the CVDA. NOW THEREFORE, in consideration of the promises, mutual covenants, and warranties herein contained, the parties agree as follows: 1.0 DEFINITIONS 1.1 Products. The term "Products", referred to herein, shall mean all derivative products and derived applications of the eight (8) Protein Crystal Growth Solutions licensed or sublicensed by UMBI, including but not limited to, crystals developed from flying the Protein Crystal Growth Solutions aboard the CVDA during STS-84; other solutions using one or more elements of the original Protein Crystal Growth Solutions; other formulations, used independently or in conjunction with other compounds or substances; and pharmaceuticals, developed from the Protein Crystal Growth Solutions. The term Products shall also include further insight as to the true nature and character of the Protein Crystal Growth Solutions or the crystals produced thereby; discoveries of new methods; inventions of new formulations; discoveries of new approaches; and all 2 intellectual property developed or created as a result of flying the Protein Crystal Growth solutions aboard the CVDA during STS-84. Products shall also include discoveries arising as a direct or indirect result of examining, testing, and otherwise working with the Protein Crystal Growth solutions. 1.2 Net Sales. The term "Net Sales", referred to herein, shall mean the payment received by UMBI from licensees (or sublicensee) in all transactions, minus expenses, directly or indirectly involving the sale of Products defined in Section 1.1 above. 2.0 DESCRIPTION OF SPECIMENS 2.1 UMBI shall provide SPACEHAB with a description of the specimens, the solvents, and precipitants to be flown, and derived from the experimental flight aboard the CVDA during STS-84. UMBI shall also provide SPACEHAB with a description of the reasonably foreseeable areas of application for which these Products could feasibly be developed to commercial usefulness. The descriptions provided by UMBI, hereunder, shall become exhibits and shall be incorporated into this agreement. SPACEHAB shall keep confidential all descriptions provided by UMBI, hereunder, and shall not disclose said descriptions without UMBI's prior consent. 3.0 CONSIDERATION 3.1 As consideration, and in exchange for SPACEHAB foregoing the $220,000 fair market value otherwise payable to fly the eight (8) Protein Crystal Growth Solutions aboard the CVDA during shuttle mission STS-84, UMBI shall pay SPACEHAB a royalty on the sale of Products, as herein set forth. 4.0 ROVALTIES 4.1 UMBI shall pay to SPACEHAB for the sale of Products sold by licensees or sub-licensees an earned royalty of two percent (2%) of Net Sales until SPACEHAB receives $440,000in royalties, and one (1%) of Net Sales thereafter. 4.2 Royalties accruing to SPACEHAB shall be paid to SPACEHAB on an annual basis. Each such payment will be for royalties which accrued within the most recently completed calendar yearend payment shall be made by UMBI within two months of the end of such calendar year. 4.3 All moneys due SPACEHAB from UMBI, its licensee or sublicensee shall be payable in United States dollars collectible in Vienna, Virginia. When Products are sold for moneys other than United States dollars, the earned royalties will first be determined in foreign currency of the country in which such Products are sold and then converted into equivalent United States funds. The exchange rate will be that established by the Bank of America in San Francisco, California. 5.0 DUE DILIGENCE 3 5.1 Upon execution of this Agreement, UMBI shall diligently proceed with the research plan utilizing the Protein Crystal Growth solutions. Upon completion of the research, UMBI shall diligently proceed to market and seek commercial licenses for Products in order to further develop, manufacture or sell Products. UMBI shall notify SPACEHAB of its progress in licensing on an annual basis. 5.2 UMBI agrees that any license agreement entered into by UMBI for the development, manufacture, or sale of Product(s) shall include the requirement: a) That any licensee (or sublicensee) develop a commercialization plan under which licensee (or sublicensee) intends to bring the Products into commercial use; b) That licensee (or sublicensee) provide written annual reports on its product development progress or efforts to commercialize on an annual basis; c) That licensee (or sublicensee) shall use its reasonable best efforts to introduce into the commercial market or apply the license processes to commercial use as soon as practicable. "Reasonable best efforts", for the purpose of this provision shall include, but not be limited to, adherence to the commercialization plan and established benchmarks in the license (or sublicense) agreement; d) That licensee (or sublicensee) shall obtain all necessary governmental approvals for the manufacture, use and sale of Products; and e) That licensee (or sublicensee) use its reasonable best efforts to keep licensed products or licensed processes reasonably accessible to the public. 5.3 UMBI shall have the sole discretion for making all decisions as to how to commercialize, market and sell Products. 5.4 All such licenses (or sublicenses) shall include all of the rights of and obligations due to SPACEHAB that are contained in this Agreement. UMBI shall provide SPACEHAB with a copy of each license (or sublicense) issued hereunder and summarize and deliver all reports due under any license (or sublicense). 5.5 Upon termination of this Agreement for any reason, SPACEHAB shall have the option to require that all licenses (or sublicenses), hereunder, be assigned to SPACEHAB, and remain in force and effect under the terms and conditions thereof with SPACEHAB as the licenser, but the duties of SPACEHAB shall only extend to SPACEHAB's duties under this Agreement. 6.0 PROGRESS AND ROYALTY REPORTS 6.1 Beginning January 1, 1998 and annually thereafter, UMBI shall submit to SPACEHAB a progress report covering UMBI's activities related to the research. 6.2 After the First Commercial Sale of a Product anywhere in the world by licensee (or sublicensee), UMBI will make annual royalty reports to SPACEHAB on or before each February 28 of each year (i.e. within two (2) months from the end of each calendar year). Each such royalty report will cover UMBI's most recently completed calendar year and will show (a) the gross sales and net sales of Products sold by licensees, or sub-licensees during the most recently completed calendar year; (b) the number of each 4 type of Product sold; (c) the royalties, in U. S. dollars, payable hereunder with respect to such sales; (d) the exchange rates used. 6.3 If no sales of Products have been made during any reporting period, a statement to this effect shall be required. 7.0 BOOKS AND RECORDS 7.1 UMBI shall require its licensee (or sublicensee) to make available books and records accurately showing all Products developed, manufactured, used and/or sold under the terms of this Agreement. Such books and records shall be preserved for at least five (5) years from the date of the royalty payment to which they pertain and shall be open to inspection by representatives or agents of SPACEHAB at reasonable times upon reasonable advance notice to UMBI. 7.2 The fees and expenses of SPACEHAB representatives performing such examination shall be borne by SPACEHAB. However, if an error in royalties of more than ten percent (5) of the total royalties due for any year is discovered, then the fees and expenses of these representatives shall be borne by UMBI. 8.0 LIFE OF THE AGREEMENT 8.1 Unless otherwise terminated by operation of law or by acts of the parties in accordance with the terms of this Agreement, this Agreement shall be in force from the Effective Date and shall remain in effect for fifteen (15) years, until both mutually agree to terminate due to a lack of commercial success of the research or until UMBI elects to buyout this Agreement, as set forth in Article 11.0, the Termination and Buyout provisions set forth herein. 9.0 TERMINATION BY SPACEHAB 9.1 Subject to Article 5.0, the Due Diligence provisions located herein, if UMBI should violate or fail to perform any material term or covenant of this Agreement, then SPACEHAB may give written notice of such default (Notice of Default) to UMBI. If UMBI should fail to repair such default within ninety (90) days of the effective date of such notice, SPACEHAB shall have the right to terminate this Agreement and invoke the Buyout provisions located in Article 11.0, by second notice (Notice of Termination) to UMBI. If a Notice of Termination is sent to UMBI, this Agreement shall automatically terminate on the effective date of such notice, and all moneys payable to SPACEHAB, hereunder, shall immediately become due. Such termination shall not relieve UMBI of its obligation to pay any royalty or fees owed at the time of such termination. 9.2 If, at any time, either party is dissolved or reorganized the other party shall have the right to terminate this Agreement. 10.0 TERMINATION BY UMBI 5 10.1 UMBI shall have the right at any time to terminate this Agreement by giving notice in writing to SPACEHAB. Such notice shall be subject to the Notice provisions located in Article 13.0 (Notices) and termination of this Agreement shall be effective sixty (60) days from the effective date of such notices. Termination by UMBI shall activate the Buyout provisions located in Article 11.0 below. 10.2 Any termination pursuant to the above paragraph shall not relieve UMBI of any obligation accrued prior to such termination or any payments made to SPACEHAB due prior to the effective date of termination. 11.0 BUYOUT 11.1 If UMBI chooses to terminate this Agreement, or if this Agreement is terminated by SPACEHAB in accordance with the default provisions set forth herein, then UMBI shall pay SPACEHAB a buyout fee. The buyout fee shall be an amount mutually established by SPACEHAB and UMBI, and shall be a function of and based upon projected future Net Sales of Products beginning at the time the Buyout provision is invoked. 11.2 UMBI's payment of the buyout fee, hereunder, shall be known as the "Buyout" provision, and shall not relieve UMBI of its obligation to pay any royalties or fees accrued and owed to SPACEHAB up through the time of the mutually established Buyout fee. 12.0 COSTS 12.1 Each party agrees to pay its own costs and expenses incurred in connection with performing and complying with this Agreement, and neither party shall be liable for the costs incurred by the other party in complying with this agreement, except as herein set forth. It is expressly understood by the parties that SPACEHAB shall not liable for the costs incurred by UMBI if the STS-84, the CVDA, or the Protein Crystal Growth Solutions are not otherwise flown; and UMBI shall not be liable for the costs incurred by SPACEHAB if the Protein Crystal Growth Solutions are not flown aboard the CVDA during STS-84. 13.0 NOTICES 13.1 Any notice or payment required to be given to either party shall be deemed to have been properly given and to be effective (a) on the date of delivery if delivered in person or (b) five (5) days after mailing if mailed by first-class certified mail, postage, pre-paid to the respective addresses given below, or to such other addresses as it shall designate by written notice given to the other party. In the case of UMBI: University of Maryland Biotechnology Institute 4321 Hartwick Road, Suite 500 6 College Park, MD 20740 Attention: ORATD In the case of SPACEHAB: SPACEHAB, Inc. 1595 Springhill Road, Suite 360 Vienna, VA 22182 Attention:Nelda Wilbanks, Contracts Administrator 14.0 ASSIGNABILITY 14.1 This Agreement is binding upon and shall inure to the benefit of SPACEHAB, its successors and assigns, but shall be personal to UMBI and assignable by UMBI only with the written consent of SPACEHAB, which consent shall not be unreasonably withheld. 15.0 LATE PAYMENTS 15.1 In the event royalty payments or fees are not received by SPACEHAB when due, UMBI shall pay to SPACEHAB annual interest charges equal to the projected inflation rate published by the United States government. Late fees shall be waived in the event there is a legitimate dispute concerning payments due to UMBI from its licensee(s). 16.0 WAIVER 16.1 It is agreed that no waiver by either party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default. 17.0 GOVERNMENT LAWS 17.1 This Agreement shall be interpreted and construed in accordance with the laws of the State of Virginia. 18.0 EXPORT CONTROL LAWS 18.1 UMBI shall observe all applicable United States and foreign laws with respect to the transfer of Products and related technical data, to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. 18.2 UMBI shall impose upon any licensees or sublicensees the requirement to observe all applicable United States and foreign laws with respect to the transfer of Products and related technical data, to foreign countries, including without limitation, the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations. 19.0 FORCE MAJEURE 7 19.1 The parties to this Agreement shall be excused from any performance required hereunder if such performance is rendered impossible or unfeasible due to any catastrophes or other major event beyond their reasonable control, including, without limitation, war, riot, and insurrection; laws, proclamations, edicts, ordinances or regulations; strikes, lockouts or other serious labor disputes; and floods, fires, explosions, or other natural disasters. When such events have been abated, the parties' respective obligations hereunder shall resume. 20.0 MISCELLANEOUS 20.1 The headings of the sections of this agreement are for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 20.2 This Agreement will not be binding upon the parties until it has been signed below on behalf of each party, in which event, it shall be effective as of the date recited on page one. 20.3 No amendment or modification hereof shall be valid or binding upon the parties unless made in writing and signed on behalf of each party. 20.4 This Agreement embodies the entire understanding of the parties and shall supersede all previous representations or understandings, either oral or written, between the parties relating to the subject matter hereof. 20.5 If any provision(s) contained in this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the term hereof, it is the intention of the parties that the remainder of this Agreement shall not be affected thereby, provided that a party's rights under this Agreement are not materially affected. It is further the intention of the parties that in lieu of each such provision which is invalid, illegal, or unenforceable, there be substituted or added as part of this Agreement a provision which shall be as similar as possible in economic and business objectives as intended by the parties to such invalid, illegal, or unenforceable provision, but shall be valid, legal and enforceable. IN WITNESS WHEREOF, both SPACEHAB and UMBI have executed this Agreement in duplicate originals, by their respective officers hereunto duly authorized, on the day and year hereafter written. UMBI SPACEHAB, INC. BY: /s/ S. Gaylen Bradley BY: /s/ Chester M. Lee --------------------- Title: Vice President Acad. Affairs Title: President Date: 1 May 1997 Date: 8 SpaceHab/University of Maryland Agreement Exhibit A (Robb) Description of Specimens Amersham Life Science, Inc. specializes in reagents, enzymes, and kits for Nucleic Acid Sequencing and Detection. The Amersham line of DNA polymerases for sequencing is the best currently available, and continues to expand with its most recent addition, Thermo Sequenase. In order to continue to provide new DNA polymerases with improved features, one focus of current research is mutagenesis of archaeal thermostable DNA polymerases (confidential information relating to our current grant from the ATP). Protein engineering is currently underway on such a polyrnerase, based on the primary and proposed secondary structure of the enzyme. Having tertiary structure information from crystal analysis would provide key information on the structure to be modified. However, despite efforts by several labs in the past few years, these proteins have proven refractory to ordinary crystallization techniques, and there is no crystal structure data available for any thermostable archaeal Type II DNA polymerase. Amersham proposes to produce sufficient quantities of modified DNA polymerase from the hyperthermophile Pyrococcus furiosus for experiments to attempt crystallization with the Commercial Vapour Diffusion Apparatus. Our colleagues at the University of Maryland Biotechnology Institute have received funding from us under the NIST ATP program. Under this agreement, Amersham retains exclusive patent rights to the University's intellectual property developed under the agreement. UMBI researchers will collaborate with us to prepare the samples in a format most amenable to crystallization. Data obtained will enhance understanding of the protein structures that contribute to thermos/ability (by comparison with homologous mesophilic structures), and lead to further modifications of polymerase active sites. The potential commercial benefits include improved stability and performance of enzymes for DNA sequencing and PCR research. The University of Maryland is conducting basic studies into the determination of exceptional thermos/ability in enzymes. The approach they have taken is the mutagenesis of moderately thermostable enzymes, based on comparative structural predictions dictated by the crystal structures of homologous, exceptionally thermostable enzymes. Currently, they have constructed five fully active glutamate dehydrogenase variants of the hyperthermophile Thermococcus litoralis, which have a five-fold range of thermos/abilities. The midpoint of denaturation (Tm) of the most thermostable variant is 111C, which is within 2c of the most thermostable dehydrogenase recorded by us, that of Pyrococcus furiosus, and is 1 8C higher than the least thermostable mutant enzyme in the study. This range represents the effects of only five altered residues in a polypeptide of 321 residues. Detailed structural studies based on the crystallization of the enzyme under microgravity conditions, will allow us to confirm the data from modeling studies that led to the choice of these mutations sites. The overall goal of the study is to devise robust predictive strategies for altering enzyme thermos/ability. 9 SPACEHAB/UNIVERSITY OF MARYLAND AGREEMENT EXHIBIT B (DiGATE) DESCRIPTION OF SPECIMENS DNA topoisomerases have been the subject of intense study in recent years. These enzymes play a crucial role in cellular DNA metabolism. The importance of this role has been reinforced by the finding that certain antibiotics and antineoplastic agents specifically target and inhibit these enzymes. For example, the coumarin and quinolone antibiotics specifically inhibit bacterial DNA gyrase and acridines, anthracyclines, ellipticines, epipodophyllotoxins, and alkaloids specifically target and inhibit eucaryotic topoisomerases. DNA topoisomerases act by altering the topoligical state of DNA. This is accomplished by the transient breakage of one (type I topoisomerase) or both (type II topoisomerase) strands(s) of the helix, a strand passing event, and the subsequent resealing of the strand(s). It is the ability of topoisomerases to link and unlink DNA, that defines their role in cellular DNA metabolism. Topoisomerases have not only been implicated in the maintenance of the superhelical density of DNA, but also in the separation (or decatenation) of chromosomes during DNA replication. My laboratory is particularly interested in Escherichia cold DNA topoisomerase I (Topo I) and III (Topo III), the two type I enzymes of this well characterized bacteria. These two topoisomerases show extensive protein sequence homology within the first 600 amino acids of the two proteins; however, they diverge rapidly in the carboxyl-terminal domains of the proteins. Our laboratory has been able to show that although these proteins show extensive protein sequence homology, they catalyze distinct reaction in vitro. Topo I is an efficient relaxation activity, catalyzing the removal of negative supercoils from circular DNA molecules, but Topo III is a poor relaxation activity. Topo III, on the other hand, is a potent decatenase capable of efficiently resolving interlinked chromosomes. Topo I is a poor decatenase. In an attempt to understand the differences between these two enzymes we have used a combined molecular biology and biophysical analysis of these two enzymes. Molecular biology studies have implicated the heterologous carboxyl-terminus of Topo III as essential for its unique biochemical properties. In addition, these studies have indicated that there must be amino acid residues within the homologous regions of both proteins that are responsible for the unique biochemical properties of these enzymes. 10 EXHIBIT B The X-ray crystal structure has been determined in the laboratory of Alfonso Mondragon for a genetically engineered truncation of Topo I (containing residues through amino acid 590). This truncation, however, is not an active enzyme. We have collaborated with Dr. Mondragon to elucidate the X-ray crystal structure of E. cold Topo III. We have been able to generate a 3 structure of Topo III that contains amino acids 1-609. Our laboratory has shown that Topo III truncated to 609 amino acids, is a fully active topoisomerase. In addition, we are attempting to explain the catalytic differences of the two enzymes within the context of their physical structure. The structural determination of Topo III to higher resolution has been hampered by the small size of the crystals. Dr. Mondragon and myself are extremely interested in the possibility of growing bigger crystals in the low gravity environment of SPACEHAB. Dr. Mondragon and myself have recently entered a collaborative research agreement with SmithKline Beecham Pharmaceuticals to perform studies to elucidate the catalytic mechanism of type 1 topoisomerases. The agreement grants to Smith-Kline Beecham an option to negotiate an exclusive worldwide royalty bearing license to UMBI developed intellectual property and to UMBI's share of any jointly developed intellectual. The ultimate goal of the research would be to rationally design inhibitors of these enzymes. Recently, there has been a increasing occurrence of antibiotic resistant strains of bacteria. It is clear that new antibiotics must be produced. Unfortunately, the current list of antibiotics target a very limited set of enzymes. It is therefore essential to develop antibiotics to new targets. Type 1 topoisomerases are potential targets since inhibition of these enzymes during catalysis would result in chromosomal breaks in much the same way that the quinolone antibiotics result in chromosomal breaks by inhibiting type II topoisomerases. The availability of the crystal structures of the two type 1 enzymes in combination with the arsenal of molecular biology techniques currently available makes this an unparalleled opportunity to rationally design a new antibiotic to a new target. The ability to generate high quality crystals is essential to the refinement of the current X-ray crystal structure of Topo III and would greatly enhance the possibility of success of this project. EX-10.66 22 UAB RESEARCH FOUNDATION AGREEMENT. 1 EXHIBIT 10.66 SPACEHAB, INC. LETTERHEAD Date: 28 April 1997 CHANGE ORDER to AGREEMENT between SPACEHAB, Inc. and the UAB Research Foundation Dated July 15, 1996 To: From: David Day SPACEHAB, INC. UABRF 1595 Spring Hill Road 701 South 20th Street Suite 360 Suite 1120G Vienna, VA 22182 Birmingham, AL 35294 WHEREAS SPACEHAB, Inc. desires to purchase the "Optional Services" set forth in the Statement of Work ("SOW") to subject Agreement, UABRF is directed to perform the tasks described in the SOW, (Section II. Optional Services) and the parties hereby agree to the following changes to the Agreement. 1. Paragraph 2 is deleted in its entirety and replaced with the following: "2. SHI shall pay UABRF a fixed price of $629,294 for all of the "Standard Services" hardware, supplies and services pursuant to the SOW, and a fixed price of $134,635 for the "Optional Services" set forth in the SOW if requested by SHI. Payment shall be made as follows for the Standard Services: $40,000 upon submission of this Agreement to UABRF (hereby acknowledged and accepted by UABRF) $211,717 within 20 days of execution of this Agreement by SHI $125,859 upon UABRF/CMC's delivery to SHI of Phase III Safety Data Package on or before November 1, 1996 (currently L-6mos.) $125,859 upon delivery of all flight hardware due hereunder to SHI's Payload Processing Facility at L-2 mos. (currently March 1, 1997) $125,859 on L+1 mo. (currently June 1, 1997) 2 UAB/SPACEHAB, Inc. Agreement Change Order April 28, 1997 Payment for the $61,080 of Optional Services shall be made within 30 days of request for such services by SHI or by December 15, 1996, whichever is later." 2. Exhibit A, SHI/UABRF STATEMENT OF WORK is amended as follows: II. OPTIONAL SERVICES (IF REQUIRED) B. is deleted in its entirety and replaced with the following. "B. Provision of passive thermal containers and internal refrigerant and packing materials required to transport the required quantity of sample blocks from the UAB CMC to Tokyo's Narita Airport via commercial airliner. Purchase of a dedicated passenger compartment seat onboard the aircraft to safely accommodate and protect these containers. Provision of a trained technical to accompany these crystal-laden containers to a designated place in head office of Mitsubishi Corporation." Except as hereby modified, all conditions of said agreement as heretofore modified, remain unchanged and in full force and effect. /s/ Nelda Wilbanks - ---------------------------- ---------------------------------- Nelda Wilbanks UAB Research Foundation SPACEHAB, Inc. 3 AGREEMENT This agreement ("Agreement") is made this 15th day of July, 1996, between SPACEHAB, Incorporated in Washington state, with its principal offices located in Vienna, Virginia ("SHI") and the UAB Research Foundation ("UABRF") on behalf of The University of Alabama at Birmingham Center for Macromolecular Crystallography, located in Birmingham, Alabama ("CMC"). WHEREAS SHI has contracted with Mitsubishi International Corporation to provide NASDA with certain experiment flight hardware and related services for conducting microgravity protein crystal growth experiments on the Space Shuttle STS-84 SPACEHAB Double Module mission no sooner than May 1997; and WHEREAS SHI desires to lease UABRF/CMS's Commercial Vapor Diffusion Apparatus ("CVDA") and certain UABRF/CMS's, to provide said hardware and services to NASDA as part of the requirements under the NASDA Contract and WHEREAS desire to provide said CVDA and related services to SHI through a subcontract win CMC for the aforesaid purpose; NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: 1. UABRF/CMC shall provide to SHI and SHI's customers NASDA, at the times and locations set forth therein, all the hardware, supplies and services set forth in the Statement of Work ("SOW') attached hereto as Exhibit A and incorporated herein by the reference. 2. SHI shall pay UABRF a fixed price of $629,294 for all of the "Standard Services" hardware, supplies and services pursuant to the SOW, and a fixed price of $123,555 for the "Optional Services" set forth in the SOW if requested by SHI. Payment should be made as follows for the Standard Services: $40,000 upon submission of this Agreement to UABRF (hereby acknowledged and accepted by UABRF) $211,717 within 20 days of execution of this Agreement by SHI $125,859 upon UABRF/CMC's delivery to SHI of Phase III Safety Data Package on or before November 1, 1996 (currently L-6 mos.) $125,859 upon delivery of all flight hardware due hereunder to SHI's Payload Processing Facility at L-2 most (currently March 1, 1997) $125,859 or L+1 mo. (currently June 1, 1997) Payment for the $123,555 of Optimal Services shall be made within 30 days of request for such services by SHI or by December 15, 1996, whichever is later. 3. UABRF/CMC warrants that the CVDA hardware being provided hereunder is designed for the particular use intended herein. 4. UABRF/CMC shall indemnify arid its customer, Mitsubishi and NASDA, against any and all 4 citrons or actions brought by any third parties based upon the negligent acts or omissions in UABRF/CMC'S performance of this agreement. 5. SHI and UABRF/CMC acknowledge that performance of the services described in this Agreement and the SOW depends upon the agreements governing NASA's lease of the SHI module for STS-84 or any ether missions covered herein ("USA Contracts"). Any changes to these NASA/SHI agreements that are imposed by NASA and which prevent the performance contemplated herein shall not constitute a breach of this agreement by either SHI or UABRF/CMC. In the event of such charges by NASA, SHI and UABRF agree to negotiate an equitable adjustment to this Agreement that satisfies both parties as well as NASA's new requirements. If there are any conflicts between this Agreement and the requirements of the NASA contracts applicable to this Agreement, the NASA Contracts terms and conditions shall take precedence. UABRF/CMC shall execute a Cross -Waiver of Liability if required by such NASA Contracts. 6. SHI and UABRF/CMC shall exchange all documents and information required for each party to fulfill its responsibilities under this Agreement. In the event technical data required to he furnished to UABRF/CMC under this Agreement is considered by SHI or its customer Misubishi/NASDA to be proprietary or a trade secret such shall inform SHI that the date is considered proprietary or trade secret and any data so provided shall be conspicuously marked "Proprietary" or "Trade Secret" prior to submittal to UABRF/CMC. UABRF/CMC agrees that the data will not, without permission, be duplicated, used or disclosed by UABRF/CMC or its Contractors and subcontractor for any propose other than as necessary to carry out UABRF/CMC's obligation hereunder. All data (including data reduction and analysis) obtained or derived as a result of the activities contemplated herein shall be the property of SHI's customer MUSUBISHI/NASDA, and, in order to protect trade secrets and other property rights in such data, UABRF/CMC shall maintain such data in confidence. UABRF/CMC will not acquire, as a result of launch and associated services under this Agreement, any rights to such properly rights, except the right to use duplicate, and disclose such data as set forth herein. 7. UABRF/CMC shall obtain any permit or license that may be required to provide the services to be furnished under this Agreement. 8. Notwithstanding any other provisions herein, SHI shall not be obligated to pay the amounts set for in paragraph number 2 above in the event STS-84 is canceled or indefinitely delayed and SHI does not arrange for another Space Shuttle mission launch to carry the NASDA experiments which are the subject of this Agreement, or SHI's customer declines, for whatever reason, to contact with SHI or otherwise to participate in the contemplated experiments. In the event of any of the above occurrences, SHI shall not be required to make any payments not due before such occurrence and UABRF/CMC shall be entitled to retain any payments made prior to such occurrence only to the extent such payments represent actual performance by UABRF/CMC up to the date of such occurrences. 9. Neither party shall assign the rights under this Agreement to any person or entity without The Often approval of the over party. 10. All notices, requests, demands, and other communication hereunder shall be in writing and shall be either (1) personally delivered, (2) sent by U.S. mail or reputable overnight delivery service, or (3) transmitted by facsimile machine as follows: To SHI: Nelda Wilbanks Contracts Administrator SPACEHAB, Inc. 1595 Spring Hill Rd. Vienna, Virginia 22182 5 To UABRF/CMC: David Day UABRI: 1120 G Administration Building 701 20th Street South Birmingham, Alabama 35294 The effective date of each notice, demand, request or other communication shall be deemed to be: (1) the date of receipt if delivered personally or by mail or overnight delivery service, or (2) the date of transmission if by facsimile. Either party may change its address or designee for purpose hereof by informing the other party in writing of such action and the effective date of such change. 11. The parties hereto desire and agree that any controversy or claim arming out of, or relating to his Agreement, or breach thereof, shall be settled by arbitration in Tysons Corner, Virginia, in accordance with the rules of the American Arbitration Association, and final judgment upon the award rendered may be entered in my court having jurisdiction thereof. 12 This Agreement constitutes the complete agreement and understanding with respect to the subject matter hereof between the parties. Reviewed By: CMC SPACEHAB, Inc. By: /s/ Dr. Lawrence J. DeLucas By: /s/ William S. Dawson ---------------------------- --------------------- Name: Dr. Lawrence J. DeLucas Name: William S. Dawson ---------------------------- --------------------- Title: Director Title: General Counsel and ---------------------------- --------------------- Director of Contracts --------------------- UABRF By: /s/ Kenneth J. Roozen, Ph.D. ---------------------------- Name: Kenneth J. Roozen, Ph.D. ---------------------------- Title: Executive Director ---------------------------- 6 EXHIBIT A SHI/UABRF STATEMENT OF WORK OBJECTIVE: Provide engineering and science support to SPACEHAB's customer, the NASDA organization, in order to perform protein crystal growth experiments in microgravity currently scheduled on STS-84 utilizing hardware developed and services provided by UABRF/CMC. I. STANDARD SERVICES A. UABRF/CMC will provide a means for the NASDA organization to perform protein crystal growth experiments in hardware designed and built by the University of Alabama at Birmingham. The hardware will be managed and integrated by the UABRF/CMC engineering staff. All safety and integration data will be generated and submitted by UABRF/CMC, with the exception of the sample list which will have to be provided by the NASDA organization. B. The Commercial Vapor Diffusion Apparatus (CVDA) will be used as the vehicle for growing protein crystals by vapor diffusion. The CVDA hardware will be flown in a CRIM in order to maintain the thermal environment of the crystal growth hardware. C. UABRF/CMC will act as the primary point of contact for hardware and operational requirements, development and implementation. D. UABRF/CMC will provide ground based hardware and procedures for determining the proper protein crystal growth conditions in microgravity. The ground hardware will be sent to NASDA approximately eleven months before launch. E. UABRF/CMC will obtain all certifications necessary for flight (including but not limited to flight and ground safety certifications). F. Provide mission specific experiment familiarization and "hands on" training sessions to the flight crew and to NASDA technical and scientific personnel as required to support ground operator, PI and flight crew training at U.S. and Japanese locations. This includes provision of the required training and/or flight hardware at the location of the training session. G. UABRF/CMC will perform/support timeline specific training at the SPACEHAB Payload Processing Facility (SPPF) H. UABRF/CMC will support all JSC mission simulations required to complete flight and ground control team preparation mission milestones. I. UABRF/CMC will be responsible for developing an "Acceptance Data Package" that will enable the Commercial Protein Crystal Growth Hardware to be processed at Kennedy Space Center pre-flight and post-landing. J. UABRF/CMC will also provide all the necessary equipment and personnel at KSC and JSC to support pre-mission integration and real-time mission operations. K. UABRF/CMC will provide badging for all NASDA personnel required at KSC to support loading of the required space hardware and at JSC to support real-time mission operations. L. UABRF/CMC will provide transportation, personnel, and equipment at the landing site in order to 7 bring the samples back to UABRF/CMC for deintegration and analysis. M. All experiment mission parameters (e.g., temperature setting, length of experiment) will be determined by the NASDA organization and submitted to UABRF/CMC for incorporation into the integration documentation. All requirements must fall within the STS middeck & CRIM capabilities. N. All Mission specific interface verification data will be submitted by UABRF/CMC with inputs on sample toxicity from the NASDA PI. O. Photo documentation of flight-grown crystals, if desired, will be performed by UABRF/CMC personnel. II. OPTIONAL SERVICES (IF REQUIRED) A. UABRF/CMC will provide three X-ray data collection facilities (one image plate detector and two multiwire detectors) for a two week period immediately following the flight. A UABRF/CMC crystallographer will provide technical assistance during this data collection period. B. Provision of passive thermal containers and internal refrigerant and packing materials required to transport the required quantity of sample blocks from the UABRF/CMC to Tokyo's Narita Airport via commercial airliner. Purchase of a dedicated passenger compartment seat onboard the aircraft to safely accommodate and protect these containers. Provision of a trained engineer to accompany these crystal-laden containers. EX-10.67 23 PENN STATE AGREEMENT. 1 EXHIBIT 10.67 [SPACEHAB, INC. LETTERHEAD] SPACEHAB DEVELOPERS OF SPACE HABITAT MODULES RECEIVED APR 29 1996 April 26, 1996 SHI-HOU-DAB-960037 Dr. Wesley C. Hymer Director Center for Cell Research The Pennsylvania State University 204 South Frear Building University Park, PA 16802-6005 Dear Dr. Hymer: Thank you for your hospitality this week during SPACEHAB's visit to the Pennsylvania State University (PSU) Center for Cell Research (CCR) facility to discuss the status of the United States Commercial Electrophoresis Program in Space (USCEPS). I was impressed by your ground test program as well as with progress on development of an integrated flight hardware system. I am more confident than ever that USCEPS will become the premier facility for electrophoresis research in space by U.S. and international principal investigators. It is our understanding that the funding required to "keep the doors open" at the CCR is $25,000 per month. It is also our understanding that the NASA Office of Space Access and Technology (Code X) has provided $40,000 in supplemental funding to the CCR, the use of which is subject to agreement by the CCR to certain USCEPS market-base definition criteria. Additionally, Code X has initiated development of a Cooperative Agreement (CA) with the CCR which, when completed, will enable additional NASA contributions as the USCEPS Program matures. SPACEHAB is prepared to consider a formal, long-term, business relationship with the PSU, the Space Technology Corporation (STC), and the CCR regarding development and/or utilization of the USCEPS and Biomodule technologies on the ground and in space. To facilitate development of the requisite documentation and understandings pertaining to such a relationship, SPACEHAB is prepared to provide initial, good-faith funds to the CCR in the amount of $12,500 per month beginning May 1, 1996, continuing for an initial period of ninety days. During this 90-day period, PSU and the CCR would be expected to accomplish the following in close coordination and cooperation with SPACEHAB. 1. Development and execution of a joint Industry-University Cooperative Research Agreement between PSU and SPACEHAB which will be consistent with University policies and which will contain certain intellectual property provisions providing STC with exclusive commercialization rights to technology developed under the agreement. 2. Development and execution of an intellectual property licensing agreement between STC and the Penn State Research Foundation (PSRF, the University's technology transfer agent) for the licensing of the background rights relative to the USCEPS Program and the Biomodule and upon which the above-referenced research program will be based. The license will be consistent with PSRF's standard license terms and conditions. (Note: In the event PSU cannot ultimately commercialize the USCEPS or Biomodule technologies using the entity STC, the parties will effectuate the intent of this agreement through licensing agreements directly from PSU's subsidiary technology transfer corporation, the PSRF, to SPACEHAB or other third parties, who will enter licensing and/or manufacturing agreements consistent with this letter agreement.) 3. Development and execution of a Commercialization Agreement between STC and SPACEHAB. This agreement will provide SPACEHAB with the right to serve as its exclusive commercialization agent, and providing SPACEHAB with the right to initially receive 50% of net profits generated from the commercialization of the USCEPS and Biomodule technologies until SPACEHAB has recovered 150% of the research monies provided to the University under paragraph 1. above, as well as SPACEHAB's right to thereafter receive 25% of net profits as a continuing royalty share. 2 4. Development of a Cooperative Agreement between the CCR and NASA to facilitate additional NASA funding, USCEPS hardware flight certification and advocacy for USCEPS flight opportunities aboard the Space Shuttle and International Space Station. 5. Development of a Statement of Work (SOW) which encompasses the strategic and tactical aspects of the CCR/SPACEHAB business relationship as it relates to marketing and managing the USCEPS and Biomodule Programs over the next five years. This SOW should include, but not be limited to, the following elements: a. Program overview (USCEPS, Biomodule) b. Program implementation strategy (USCEPS, Biomodule) c. Current market assessment (USCEPS, Biomodule) and outreach plan (as specific as proprietary considerations allow) d. USCEPS development-to-flight-readiness schedule with key technical and programmatic milestones and assumptions identified 6. Development of a phased budget plan which projects CCR costs throughout the five year period. 7. Monthly progress reports updating the status of work on the above products. Following the initial 90-day period, all parties will evaluate the above products for completeness and substance, realizing that certain technical aspects of the USCEPS development and flight opportunity schedule may continue to be somewhat uncertain during this time. If SPACEHAB determines in its sole discretion that substantial progress has been made on the above products, SPACEHAB will continue funding at $12,500 per month through April, 1997 (a total of $150,000 in funds), at which time an additional assessment of Program status will be made by SPACEHAB. A negative assessment at the 90-day milestone will result in termination of SPACEHAB funding (a total of $37,500). It is expected that all funds provided by SPACEHAB, Inc. will be used solely to facilitate the continuation of USCEPS ground tests currently in process; in the development of a detailed Statement of Work which functionally organizes the technical and business-base-development work to be done up to and including first USCEPS flight; in the overall management of the USCEPS and PSB research program; and in the maintenance of the USCEPS and PSB flight hardware. As a part of this letter agreement, the CCR will use the Oceaneering SPACEHAB Refrigerator Freezer (OSRF) as the USCEPS sample refrigeration facility, subject to successful completion of all OSRF flight qualification testing. It is expected that the CCR retain the services of Mr. Joe Baker as USCEPS Program Manager throughout the funding period. The CCR, however, will remain solely responsible for Mr. Baker's compensation. 2 3 Your concurrence on the above and signature below is requested at your earliest convenience. SPACEHAB, Inc. looks forward to working with the CCR in its USCEPS and Biomodule commercialization efforts. Sincerely, /s/ Dan A. Bland, Jr. - ---------------------- Dan A. Bland, Jr. Director, Commercial Applications SSUP Program manager /s/ Margaret E. Grayson /s/ R. D. Nargi - ------------------------ -------------------------- Margaret E. Grayson Mr. R.D. Nargi SPACEHAB Vice President - Finance Associate Treasurer and Administration The Pennsylvania State University 3 EX-10.68 24 NASA SA42 (MIR CONTRACT AMENDMENT). 1 EXHIBIT 10.68 OMB APPROVAL NO. 2700-0042 - -------------------------------------------------------------------------------- AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE PAGE 1 OF 41 PAGES - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 42 SEE BLOCK 16C - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQ. NO. N/A 5. PROJECT NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE BV2/Y55 NASA/Lyndon B. Johnson Space Center -------------------------------- Space Shuttle Business Management Office 7. ADMINISTERED BY (if other Attn: BV2/ Christine Mack than item 6) Houston, TX 77058 CODE - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and Zip Code) Spacehab, Inc. Attn: Nelda Wilbanks -------------------------------- 1595 Spring Hill Rd., Suite 360 APPROVED Vienna, VA 22182 - ------------------------------------------- /s/ CODE FACILITY CODE ------------------------ - ------------------------------------------- JSC PROCUREMENT OFFICER [X] 9A. AMENDMENT OF SOLICITATION NO. 7/16/97 - ------------------------------------------- ------------------------- 9B. DATED (SEE ITEM 11) DATE - ------------------------------------------- ------------------------- [X] 10A. MODIFICATION OF CONTRACT/ORDER NO. 10B. DATED (SEE ITEM 13) NAS 9-19250 11/17/94 - ---------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS - ---------------------------------------------------------------------------- [ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended, [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and returning copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATE (If required) N/A - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- [X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14. PURSUANT TO THE AUTHORITY OF FAR 43 103(b) - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: 10 U.S.C. 2304 (c)(1) - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor [ ]is not [X] is required to sign this document and return 3 copies to the issuing office. --- - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where required.) The purpose of this modification is to: (1) definitize letter contract modification 23, Contract Change Orders (CCOs), 12, 13, 14, and 15, and all revisions; and (2) recognize full and equitable adjustment. To implement the above actions, the following changes are made to the contract: 1. Article B.2. SCHEDULE OF SERVICES TO BE PROVIDED, is deleted in its entirety and replaced with the following: Except as provided herein, all items and conditions of the document referenced in Item 9A or 10A as heretofore changed, remained unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Nelda Wilbanks, Contracts Administrator - -------------------------------------------------------------------------------- 15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED /s/ Nelda Wilbanks 7/11/97 (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) Carl C. Weber, Jr., Contracting Officer - -------------------------------------------------------------------------------- 16B. UNITED STATES OF AMERICA By: /s/ Carl C. Weber, Jr. (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 16C. DATE SIGNED 16 July 97 - -------------------------------------------------------------------------------- 2 NAS 9-19250 Modification No. 42 Page 2 of 41 "B.2 SCHEDULE OF SERVICES TO BE PROVIDED In accordance with the Statement of work set forth in Section C, the Contractor shall provide all flight and ground hardware and integration and operations services required to meet the following launch dates for seven missions to MIR:
Missions Module Configuration Launch Date -------- -------------------- ----------- Shuttle/Mir Mission-03 (S/MM-03) Single 22 Mar 1996 Shuttle/Mir Mission-04 (S/MM-04) Double 16 Sep 1996 Shuttle/Mir Mission-05 (S/MM-05) Double 12 Jan 1997 Shuttle/Mir Mission-06 (S/MM-06) Double 15 May 1997 Shuttle/Mir Mission-07 (S/MM-07) Double 18 Sep 1997 Shuttle/Mir Mission-08 (S/MM-08) Double 15 Jan 1998 Shuttle/Mir Mission-09 (S/MM-09) Single 29 May 1998
(End of clause)" 2. Article B.3 FIRM-FIXED PRICE (NASA 18-52.2167-78) (DEC 1988) is deleted in its entirety and replaced with the following to reflect the negotiated price of $38,000,000 for definitization letter contract modification 23, and for CCOs 12, 13, 14, and 15, and all revisions. "B.3 FIRM-FIXED PRICE (NASA 18-52.216-78) (DEC 1988) The total firm-fixed-price of this contract is $88,506,600." 3. Section C, Statement of work is deleted in its entirety and replaced with the attached statement of work which includes the following revisions to letter contract modification 23: - As definitization for CCO 12, section 2.1, fourth paragraph, is deleted in its entirety and replaced with the following: "Figure 1 provides a preliminary payload manifest for the first four NASA-Mir Program Phase 1 missions utilizing SPACEHAB. It is provided to assist the Contractor in scoping the effort required. The payload complement for the remaining three missions shall be a combination of Russian logistics, research payloads and miscellaneous items associated with one crewmember exchange on S/MM-07 and S/MM-08, and one crewmember return on S/MM-09. Russian logistics items are expected to be similar to those items manifested on the first four missions, however, the quantity of items may be revised, as in the case of the Russian 800A storage batteries. The quantity of these batteries, which require special mounting hardware, has been increased from three to a maximum of seven on missions S/MM-07, -08 and -09. Additions, deletions, and changes to the individual payload mass and volume for both the launch and return payload complements, and changes to other 3 NAS 9-19250 Modification No. 42 Page 3 of 41 requirements such as active versus passive payloads and Extra Vehicular Activity (EVA) requirements are anticipated. " - - As definitization for CCO 13, SOW Section 3.5.2.2 is modified by the addition of the following paragraph: "For S/MM-06 the contractor shall provide routing and installation of a customer-provided data cable form the EORF to a SPACEHAB module Experiment Connector Panel, configuration of the module downlink telemetry system to accept EORF data, preflight testing of the data system with EORF data, and real-time throughput of the received telemetry data from the SPACEHAB POCC to the JSC Science Monitoring Area during the mission." SOW Section 3.4, Power, the last sentence in the first paragraph, is deleted in its entirety and replaced with the following: "In addition to standard electrical services for payloads, beginning with S/MM-04 the contractor shall provide a 28 VDC, 25 ampere electrical power outlet and cable to connect to the Enhanced Orbiter Refrigerator Freezer (EORF) to existing module electrical power circuits. In addition, for S/MM-06 the contractor shall provide an electrical power cable for connection of the Inflatable Thermal control unit (ITCU) to existing module electrical power circuits." - - As definitization for CCO 14, SOW Section 3.5.2.2, Telemetry, is modified by the addition of the following paragraph: "For S/MM-06, -08 and -09 the Contractor shall provide the capability to process simultaneously in the POCC both real time downlinked telemetry data from the Realtime Radiation Monitoring Device (RRMD) experiment, and RRMD experiment data recorded on board during Orbiter Loss Of Signal (LOS) periods for delayed playback." - - As definitization for CCO 15, SOW Section 3.1, the following paragraph is added after the eleventh paragraph: "The Contractor shall provide the hardware, facilities and services necessary to integrate a Russian-provided Elektron oxygen generating unit into the SPACEHAB double module for ascent or descent to/from the Mir Station on any SPACEHAB-Mir double module mission after S/MM-05." - - To support alternate landing site for S/MMs 07, 08, and 09, SOW Section 6.3.9, End-of-Mission Access, is deleted in its entirety and replaced with the following: "The Contractor shall negotiate with the SSP through the PIP for early module access at the end of a mission. In concert with KSC landing and recovery personnel, and if necessary to meet payload complement requirements, the Contractor shall provide the 4 NAS 9-19250 Modification No. 42 Page 4 of 41 support necessary, including GSE, for the accomplishment of approved payload early removal from the module at the primary and first alternate landing sites. At the primary landing site the Contractor shall be ready to support a landing at any time after launch. At the first alternate landing site the Contractor shall be ready to support a landing at any time after Docking + 48 hours, if Shuttle-Mir docking is successful. If not successfully accomplished, support will be on a best effort basis. If necessary to provide timely support at the first alternate landing site, the Contractor shall preposition GSE there to support payload removal on all SPACEHAB-Mir missions. The Contractor shall have in place a rapid response plan to move the necessary personnel and equipment to other alternate or abort landing sites if so directed." - - To incorporate full capacity of the modules, negotiated as approximately 13,860 lbs, and to incorporate up to 25 percent active payloads the following changes are made: - SOW Section 2.3, paragraph (a) is deleted in its entirety and replaced with the following: "a Total available SPACEHAB module internal volume. Except as constrained by (1) Space Shuttle ascent performance, (2) center-of-gravity considerations, and (3) the structural limitations of installed storage accommodations, and to the extent that (1) approved Phase 1 manifest requirements exist and (2) the utilization of storage capacity is operationally practical, the Contractor shall utilize all available module storage volume." - SOW Section 2.3, paragraph ( c) is deleted in its entirety and replaced with the following: "c. Total allowable SPACEHAB payload weight. For each SPACEHAB-Mir mission the projected maximum payload net weight at launch is as follows:
Mission Payload Net Weight ------- ------------------ Shuttle/Mir Mission-03 3132 lbs (1420 kg) Shuttle/Mir Mission-04 4421 lbs (2005 kg) Shuttle/Mir Mission-05 4224 lbs (1916 kg) Shuttle/Mir Mission-06 4647 lbs (2107 kg) Shuttle/Mir Mission-07 5250 lbs (2381 kg) Shuttle/Mir Mission-08 5250 lbs (2381 kg) Shuttle/Mir Mission-09 3360 lbs (1524kg)
Manifesting of more or less payload net weight on any mission, up to the limits of Orbiter ascent performance, or center-of-gravity limits, or module structural capability, is not precluded. Active payloads manifested on SPACEHAB-Mir missions-07, 08, and 09 may constitute up to 25% of the total net ascent payload weight accommodated in the SPACEHAB during those missions. Active payloads (those requiring extensive ICD and 5 NAS 9-19250 Modification No. 42 Page 5 of 41 safety packages, module electrical power, crew training, procedures and flight support), either bulkhead or rack mounted, are not precluded on any mission." - - No adjustments will be made to the contract price for net ascent payload weight above or below 13,860 lbs. for S/MMs-7, 08, and 09. - - A new paragraph is added after the sixth paragraph of SOW Section 3.1 to incorporate a cargo net: "The Contractor shall develop and provide a light weight cargo net or bag arrangement that may be stowed for ascent and deployed for descent. This shall be used to meet a requirement on S/MMs-07, 08, and 09 for an efficient method to return excess low density packing material from the Mir Station." - - Section 4.7, paragraph 1, is deleted in its entirety and replaced with the following for clarification of the payload complement assessment process: "For each SPACEHAB-Mir mission, the contractor shall perform an assessment of candidate payloads for their technical and operational compatibility when integrated into a total mission complement. For the initial baselining, and for each proposed update to the Phase 1 Requirements Document, the Contractor shall perform an informal assessment of candidate payloads for their technical and operational compatibility when integrated into a total mission complement. The results of this assessment shall be informally transmitted to the Government's Phase 1 Requirements Integrated Product Team as part of the Phase 1 manifesting process. For each approved update to the baselined Phase 1 Requirements Document the Contractor shall develop and submit to the Government a Mission Requirements and Allocations Document (MRAD) (DRL Line Item No. 14) detailing how the approved requirements will be accommodated in SPACEHAB." - - The above and all other changes to Section C associated with incorporating S/MMs-07, 08, and 09, as negotiated, are bar-marked in the attached SOW. - - CC04 and all revisions, will be revised to include additional lease hardware on STS-89. The revised CCO will have an NTE of $580,000 and will be negotiated at $0 profit. 4. Article F.4, COMPLETION OF WORK (JSC 52.212-95) (SEP 1988), is deleted its entirety and replaced with the following: "F.4 COMPLETION OF WORK (JSC 52.219-95) (SEP 1988) All work required under this contract, including submission of all reports, shall be completed on or before July 31, 1998. (End of clause)" 6 NAS 9-19250 Modification No. 42 Page 6 of 41 5. Clause H.5 LIMITATION OF FUNDS FIXED-PRICE CONTRACT (NASA 18-52.232-77) (MARCH 1989), paragraphs (a) and (c)(l) are deleted in their entirety and replaced with the following to reflect the new Schedule for Allotment of Funds: (a) Of the total price of this contract, the sum of $54,226,100 is presently available for payment and allotted to this contract. It is anticipated that from time to time additional funds will be allocated to this contract in accordance with the following schedule until the total price of said items is allotted: SCHEDULE FOR ALLOTMENT OF FUNDS
Date Amounts GFY95 $12,800,000 GFY96 $37,493,944 GFY97 $30,500,000 GFY98 $ 7,712,656 TOTAL $88,506,000
(c)(1) It is contemplated that funds presently allotted to this contract will cover the work to be performed until August 31, 1997." 6. Article H.7, RESERVED, is deleted in its entirety and replaced with the following: "H.7 AGREEMENT CONCERNING DELAYS IN LAUNCH DATES AS SET FORTH IN THE CONTRACT AND RELATED EQUITABLE ADJUSTMENTS Since flight schedule changes are likely to occur, it is desirable to negotiate an agreement that equitable adjustments will not be made unless the schedule slips impact the hardware processing time or impacts the total period of performance under this contract. The proposed agreement is identified below: No equitable adjustment shall be requested in the event of launch schedule changes as long as the launch schedule changes: 1.) Allow the contractor at least 45 working days to process hardware in the Spacehab Payload Processing Facility. 2.) Do not increase the total period of performance under this contract. (End of clause)" 7 NAS 9-19250 Modification No. 42 Page 7 of 41 7. Article H.10, RESERVED, is deleted in its entirety and replaced with the following: "H.10 SPECIAL PROVISION FOR CONTRACT CHANGES Notwithstanding the provisions of the Changes clause, the parties agree that no change made pursuant to the Changes clause shall give rise to an equitable adjustment in the firm-fixed-price or any other contract provision, when said change causes an increase or decrease in the contractor's estimated cost of performing that change is $30,000 or less in this contract. Each change shall be controlling in making this determination, and such change shall not, for purposes of determining the applicability of this clause, be added to any other change(s). The parties recognize that several changes may be grouped together in a bilateral contract modification for definitization; however, the dollar value of each individual change will be controlling in determining whether or not an equitable adjustment is in order. (End of clause)" 8. Article I.8, PROGRESS PAYMENTS (FAR 52.232-16) (JUL 1991), of the basic contract, and Article I.11, PROGRESS PAYMENTS (FAR 52.232-16) (JUL 1991), Alternate II (AUG 1987), of letter contract modification 23, are deleted in their entirety following final payment for work in support of the basic missions totaling $50,506,600 and until the contractor's accounting system is approved by the Defense Contract Audit Agency. 9. Article I.11, MILESTONE SCHEDULE, is hereby added to the contract: "I. 11 MILESTONE PAYMENT SCHEDULE The firm-fixed price for the lease of module and related services on a per-flight basis is as follows:
Firm-Fixed Delivery Item Number Services Price Date ----------- -------- ----- ---- 1 Lease of double module and related integration services on STS-86 la Interface Control Agreements (Interface Control Documents (ICDs), Stowage Interface Agreements (SIAs) Payload Transfer Agreements (PTAs)) baselined $3,400,000 06/20/97
8 NAS 9-19250 Modification No. 42 Page 8 of 41
Firm-Fixed Delivery Item Number Services Price Date ----------- -------- ----- ---- 1b Analytical Engineering Analyses (Structural, Thermal, Electromagnetic Interference/Electromagnetic Compatibility (EMI/EMC) and Acoustics) delivered to Space Shuttle Program(SSP) $ 3,400,000 07/19/97 1c Delivery of flight-ready SPACEHAB double module in accordance with the SOW to KSC $ 3,400,000 08/13/97 1d Post-flight destow process complete $ 3,400,000 10/28/97 SUBTOTAL $13,600,000 2 Lease of double module and related integration services on STS-89 2a Interface Control Agreements (ICDs, SIAs, PTAs) baselined $ 3,400,000 10/16/97 2b Analytical Engineering Analyses (Structural, Thermal, EMI/EMC and Acoustics) delivered to SSP $ 3,400,000 11/15/97 2c Delivery of fight-ready SPACEHAB double module in accordance with the SOW to KSC $ 3,400,000 12/03/97 2d Post-flight destow process complete $ 3,400,000 02/24/98 SUBTOTAL $13,600,000 3 Lease of single module and related integration services on STS-91 3a Interface Control Agreements (ICDs, SIAs, PTAs) baselined $ 2,700,000 02/27/98 3b Analytical Engineering Analyses (Structural, Thermal, EMI/EMC and Acoustics) delivered to SSP $ 2,700,000 03/29/98
9 NAS 9-19250 Modification No. 42 Page 9 of 41
Firm-Fixed Delivery Item Number Services Price Date ----------- -------- ----- ---- 3c Delivery of fight-ready SPACEHAB double module in accordance with the SOW to KSC $ 2,700,000 04/21/98 3d Post-flight destow process complete $ 2,700,000 07/08/98 SUBTOTAL $ 10,800,000 TOTAL PAYMENTS $ 38,000,000
Milestone payments shall be made until the contractor's accounting system is approved. Following DCAA approval of the contractor's accounting system, milestone payments shall be used concurrently with progress payments. The milestone invoices will be credited for amounts received as progress payments during that milestone period. (End of clause)" 10 SPACEHAB PHASE ONE CONTRACT STATEMENT OF WORK 1.0 SCOPE The National Aeronautics and Space Administration (NASA) and the Russian Federation are planning a cooperative space venture in which the Space Shuttle, carrying an external airlock and docking mechanism, will rendezvous and dock with the Russian Mir Space Station. There will be multiple missions to Mir and the purpose of these missions is logistical resupply of the space station, transfer of research, technology demonstration and risk mitigation payloads to/from the Mir, and to conduct on-orbit joint activities. A pressurized habitable volume greater than that available in the Orbiter middeck is required for the payload to be carried to/from the Mir Space Station. To meet the requirement for additional habitable volume NASA intends to acquire the use of both SPACEHAB single and double modules, with end-to-end integration and operations services, for a series of seven flights to Mir in the early calendar 1996 to mid 1998 time period, assuming current Shuttle launch schedules. The period of performance of the contract issued to perform the tasks identified in this SOW shall run from November 17, 1994 until 45 days after the landing (R+45) of the last SPACEHAB-Mir mission, or about July 23, 1998, based on current launch schedules. The following terms are used frequently throughout this SOW. The term "payload" corresponds to all NASA-Mir Program logistics items, science samples and equipment carried in the SPACEHAB module to or from orbit. "Module" refers to either single or double module configurations (unless explicitly stated) plus the module integration hardware required to effect a complete interface with the Orbiter. The integrated module and payload are referred to as the SPACEHAB "cargo element." 2.0 SERVICES PROVIDED TO THE GOVERNMENT 2.1 LEASE OF SPACEHAB FLIGHT HARDWARE The Contractor shall provide the services of single or double SPACEHAB modules to NASA. These services include SPACEHAB flight hardware, Ground Support Equipment (GSE), and module trainers and mockups to support flight crew training and mission integration services. The SPACEHAB modules provided shall be capable of supporting Space Shuttle-Mir mission durations of up to 11 days plus 2 Space Shuttle contingency days (i.e. a landing delay due to a variety of reasons). This Statement of Work covers provision of the following SPACEHAB related services by the Contractor to the Government: (1) physical accommodations in the SPACEHAB module for the operation, servicing and maintenance of Government- sponsored payloads on each flight; (2) associated mission integration, flight operations support, and mission deintegration services; and (3) provision of the required module resources (e.g., power, thermal, command and data management, etc.) for the payloads. The contractor shall provide all flight and ground hardware and integration and operations services required to meet the following launch dates for seven missions to Mir.
Mission Module Configuration Launch Date ------- -------------------- ----------- Shuttle/Mir Mission-03 (S/MM-03) Single 22 Mar 1996 Shuttle/Mir Mission-04 (S/MM-04) Double 16 Sep 1996 Shuttle/Mir Mission-05 (S/MM-05) Double 12 Jan 1997 Shuttle/Mir Mission-06 (S/MM-06) Double 15 May 1997 Shuttle/Mir Mission-07 (S/MM-07) Double 18 Sep 1997 Shuttle/Mir Mission-08 (S/MM-08) Double 15 Jan 1998
C-4 11
Mission Module Configuration Launch Date ------- -------------------- ----------- Shuttle/Mir Mission-09 (S/MM-09) Single 29 May 1998
Figure 1 provides a preliminary payload manifest for the first four NASA-Mir Program Phase 1 missions utilizing SPACEHAB. It is provided to assist the Contractor in scoping the effort required. The payload complement for the remaining three missions shall be a combination of Russian logistics research payloads and miscellaneous items associated with one crewmember exchange on S/MM-07 and S/MM-08, and one crewmember return on S/MM-O9. Russian logistics items are expected to be similar to those items manifested on the first four missions, however, the quantity of items may be revised, as in the case of the Russian 800A storage batteries. The quantity of these batteries, which require special mounting hardware, has been increased from three to a maximum of seven on missions S/MM-07, -08 and -09. Additions, deletions, and changes to the individual payload mass and volume for both the launch and return payload complements, and changes to other requirements such as active versus passive payloads and Extra Vehicular Activity (EVA) requirements are anticipated. Not shown in Figure 1 are 8 Middeck Locker Volume Equivalents of experiments which must be accommodated on one of the SPACEHAB-Mir missions to satisfy Spacehab Inc.'s obligations to NASA under Contract NAS9-18371. C-5 12
S/MM-03 PAYLOAD DEFINITION Weight Pwr (kg) (lbs) MLE (W) Comments --- --- ---- ------ -------- Stowage Location SCIENCE AND TECHNOLOGY Middeck Commercial Generic Bioprocessing App. 54 119 2 A 40 up only Protein Crystal Growth (STES) 54 119 2 A 141 up only Animal Enclosure Module (AEM) 30 86 1 A 42 Microgravity GN(2) Dewar 22 49 1 n/a swap out Blorack Late Access Locker 22 49 1 n/a --- --- ---- ------ Subtotal 182 401 7 223 ISSA ROCK MITIGATION Micromat/Debns Photo Survey of Mir 0 0 n/a n/a --- --- ---- ------ Subtotal 0 0 0 0 LVA SAFER(2) 91 200 # 8 n/a --- --- ---- ------ Subtotal 91 200 8 0 --- --- ---- ------ Middeck Total 273 601 15 223 Pressurized Module SCIENCE AND TECHNOLOGY (Spacehab-SM) Biorack and 1 MLE Stowage -212 467 rack 7 TSD Science and Technology Experiments 109 240 4 LSLE Refrigerator and Freezer 77 170 rack A 183 req. entry seq. Refrigerated and Frozen Stowage 20 44 n/a down only ======================================================================================================================= Under review Microgravity Glovebox Experiments 80 175 4 up only due to Life Sciences Stowage 80 175 4 up only stowage Ambient Science Logistics to Mir 60 132 3 n/a swap out limitations BTS Hardware (STES and REM) 38 84 3 A 400 up only (765 lbs Fundamental Biology Stowage 30 65 3 swap out not included GASMAP Stowage 21 46 1 up only in totals). Two SIA Drawer Rack Modification 20 44 rack swap out Korund Liquid Phase Sintering 10 22 0.5 up only SAMs Data Disks 8 18 0.5 n/a swap out --- --- ---- ------ Subtotal 418 922 4 193 --- --- ---- ------ ISSA ROCK MITIGATION Mir Electric Field Characterization 37 82 *1.5 O 140 Shuttle/Mir MEEP Mir Attach Hardware 18 40 1.5 n/a --- --- ---- ------ Subtotal 55 121 3 140 --- --- ---- ------
STS-79 Notes: A = Ascent O = On-orbit * = Req. window shade bag (mdk) Steve Gayler # = Assumes 2 airlock/ODS stowage bags Manifest/Schedules Office/MC Shuttle/Mir = Ops on both veh. 1/31/95 1 of 2 C-6 13 S/MM-03 PAYLOAD DEFINITION
Stowage Location Weight Pwr -------------- --- (kg) (lbs) MLE (w) Comments ------------------------------------------------- Russian Logistics Gyrodyne 124 273 26.6 n/a up only Storage Battery (3) and Transformer (3) 256 585 9 n/a up only Other Logistics 479 1,055 43 n/a up only --- ----- ---- --- Subtotal 868 1,914 78.6 0 --- ----- ---- --- EVA Tools for 90 bolts & Stowage Bag 48 106 4 n/a DTO 871,872 21 47 2 n/a Medical DSOs (482,489,494) 7 15 0.5 n/a DTO 640 7 15 0.5 n/a ----- ----- ---- --- Subtotal 83 184 7 0 ----- ----- ---- --- PAO Electronic Still Camera (ESC) 16 35 0.5 n/a ----- ----- ---- --- Subtotal 16 35 0.5 0 ----- ----- ---- --- Pressurized Module Total 1,440 3,176 93.1 533 ----- ----- ---- --- Payload Bay ISSA Risk Mitigation MEEP (includes 2 POSAs, PPMD, ODC, 305 672 n/a n/a up only (Mir ext) and 4 APCs) ----- ----- ---- --- Subtotal 305 672 0 0 ----- ----- ---- --- EVA DTO 671 (includes 1 APC) 54 120 n/a n/a ----- ----- ---- --- Subtotal 54 120 0 0 ----- ----- ---- --- Payload Bay Total 359 792 0 0 ----- ----- ----- --- Mission Total 2,072 4,689 108.1 556 ----- ----- ----- ---
STS-76 Notes A = Ascent O = On-orbit * = Reg. window shade bag (mdk) Steve Gaylor # = Assumes 2 airlock/ODS stowage bags Manifest/Schedules Office/MC Shuttle/Mir = Ops on both veh. 1/31/95 2 of 2 C-7 Figure 1 14 S/MM-04 Payload Definition
_________ _____ STS-70 Weight PWR Stowage Location _______________________________ Middeck (kg) (lbs) MLE (W) Comments __________________________________________________________________________ SCIENCE AND TECHNOLOGY Counter Measures Treadmill 84 185 n/a Thermo-Electric Holding Module 69 132 2 E 150 Protein Crystal Growth (STES) 54 119 2 260 swap out BTS Hardware (STES and BEM) 38 64 2 260 up only Commercial Protein Crystal Growth 31 68 1 115 up only Animal Enclosure Module (AEM) 30 66 1 E 42 Microgravity GN(2) Dewar 16 35 1 n/a swap out _________________________________________________________________________ Subtotal 322 710 9 827 _________________________________________________________________________ ISSA RISK MITIGATION Microbiology Monitor Kit #1 7 15 1 n/a swap out Micromet/Debris Photo Survey of Mir 0 0 n/a n/a _________________________________________________________________________ Subtotal 7 15 1 0 _________________________________________________________________________ CMAM PAYLOAD (OTHER CARGO) CMAM Payload 218 480 8 _________________________________________________________________________ Subtotal 213 480 8 0 _________________________________________________________________________ _________________________________________________________________________ Middeck Total 547 1,205 18 827 _________________________________________________________________________ Pressurized Module SCIENCE AND TECHNOLOGY (Spacehab-DM) LSLE Refrigerator and Freezer 85 187 rack Life Sciences Stowage 80 176 4 swap out Microgravity Glovebox Experiments 80 176 4 swap out Thermo-Electric Holding Module 69 152 2 E 150 Commerical Generic Bioprocessing App. 54 119 2 down only Counter Measures LBNP 37 82 2 Fundamental Biology Stowage 30 66 3 swap out Materials in Devices as Superconductors 20 44 1 up only Refrigerated and Frozen Stowage 20 44 down only Two SIA Drawer Rack Modifications 20 44 rack BTS Hardware (Stowage and BCM) 16 35 1 up only High-Temperature Liquid Phase Sintering 10 22 0.5 down only SAMS Data Disks 8 18 0.5 n/a down only Film and Camera Supplies 5 11 n/a swap out _________________________________________________________________________ Subtotal 534 1,177 20 150 _________________________________________________________________________
STS-79 Notes A = Ascent O = On-orbit E = Entry Suzan Voss, Steve Gaylor * = Requires window shade bag (middeck) Manifest/Schedules Office/MC Shuttle/Mir = Ops on both vehicles 3/7/95 1 of 2 C-8 FIGURE 1 15 S/MM-04 Payload Definition
------------ ----- Weight Pwr STS-79 ----------------------------------------------- Stowage Location (kg) (lbs) MLE (W) Comments - ---------------- -------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- USSA Risk Mitigation Active Rack Isolation System (ARIS) 494 1,090 n/a 600 Mir Electric Field Characterization 37 92 1.50 170 Shuttle/Mir Mir Structural Dynamics Experiment 88 216 4 115 up only Real-time Radiation Monitor Device 24 53 1 20 plus track --------------------------------------------------------------------------------------------------- Subtotal 653 1,440 6.5 905 Russian Logistics Gyrodyne & Fastening Ring 124 273 26.5 n/a up only Storage Battery & Transformer 265 585 9 n/a up only Water Container 64 140 5 n/a up only Food Containers 245 540 18 n/a up only Clothing 27 60 5 n/a up only Seat Liner Kit 42 92 8 n/a up only Personal Hygiene Equipment 87 193 5 n/a up only Medical Kit 2 4 0.5 n/a up only -------------------------------------------------------------------------------------------------- Subtotal 856 1,888 79.1 0 EVA Tools for 96 Bolts & Stowage Bag 48 106 4 n/a (Shuttle-required) 0 -------------------------------------------------------------------------------------------------- Subtotal 48 106 4 0 Code U Risk Mitigation (other cargo) Volatile Organics Analyzer 6 13 0.5 up/down -------------------------------------------------------------------------------------------------- Subtotal 6 13 0.5 -------------------------------------------------------------------------------------------------- Pressurized Module Total 2,098 4,624 110 1055 Payload Bay Science and Technology (none) 0 0 -------------------------------------------------------------------------------------------------- Subtotal 0 0 0 0 -------------------------------------------------------------------------------------------------- Payload Bay Total 0 0 0 0 -------------------------------------------------------------------------------------------------- Mission Total 2,644 5,829 128.1 1882
STS-79 Notes A = Ascent O = On-orbit E = Entry Suzan Voss, Steve Gaylor * = Requires window shade bag (middeck) Manifest/Schedules Office/MC Shuttle/Mir = Ops on both vehicles 2 of 2 3/7/95 C-9 FIGURE 1 16 S/MM-05 PAYLOAD DEFINITION
Weight Pwr STS-81 ------------- --- Stowage Location (kg) (lbs) MLE (W) Comments - ---------------- ---- ----- ---- --- -------- Middeck SCIENCE AND TECHNOLOGY Counter Measures Treadmill 84 185 n/a Commercial Protein Crystal Growth 64 141 2 down only Protein Crystal Growth (STES) 54 119 2 swap out STS Hardware (STES and EEM) 38 84 2 swap out Animal Enclosure Module (AEM) 30 66 1 Microgravity GN(2) Dewar 22 49 1 n/a swap out Biorack Late Access Locker 22 49 1 n/a Fundamental Biology GN(2) Dewar 22 49 1 ------------------------------------------------------------------- Subtotal 336 741 10 0 ------------------------------------------------------------------- ISSA RISK MITIGATION Optical Properties Monitor (OPM) 122 268 ODS? n/a up only OPM/Shuttle Attach Kit 13 29 ODS? n/a up only OPM/Mir Interface Plate 30 65 ? n/a up only ------------------------------------------------------------------- Subtotal 164 362 0 0 ------------------------------------------------------------------- Middeck Total 500 1,103 10 0 =================================================================== Pressurized Module SCIENCE AND TECHNOLOGY (Spacehab-DM) Biorack and 1 MLE Stowage 257 567 rack Mechanics of Granular Materials (MGM) 168 370 5 LSLE Refrigerator and Freezer (x 2) 154 340 rack Life Sciences Stowage 80 176 4 swap out Microgravity Glovebox Experiments 80 176 4 swap out Counter Measures LBNP 37 82 2 Baroreflex Hardware 32 71 2 up only Fundamental Biology Stowage 30 66 3 swap out Two SIA Drawer Rack Modification 20 44 rack Refrigerated and Frozen Stowage 20 44 n/a n/a down only SVET Root Module 20 44 1 swap out SAMS Hardware for MGM 20 44 1 SAMS Data Disks 8 18 0.5 swap out ------------------------------------------------------------------- Subtotal 926 2,041 22.5 0 ------------------------------------------------------------------- ISSA RISK MITIGATION MIR Electric Field Characterization 37 82 1.5O 140 Shuttle/Mir Microbiology Monitor Kit #2 7 15 0.5 n/a swap out ------------------------------------------------------------------- Subtotal 44 97 2 140 -------------------------------------------------------------------
STS-81 Notes: A = Ascent O = On-orbit * = Requires window shade bag (middeck) Suzan Voss, Steve Gaylor # = Assumes 40 lbs/locker Manifest/Schedules Office/MC Shuttle/Mir = Operations on both vehicles 3/7/95 1 of 2 C-10 FIGURE 1 17
S/MM-05 Payload Definition ------------------------ ----------- STS-81 Weight Pwr ------ ----------------------------------------------- Stowage Location (kg) (lbs) MLE (W) Comments - ---------------- ----------------------------------------------------------- Russian Logistics Target for Contents & MPE 850 1,874# 47 n/a ?? only ------------------------------------------------------------------------------------------------------- Subtotal 850 1,874 47 0 ------------------------------------------------------------------------------------------------------- EVA Tools for 96 Bolts & Stowage Bag 48 106 4 n/a ------------------------------------------------------------------------------------------------------- Subtotal 48 106 4 0 ------------------------------------------------------------------------------------------------------- Code U Risk Mitigation (other cargo) Water Quality Monitor 68 150 4 ?? only ------------------------------------------------------------------------------------------------------- Subtotal 68 150 4 0* ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Pressurized Module Total 1,936 4,268 79.5 140 ------------------------------------------------------------------------------------------------------- Payload Bay Science and Technology [none] 0 0 ------------------------------------------------------------------------------------------------------- Subtotal 0 0 0 0 ------------------------------------------------------------------------------------------------------- ISSA Risk Mitigation [none] 0 ------------------------------------------------------------------------------------------------------- Subtotal 0 0 0 0 ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Payload Bay Total 0 0 0 0 ------------------------------------------------------------------------------------------------------- Mission Total 2,436 5,371 89.5 140 -------------------------------------------------------------------------------------------------------
STS-81 Notes: A = Ascent O = On-orbit * = Requires window shade bag (middeck) # = Assumes 40 lbs/locker Suzan Voss, Steve Gaylor Shuttle/Mir = Operations on both vehicles 2 of 2 Manifest/Schedules Office/MC 3/7/95 C-11 FIGURE 1 18 S/MM-06 Payload Definition
-------------- ----- STS-84 Weight Pwr - ------ ------------------------------ Stowage Location (kg) (lbs) MLE (W) Comments - ---------------- ----------------------------------------------------------------------- -------- Middeck SCIENCE AND TECHNOLOGY Counter Measures Treadmill 84 185 n/a Protein Crystal Growth (STES) 54 119 2 down only BTS Hardware (STES and BEM) 33 84 2 down only Advance Protein Crystalization Facility 32 71 2 Animal Enclosure Module (AEM) 30 66 1 Fundamental Biology GN(2) Dewar 22 49 1 swap out Microgravity GN(2) Dewar 22 49 1 n/a down only Biorack Late Access Locker 22 49 1 n/a ---------------------------------------------------------------------- Subtotal 304 670 10 0 ---------------------------------------------------------------------- ISSA RISK MITIGATION ESA Prox Ops Sensor Test 0 1 ---------------------------------------------------------------------- Subtotal 0 0 1 0 ---------------------------------------------------------------------- Middeck Total 304 670 11 0 ---------------------------------------------------------------------- Pressurized Module SCIENCE AND TECHNOLOGY (Spacehab-DM) Biorack and 1 MLE Stowage 257 567 rack Mechanics of Granular Materials (MGM) 168 370 5 LSLE Refrigerator and Freezer (x 2) 154 340 rack Life Sciences Stowage 80 176 4 swap out Microgravity Glovebox Experiments 80 176 4 down only Counter Measures LBNP 37 82 2 Fundamental Biology Stowage 30 66 3 down only Refrigerated and Frozen Stowage 20 44 n/a down only SVET Root Module 20 44 1 down only Two SIA Drawer Rack Modification 20 44 rack SAMS Hardware for MGM 20 44 1 Materials in Devices as Superconductors 20 44 1 down only PIE (up on Priroda) 20 44 1 down only MSRE (up on Priroda) 20 44 1 down only SAMS Data Disks 8 18 0.5 swap out ---------------------------------------------------------------------- Subtotal 954 2,103 23.5 0 ---------------------------------------------------------------------- ISSA RISK MITIGATION Treadmill Vibration Isolation System Exp. 145 320 4.5 120 Real-Time Radiation Monitor Device 24 53 rack 20 Microbiology Monitor Kit #3 7 15 0.5 n/a swap out ---------------------------------------------------------------------- Subtotal 176 388 5 140 ---------------------------------------------------------------------- RUSSIAN LOGISTICS Target for Contents & MPE 750 1,653* 41 n/a up only
STS-84 Notes: A = Ascent Suzan Voss, Steve Gaylor O = On-orbit Manifest/Schedules Office/MC * = Assumes 40 lbs/locker 1 of 2 3/7/95 C-12 FIGURE 1 19 S/MM-06 Payload Definition
Weight Pwr STS-84 ----------------------------------------- Stowage Location (kg) (lbs) MLE (W) Comments - ---------------- ------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ Subtotal 750 1,653 41 0 ----- ----- ---- ---- EVA Tools for 96 Bolts & Stowage Bag 48 106 4 n/a ----- ----- ---- ---- Subtotal 48 106 4 0 ----- ----- ---- ---- Code U Risk Mitigation (other cargo) Vapor Compression Distillation System 225 496 rack up only Volatile Removal System 50 110 rack up only Crew Medical Restraint System 45 99 4 up only ----- ----- ---- ---- Subtotal 320 705 4 0* ----- ----- ---- ---- Space Shuttle Program Office Orbiter Space Vision System 70 154 4 ----- ----- ---- ---- Subtotal 70 154 4 0 ----- ----- ---- ---- Pressurized Module Total 2,318 5,110 81.5 140 ----- ----- ---- ---- Payload Bay Science and Technology (none) 0 0 ----- ----- ---- ---- Subtotal 0 0 0 0 ----- ----- ---- ---- ISSA Risk Mitigation ESA Prox Ops Sensor Test 25 55 n/a ----- ----- ---- ---- Subtotal 25 55 0 0 ----- ----- ---- ---- Payload Bay Total 25 55 0 0 ----- ----- ---- ---- Mission Total 2,647 5,836 92.5 140 ----- ----- ---- ----
STS-84 Notes: A = Ascent Suzan Voss, Steve Gaylor O = On-orbit Manifest/Schedules Office/MC # = Assumes 40 lbs/locker 3/7/95 2 of 2 C-13 FIGURE 1 20 2.2 ACQUISITION OF CONTRACTOR INTEGRATION & OPERATION SERVICES As a minimum, the following services are to be provided by the Contractor: a. Manifest assessment support to the NASA-Mir Phase 1Program Office for each SPACEHAB-Mir mission. Perform trade-off studies of proposed launch and return payloads, assessing volume, weight, electrical power and other requirements against module resources to achieve the optimum module configuration for each mission. Participate in manifest working groups as directed by the Contracting Officer's Technical Representative (COTR). b. Acquisition, analysis, integration, and documentation of SPACEHAB payload technical systems and operational constraints data. Management of resultant data bases and documents in accordance with the established Space Shuttle payload integration process in order to facilitate overall Shuttle mission integration and to ensure SPACEHAB cargo element compatibility and operator safety with the Space Shuttle for each SPACEHAB-Mir mission. c. Development, utilization and maintenance of a Product Assurance Plan (DRL Line Item No. 17) to assure the safety of personnel and to provide to the Government highly reliable SPACEHAB modules which conform to applicable quality and safety requirements. d. For each SPACEHAB-Mir mission, representation to the Government of all matters regarding flight safety, Space Shuttle mission integration processes, and technical management of module and payload systems development. The Contractor representative(s) shall be the Government's point of contact for mutual exchange of correspondence, documentation, and data as well as for participation in telecons, meetings, working groups, and various other mission support forums. e. Contractor-provided training (including Contractor-provided equipment, documentation, and instruction) of flight crew and ground controllers in the operation of SPACEHAB module systems. Also, Contractor-coordinated training (including user-provided equipment, documentation, and instruction) in the operation of each SPACEHAB-Mir mission's complement of SPACEHAB payloads shall be conducted according to established NASA mission development schedules and milestones. Integrated Space Shuttle and SPACEHAB module systems training will be conducted at the NASA-Lyndon B. Johnson Space Center (JSC). f. Coordination of direct Contractor and user participation in the Joint Integrated Simulations (JIS's) for each SPACEHAB-Mir mission. This support shall be provided from the NASA-JSC Mission Control Center (MCC) complex, specifically from the Payload Operations Control Center (POCC). Customer Support Room (CSR) areas for SPACEHAB program management support shall be utilized. g. Analytical and physical ground integration, test and checkout services necessary to permit the fully integrated SPACEHAB with its payload complement to go directly to the NASA-Kennedy Space Center (KSC) Operations & Checkout (O&C) Facility for launch processing (except for late pad access items). h. Personnel and equipment needed to install and remove payloads during SPACEHAB module late access, early retrieval and launch scrub turnaround activities. This support will be provided to KSC in response to Space Shuttle launch/landing requirements. i. Coordination of direct Contractor and user participation in flight operations (a.k.a. real-time prelaunch, ascent, on-orbit, descent, and landing operations) associated with each SPACEHAB-Mir mission. This support will be provided from the MCC, specifically from the POCC and CSR areas. j. Deintegration and disposition of payloads at completion of each SPACEHAB-Mir mission. k. Physical security at the appropriate level to protect proprietary data, hardware, or processes during all SPACEHAB-Mir Mission support phases. C-14 21 l. Coordination with the NASAMir program regarding interaction or exchange of payloads to/from the SPACEHAB module to/from the Mir Space Station SPACEHAB-Mir missions. m. A communication system for Personal Computers (PC's) located at NASA-JSC, the Contractor's offices in Virginia, Florida and Texas, and McDonnell Douglas Aerospace in Huntsville, Alabama. The communication system shall provide electronic mail (e-mail) connectivity and file transfer capability. Word processing and spreadsheet software shall be compatible with NASA-JSC standards. 2.3 SPACEHAB MODULE RESOURCES SPACEHAB module resources availability shall be a principal consideration in Contractor determination of feasible flight manifests and in the development of associated payload integration and crew training milestones. The following shall be considered as a minimum SPACEHAB module resource available to the Government on any SPACEHAB-Mir mission. a. Total available SPACEHAB module internal volume. Except as constrained by (1) Space Shuttle ascent performance. (2) center-of-gravity considerations and (3) the structural limitations of installed storage accommodations, and to the extent that (1) approved Phase 1 manifest requirements exist and (2) the utilization of storage capacity is operationally practical the Contractor shall utilize all available module storage volume. b. Total available external payload mounting area on module roof c. Total allowable SPACEHAB payload weight. For each SPACEHAB-Mir mission the projected maximum payload net weight at launch is as follows: Mission Payload Net Weight Shuttle/Mir Mission-03 3132 lbs (1420 kg) Shuttle/Mir Mission-04 4421 lbs (2005 kg) Shuttle/Mir Mission-05 4224 lbs (1916 kg) Shuttle/Mir Mission-06 4647 lbs (2107 kg) Shuttle/Mir Mission-07 5250 lbs (2381 kg) Shuttle/Mir Mission-08 5250 lbs (2381 kg) Shuttle/Mir Mission-09 3360 lbs (1524 kg) Manifesting of more or less payload net weight on any mission, up to the limits of Orbiter ascent performance, or center-of-gravity limits or module structural capability is not precluded. Active payloads manifested on SPACEHAB-Mir missions-07, -08 and -09 may constitute up to 25% of the total net ascent payload weight accommodated in the SPACEHAB during those missions. Active payloads (those requiring extensive ICD and safety packages, module electrical power, crew training, procedures and flight support), either bulkhead or rack mounted, are not precluded on any mission. d. Available AC/DC power e. Vacuum venting capability f. Video, command and data management capability g. Payload late access/early removal capability h. Interface hardware including but not limited to: lockers, racks, soft pack stowage including foam, adapter plates and other hardware to accommodate payloads to be flown in the SPACEHAB module and possibly transferred to or from Mir i. Active payload cooling capability 22 j. Payload-required ancillary equipment provided in the SPACEHAB inventory k. Crew training services l. Crew time m. Crew work area n. Single or double modules Only a single module is available for S/MM-03. A single module shall be manifested on S/MM-09 for compatibility with the Alpha Magnetic Spectrometer (AMS) payload also manifested on that mission. All other SPACEHAB-Mir missions shall utilize double modules. Note: The Phase 1 Requirements Document is the driver for the aggregate of the above resources. 3.0 SPACEHAB MODULE PERFORMANCE REQUIREMENTS 3.1 MODULE SIZE/VOLUME/WEIGHT/INTERNAL CONFIGURATION Size, weight, and volume accommodations of the SPACEHAB module in all text that follows shall be such that they are contained within the Orbiter cargo bay and connect to the Orbiter Docking System (ODS) or the Spacelab Tunnel Adapter hatch opening through an extended tunnel. The structural/mechanical interface between the SPACEHAB module and the Orbiter shall consist of four longeron trunnions and one keel trunnion that shall attach to SSP-provided longeron and keel attach fittings. Trunnion locations for the single and double modules shall be as follows: Single Module Double Module ------------- ------------- Forward trunnions (2) X(o) = 1013.9 in. x(o) = 1013.9 in. Aft trunnions (2) X(o) = 1108.3 in. x(o) = 1218.5 in. Keel trunnion (1) X(o) = 1108.3 in. x(o) = 1108.3 in. In addition, the Contractor shall provide for the SPACEHAB-Mir missions a 65.3 in. long tunnel segment which shall interface with the Orbiter with two longeron trunnions and a keel trunnion, all located at Orbiter X(o) = 954.9 in. The SPACEHAB-provided tunnel segment shall be integrated by KSC with the cylindrical section of the Spacelab Transfer Tunnel and the Spacelab Mir Tunnel Extension to form a complete tunnel assembly connecting the ODS or the Tunnel Adapter (in the OV-103 configuration) to the SPACEHAB module. The complete structural/mechanical interface between the module, the tunnel and Orbiters OV-103, OV-104 and OV-105 shall be specified in the A-level Orbiter-to-SPACEHAB Interface Control Document (ICD) for the SPACEHAB-Mir missions ICD-A-21095. It is planned to use OV-104 for S/MM-03 through S/MM-07, OV-105 for S/MM-08 and OV-103 for S/MM-09. NASA plans to utilize the full volumetric and mass capacities of the SPACEHAB modules though consideration must be given to launch and landing mass constraints required to enable the Space Shuttle to manage Orbiter center-of-gravity conditions that will be effected by the planned location of the module in the Payload Bay. The overall design of the single and double modules must minimize reduction in launch performance and complexity of physical integration into the Orbiter while maximizing manifesting flexibility and must be easily accessible from the Orbiter middeck when on orbit. Interior volume and external mounting area shall accommodate projected Government-sponsored payload manifests contained in mission-specific Phase 1 Requirements Documents. C-16 23 The SPACEHAB modules shall provide accommodations for standard Orbiter middeck lockers, and equipment designed to utilize standard middeck locker interfaces. The use of soft stowage bags, some of which should be sized to fit within standard lockers, is encouraged as a weight-saving measure. The Contractor shall develop and provide a light weight cargo net or bag arrangement that may be stowed for ascent and deployed for descent. This shall be used to meet a requirement on S/MM-07, -08 and -09 for an efficient method to return excess low density packing material from the Mir Station. Accommodations for SPACEHAB racks shall be provided. Rack mounting capabilities shall accommodate 19-inch wide payload mounting panels with standard interfaces. These racks and their supporting module subsystems shall accommodate those payloads in Figure 1 identified as requiring rack installation, whether new SPACEHAB installations or payloads originally designed for Spacelab racks. SPACEHAB racks, both single and double, shall be capable of being outfitted as Soft Stowage(TM) racks, capable of accommodating either Contractor-provided Soft Stowage(TM) bags or NASA-provided Collapsible Transfer Bags. The Contractor shall provide the hardware, facilities and services necessary to support integration of the European Space Agency-provided Biorack facility in a SPACEHAB rack for three missions to Mir. The Contractor shall also build and provide ground translation and display computer software to allow ground computers at NASA-JSC to provide the same Biorack screen displays as seen in the SPACEHAB module on-orbit. The Contractor shall provide an adaptive structure (J-Frame) and Ground Support Equipment (GSE) to allow installation of an International Standard Payload Rack (ISPR) in the SPACEHAB module. Additionally, the Contractor shall provide the hardware and services necessary to support integration of an ISPR and Active Rack Isolation System (ARIS) experiment in the Contractor-provided J-Frame for one SPACEHAB-Mir mission. The Contractor shall provide the hardware, software and services required to effect a data interface for the Real-time Radiation Monitor Device (RRMD) Risk Mitigation Experiment with the SPACEHAB Ground Teleoperations System (GTS) and provide ground cabling necessary for RRMD/GTS operations at the SPACEHAB Payload Processing Facility (SPPF) and at the NASA-JSC POCC. The Contractor shall provide the hardware and services necessary to integrate a Russian-provided ORLAN-DMA Space Suit into a SPACEHAB double module for return from the Mir Station on one SPACEHAB-Mir mission. In addition, the Contractor shall provide to NASA-JSC flight-like training items (straps and hardware) to support crew training in a JSC-supplied mockup. The Contractor shall provide the hardware, facilities and services necessary to integrate a Russian-provided Elektron oxygen generating unit into the SPACEHAB double module for ascent or descent to/from the Mir Station on any SPACEHAB-Mir double module mission after S/MM-05. The Contractor shall provide the hardware, including the lease of Contractor-owned support hardware, facilities and services necessary to integrate the Volatile Removal Assembly (VRA) into a SPACEHAB rack for S/MM-06. To replace VRA on its originally scheduled mission, S/MM-06, the Contractor shall provide additional Soft Stowage(TM) hardware to allow reconfiguration of the SPACEHAB rack volume reserved for VRA to a stowage configuration. Standard Interface Adapter (SIA) panel units and drawers shall be accommodated. Other payload accommodations required include Z-axis viewing through one or more MSFC-provided view ports, vacuum vent capability, power, cooling, video and data management, late access/early retrieval of payloads from the modules, and ascent and descent power. For payloads requiring transfer, SPACEHAB translation aids and stowage systems shall be designed such that they do not preclude transfer of these payloads through the existing Space Shuttle airlock and ??DS hatch openings. Provisions must be included to perform scheduled and unscheduled inflight maintenance of the SPACEHAB modules. C-17 24 3.2 HUMAN FACTORS The crew work area of each SPACEHAB module shall be designed to accommodate a minimum of 2 crewmembers working simultaneously and continuously, and three to four crewmembers working for shorter periods. A "shirtsleeve environment" must be maintained and foot restraints, handholds, air diffusers, and lighting provided in appropriate locations. A work station may be required to support specific payload requirements. 3.3 ENVIRONMENTAL CONTROL The SPACEHAB modules shall preserve a crew habitable "shirtsleeve environment" when integrated with the Orbiter. Air temperature, surface temperatures, carbon dioxide concentration, air circulation, moisture condensation, contamination and humidity control shall be maintained to assure a safe environment for a minimum of two crew members working simultaneously and continuously, or for three to four crewmembers working for shorter periods. An environment comparable to that in the Orbiter middeck must be maintained. Because of limitations placed on the capability of the SPACEHAB Atmospheric Revitalization System (ARS) by the flow rate and dew point of the conditioned/unconditioned air mixture ducted from the Orbiter, use of crew exercise devices such as the treadmill or cycle ergometer in the SPACEHAB module is not contemplated on SPACEHAB-Mir missions. 3.3.1 Heat Rejection The SPACEHAB modules, when integrated into the Orbiter, shall be designed to reject heat from payloads using module air flow or utilizing a forced air and/or liquid cooling system. Methods for ease of connection/disconnection, flow variation and isolation of the cooling flow shall be provided. The total SPACEHAB module and payload complement may require up to 6.0 kilowatts of active cooling on orbit and 1,500 watts during prelaunch, launch, landing, and post-landing. Heat rejection shall be compatible with environmental control requirements. See (Shuttle Orbiter/Cargo Standard Interfaces) CD-2-19001 for details. The Contractor shall perform mission unique thermal analyses as a part of the Spacehab-Mir Mission Performance Analyses (DRL Line Item No. 4) which verify that the SPACEHAB module and its manifested payloads can operate during routine mission situations at a cabin temperature that is comfortable to the crew. 3.3.2 External Thermal Requirements The SPACEHAB module shall be designed to have the same attitude-hold capability as the Orbiter which is defined in Section 61.1.2 of ICD-2-19001 and shall not require any on-orbit thermal attitude constraints in a fully operative mode. In the event of degraded performance of SPACEHAB subsystems, the Contractor shall not rely on Orbiter attitude control to prevent module external water line freezing. The SPACEHAB module water loop design shall permit satisfactory thermal system performance at the "maintenance level" with the Orbiter radiators in bypass mode and the module water pump in operation (as they would be during radiator cold soak prior to nominal deorbit). 3.3.3 Vacuum Venting 3.3.3.1 Module Venting For safety, a capability for venting of the module internal atmosphere shall be provided and shall be capable of activation by the crew from the safe haven of the Orbiter. 3.3.3.2 Payload Venting C-18 25 The SPACEHAB module shall provide a capability to allow multiple payloads to be exposed to a controlled vacuum environment. This will be an on-orbit operation performed by the crew and shall not jeopardize the safety of the flight crew or harm other payloads in the SPACEHAB module. 3.4 POWER The SPACEHAB module, when integrated into the Orbiter, shall be designed to accommodate two (2) Orbiter power feeds to supply up to 3.5 kilowatts of continuous and 6 kilowatts peak DC power during on-orbit (payload bay doors open) operations. Accommodations on both power feeds for switching of power to the module shall be provided by the contractor. In addition, the SPACEHAB module shall accommodate 690 volt-amps (VA) continuous and 1,000 VA peak AC power during on-orbit (payload bay doors open) operations from auxiliary feeds. For ascent and descent, the module shall accommodate 1.3 kilowatts of DC power only. See ICD-2-19001 for details. The module shall provide these standard services to numerous interface locations as needed to meet the payload requirements. All payload locations shall be accessible to these accommodations and easily integrated. In addition to standard electrical services for payloads, beginning with S/MM-04 the Contractor shall provide a 28 VDC, 25 ampere electrical power outlet and cable to connect the Enhanced Orbiter Refrigerator/Freezer (EORF) to existing module electrical power circuits. In addition, for S/MM-06 the Contractor shall provide an electrical power cable for connection of the Inflatable Thermal Control Unit (ITCU) to existing module electrical power circuits. The power system design for safety critical systems and subsystems shall comply with the applicable redundant electrical power and failure requirements of the Safety Policy and Requirements for Payloads using the Space Transportation System NSTS 1700.7B. Specifically, a Main Power Kill command shall require the ability to switch safety-critical module AC powered equipment (fans and water circulation pumps) from SPACEHAB to Orbiter AC power from a location outside the module. 3.5 COMMAND AND DATA MANAGEMENT SYSTEMS The module shall be compatible with the assisting Orbiter command and telemetry systems and utilize those services currently provided as standard payload accommodations. The SPACEHAB module shall provide a Command and Data Management system that is capable of performing, as a minimum, the following functions: 3.5.1 Orbiter-To-Module Services 3.5.1.1 Monitoring and Control Provide the capability within the Orbiter crew and compartment for sufficient monitoring and control of the module subsystems to perform time critical and safety critical operations without requiring access to the module itself. Provide capability to monitor module status during all phases of operation where the module is active. This requires that module systems be adequately instrumented to allow monitoring not only of obvious safety critical functions such as fire suppression and cabin pressure, but also of functions which control routine module/payload resource interfaces and services (such as power to payload lockers and racks). SPACEHAB module systems health parameters monitorable from the Orbiter aft flight deck must also be monitorable from within the module. Use of the Payload and General Support Computer (PGSC) should be considered. 3.5.1.2 Telemetry Provide the capability for the module systems and payload data to be included in the Orbiter downlink telemetry and if required, to the Orbiter Multifunction Cathode ray tube Display System (MCDS). Uplink command capability to SPACEHAB module systems and payloads shall be provided. C-19 26 3.5.1.3 Flight Crew Communications Provide capability to interface with the Orbiter Air-to-Ground and crew compartment intercom systems. 3.5.1.4 Closed Circuit Television (CCTV) Provide capability to interface with the Orbiter CCTV system for remote television capability in the module. Services shall also be provided by the module to utilize Orbiter cameras systems (camcorders). When dictated by payload requirements, video switching capability shall be provided in the SPACEHAB module to allow selection of one output to the Orbiter CCTV system from multiple payload or module cameras. Provide capability to mount Orbiter CCTV's external to the module and located on the aft bulkhead to view the payload bay area behind the module. 3.5.1.5 Caution and Warning (C&W) The module shall be compatible with the Orbiter C&W system for safety critical status. 3.5.2 MODULE-TO-PAYLOAD SERVICES 3.5.2.1 Monitoring and Control Provide control and monitoring capability for payloads through the use of standard orbiter laptop computers, e.g., the PGSC, in order to standardize the crew-to-payloads interface. 3.5.2.2 Telemetry To the extent that payload data is required in the JSC POCC, provide services for inclusion of payload data to the Orbiter downlink telemetry systems. Uplink commanding between the JSC POCC and the SPACEHAB payloads shall be provided when required. For S/MM-06 the Contractor shall provide routing and installation of a customer-provided data cable from the EORF to a SPACEHAB module Experiment Connector Panel, configuration of the module downlink telemetry system to accept EORF data, pre-flight testing of the system with EORF data, and real-time throughput of the received telemetry data from the SPACEHAB POCC to the JSC Science Monitoring Area during the mission. For S/MM-06, -08 and -09 the Contractor shall provide the capability to process simultaneously in the POCC both real time downlinked telemetry data from the Realtime Radiation Monitoring Device (RRMD) experiment, and RRMD experiment data recorded on board during Orbiter Loss Of Signal (LOS) periods for delayed playback. 3.5.2.3 Onboard Recording Provides services for onboard recording of payload data using the Orbiter Payload Recorder. 3.5.2.4 Timing Signals Provide the appropriate timing signal services for payload use. This shall include, but not be limited to Orbiter Mission Elapsed Time (MET) and Greenwich Mean Time (GMT) signals. 3.6 ELECTROMAGNETIC INTERFERENCE/COMPATIBILITY (EMI/EMC) 27 The SPACEHAB cargo element shall be compatible with the EMI/EMC requirements as specified in IGD-19001. Additional requirements are as follows: a. The SPACEHAB module shall be capable of tolerating Ku-Band external radiation with no operational constraints on the Space Shuttle and without sustaining performance loss or degradation. b. The Contractor shall be responsible for insuring that the payload complement meets all specifications for EMI/EMC between the payload and the Orbiter, the payload and the module and between payloads within the module and shall so certify. This certification is required by NASA as part of the overall SPACEHAB certification for flight. 4.7 EXTRAVEHICULAR ACTIVITY (EVA) COMPATIBILITY The SPACEHAB shall be compatible with Space Shuttle EVA design requirements. The module, with any external payloads installed, shall not preclude EVA access to the Orbiter payload bay door contingency work areas with the payload bay doors closed. 3.8 DIRECT VIEWING Direct viewing from the Orbiter aft flight deck toward the aft bulkhead is required for payload bay door operations. The SPACEHAB module, with any external payloads installed, shall not block this viewing. 4.0 CONTRACTOR INTEGRATION AND OPERATIONS RESPONSIBILITIES 4.1 SPACE SHUTTLE INTEGRATION SUPPORT The Contractor shall provide the products and services to support NASA in the integration of the SPACEHAB cargo element into the Space Shuttle as defined in the standard Space Shuttle payload integration process (reference NSTS 07700 Volume XIV, Space Shuttle System Payload Accommodations). The Contractor shall provide generic and specific mission documentation. Items which are not considered standard Space Shuttle Program (SSP) integration services will be identified to the COTR. 4.2 FLIGHT DESIGN SUPPORT The Contractor shall support NASA in the production of the integrated flight design for each SPACEHAB-Mir mission by providing cargo element data such as physical configuration, mass and volume, electrical power and energy requirements, orbiter attitude requirements and crew time utilization. Additionally, it is a requirement that the SPACEHAB module not impose any operational constraints or special requirements (e.g., launch window constraints, orbital attitude or inclination constraints, etc.) on the SSP flight design process. 4.3 MISSION TRAINING SUPPORT The Contractor shall be responsible for planning and implementing an integrated training program for flight crew and ground personnel for each mission. The training program for each mission shall include participation by the Orbiter flight crew, the SPACEHAB Flight Control Team, JSC-Mission Operations Directorate personnel and payload developers and shall be documented by the Contractor in a Mission Training Plan (MTP). 4.3.1 SPACEHAB SYSTEMS TRAINING SUPPORT The SSP is responsible for the training of flight crews and ground support personnel in the operation and maintenance of SPACEHAB module to Space Shuttle systems interfaces. As such, the SSP shall develop detailed crew training schedules and plans for use by the Contractor in each SPACEHAB-Mir mission's C-21 28 training cycle. The SSP is also responsible for Shuttle Mission Simulator (SMS) training of the integrated Space Shuttle and SPACEHAB module system. Module systems training shall be performed by the Contractor at JSC where practical; otherwise, at other locations convenient to NASA/Contractor mission preparation activities and schedules. As a minimum, the Contractor shall be required to provide the following module systems training functions: a. Systems familiarization briefings in the classroom covering nominal and off-nominal systems operations and maintenance. b. Hands-on instruction in SPACEHAB module systems operations and maintenance using desktop computer trainers, module mockups, and one or more flight modules as appropriate to the training task. This hands-on training shall nominally precede SMS training, and shall include module systems up to Orbiter interfaces, as well as moduleOrbiter systems interactions. c. Participation in SMS joint integrated mission training sessions. d. Instructional training documentation and material as appropriate to the training task. e. Coordination of integrated training plans and schedules with NASA to avoid schedule conflicts and assure proper lesson content. f. Updates to module data and contractor-provided training hardware as required to maintain a mission-specific training environment for each of the training aids/mockups defined in paragraph 4.3.3 below. 4.3.2 SPACEHAB PAYLOAD TRAINING The contractor shall be responsible for the training of flight crews and ground support personnel in the operation and maintenance of SPACEHAB payloads and Contractor-provided mission support equipment. This training may be performed directly by the Contractor or may be performed by individual payload sponsors, but in either case, the overall responsibility for effective SPACEHAB payload/logistics training rests with the Contractor. Traning shall be located/consolidated so as to limit requirements for NASA personnel travel. As a minimum, this traning shall include: a. Development and provision of training curricula and reference material which have been previously verified by the Contractor as adequate to accomplish the objectives of the training lesson. b. Provision of payload operations flight procedures and timelines which have been previously verified by the Contractor as technically correct and operationally achievable. c. Provision of integrated payload operations training in a simulator or flight unit as appropriate. The training environment shall include high fidelity internal SPACEHAB cabin, payload, and support equipment configurations which are representative of a flight environment. Additionally, there shall be adequate availability of ground resources such as power, cooling, and data management to conduct integrated payload operations timelines. d. Assistance to the NASA training team in the development of training plans for joint integrated simulations. 4.3.3 TRAINING AIDS AND MOCKUPS The Contractor shall obtain and provide training aids for use in SPACEHAB operator training and flight procedures development. The Contractor shall provide for routine maintenance of the aids as required to C-22 29 keep them at an acceptable level of fidelity. A brief description of each required training aid follows; more specific information is provided in the SPACEHAB-Mir Payload Integration Plan (PIP), NSTS 21320. a. For use with the NASA SMS located at NASA-JSC existing high fidelity, flight-like SPACEHAB Display and Control (D&C) panels which interface with the Orbiter subsystem (e.g., environmental control and life support, data management, fire suppression, and electrical power). Additionally, the Contractor shall provide the necessary data to develop SMS visual models and functional math models of the SPACEHAB structure, systems, and subsystems. b. For use in the NASA Weightless Environment Test Facility (WETF) located at NASA-JSC the existing structural mockup of the SPACEHAB single module compatible with WETF requirements to support EVA crew training. c. The existing high fidelity trainer for SPACEHAB module systems, subsystems, payloads, and support equipment, located at the SPACEHAB Payload Processing Facility (SPPF), Cape Canaveral, Florida. This trainer can be used for procedure validation and simultaneous training of two mission specialists for integrated payload operations. It must be capable of being configured as either a single or double module, and of interfacing with payload high fidelity mockups, engineering development units, or actual flight hardware to ensure the highest quality integrated orbital procedures training in module systems and payload operations. The mockup shall have internal dimensions and clearances which are consistent with those within the flight single and double modules. d. The existing SPACEHAB module vertical access trainer, located at the SPPF in Cape Canaveral, Florida. This trainer is used for developing and validating procedures and hardware for late installation and removal of payload hardware into or from the module while in the vertical on the launch pad. e. The contractor shall provide configuration control and maintenance of the existing SPACEHAB Intelligent Familiarization Trainer (SHIFT) located at NASA-JSC. The Contractor shall provide workstations as required for software maintenance. The Government will provide computer workstations as required for NASA ground and flight personnel training. The institutional safety requirements that are required for this contract are restricted to the training and mockup provisions of subparagraphs b. (hardware) and the (software) above. Because these mockups and trainers fall within the province of JMI 8830.1. "Facilities Baseline Documentation," system safety requirements are applicable. To insure compliance with pertinent NASA policies and requirements and Federal, State, and local regulations for safety and health, environmental protection, and emergency preparedness, the Contractor will develop and implement a safety and health program in accordance with a Safety and Health Plan (DRL Line Item No. 11) as approved by NASA. 4.4 SPACEHAB MODULE SYSTEMS. CONFIGURATION AND STOWAGE DATA The Contractor shall provide the Government with a SPACEHAB Systems Data Book (DRL Line Item No. 3) that is an accurate and comprehensive source of module systems operational data. This data shall be used by the Government for development of procedures, operational limits, flight rules, preflight mission design, and as flight reference material. On a mission specific basis, the Contractor shall provide the Government with integrated SPACEHAB-Mir Mission Performance Analyses (DRL Line Item No. 4) which contain the technical data necessary to provide the Contractor and the Government with an understanding of the mission-unique performance parameters of the SPACEHAB systems, the module payloads, and the integrated SPACEHAB. The Contractor shall provide the Government SPACEHAB-Mir cargo element Configuration Management Plan (DRL Line Item No. 5). This document shall provide the Government with insight into the Contractor's hardware/software configuration management system for the SPACEHAB and its payload interfaces. C-23 30 The Contractor shall provide to the Government a SPACEHAB/Mir cargo element Stowage Management Plan (DRL Line Item No. 18) This plan shall document the process by which the payloads are stowed, and may be identified and located during all phases of flight. Payload removal/replacement and return of items carried to orbit on Russian spacecraft shall also be documented in this DRL. 4.5 DESIGN REVIEWS AND PROGRAM STATUSING The Contractor is responsible for conducting reviews of the SPACEHAB module during the design and development process. During this process the Government shall be provided an opportunity to submit Review Item Discrepancies pertaining to the Space Shuttle/SPACEHAB module interfaces and operations. Government participation in the review process shall not unilaterally impose new requirements on the design. NASA and other agency participation in these reviews does not constitute approval of the design nor certificating as to its reliability. The Contractor shall submit monthly Progress Reports (DRL Line Item No. 1) to the Government for its use in maintaining visibility of contract performance, current program status, technical accomplishment compared with planned activities and areas of concern. Beginning in April 1995, quarterly SPACEHAB cargo element Mission Status Reviews will be held at McDonnell Douglas Aerospace, Huntsville, Alabama and will be chaired by the COTR. Presentations from the Contractor will be made, and formal, in-scope action items will be assigned. 4.6 PAYLOAD DOCUMENTATION The Government shall identify to the Contractor beginning at approximately L-17 months the prioritized list of candidate payloads, including points of contact for payload information, to be accommodated by SPACEHAB for each SPACEHAB-Mir mission. This includes the payload complement to be carried to Mir and that to be returned. After the mission complement is baselined by the Government, the Contractor is responsible for the definition, development and configuration control of all integration documentation for the payloads. 4.7 PAYLOAD INTEGRATION For each SPACEHAB-Mir mission, the contractor shall perform an assessment of candidate payloads for their technical and operational compatibility when integrated into a total mission complement. For the initial baselining, and foe each proposed update to the Phase 1 Requirements Document (P1RD), the Contractor shall perform an informal assessment of candidate payloads for their technical and operational compatibility when integrated into a total mission complement. The results of this assessment shall be informally transmitted to the Government's Phase 1 Requirements Integrated Product Team as part of the Phase 1 manifesting process. For each approved update to the baseline, P1RD the Contractor shall develop and submit to the Government a Mission Requirements and Allocations Document (MRAD) (DRL Line Item No. 14) detailing how the approved requirements will be accommodated in SPACEHAB. Once the manifest is approved by the Government, the Contractor is responsible for negotiating with the Government (the NASA-Mir Phase 1 Program Office and the SSP) a mission specific PIP Addendum, and associated PIP annexes defining the mission unique responsibilities, mission support requirements, and overall mission guidelines/constraints to meet the needs of the SPACEHAB cargo element. To assist in Government and Contractor assessments of the mission feasibility of SPACEHAB-Mir payloads, the Contractor shall provide to the Government a generic Payload Interface Definition Document (IDD) (DRL Line Item No. 15) which shall define all payload to SPACEHAB module interfaces. In order for the Government to maintain cognizance over the individual experiments, the Contractor shall provide NASA copies of all payload specific ICD's (DRL Line Item No. 6). The payload specific ICD's shall be organized such that they address, item by item, the interface requirements set for in the IDD. C-24 31 4.8 SPACE SHUTTLE PROGRAM FLIGHT DOCUMENTATION The Contractor is responsible for supporting the SSP in the generation of the flight procedures, malfunction data, support documentation, and the integrated mission timeline. As a minimum, the Contractor is responsible for the following: a. SPACEHAB module systems operations flight documentation shall be jointly developed by NASA and the Contractor. An operations procedures plan for the SPACEHAB cargo element which defines the roles and responsibilities for all operations documentation products must be developed by the Contractor. This must address all the development, configuration control, verification, and Flight Data File production aspects including schedules for these products, and be approved by NASA. b. All integrated SPACEHAB module systems Shuttle flight procedures, mission timelines and SPACEHAB module system flight procedures and associated changes shall be the responsibility of NASA/JSC with appropriate inputs from the Contractor through the standard integration documentation process as defined in paragraph 4.9. All joint ground procedures will be jointly defined and approved and shall be documented in the appropriate PIP annexes. c. All SPACEHAB payload flight procedures and timelines shall be the responsibility of the Contractor to develop and produce as defined in the operations procedures plan. All procedures shall meet the Space Shuttle crew procedures preparation and production standards. The NASA-generated flight plan shall be the overall controlling document and the Contractor-generated payload timelines must operate within the crew time allotted by the flight plan. d. Results of the Contractor's control process, procedure validation process and documentation production process must be reviewed by the NASA/JSC Crew Procedures Control Board periodically to ensure timely product delivery and coordination with other mission documentation. e. All Contractor-generated documentation is required to be a part of the flight specific Flight Operations Review (FOR) package and is subject to all changes approved by the FOR Board without additional approval by the Contractor control process. 4.9 INTEGRATION DOCUMENTATION The Contractor is responsible for performing those functions necessary to ensure the integration of the SPACEHAB module into the Space Shuttle. The Space Shuttle standard integration documentation shall be utilized to integrate the module into the Space Shuttle. The primary documentation to ensure proper integration of the SPACEHAB into the SSP shall consist of the SPACEHAB-Mircore PIP, NSTS 21320 with the PIP Addendum, annexes, and appropriate ICD's for each mission. The core PIP and its mission-specific Addenda shall be jointly approved by NASA and the Contractor. PIP changes, PIP annexes, unique ICD (or ICD addendum), and associated change shall be jointly approved by NASA and the Contractor. Configuration control shall be initiated upon signature approval. The NASA-JSC shall maintain configuration control of the cited documentation in accordance with Mission Integration Control Board Configuration Management Procedures, NSTS 18468, with the exception of the Launch Site Support Plan Annex, which will be maintained by the NASA-KSC in accordance with instructions for KSC Crew Procedures Configuration Control Board Operations, KSC K-CM-04.2. 4.10 MISSION SUPPORT DATA The Contractor is responsible for developing an electronic Mission Support Data (MSD) repository (DRL Line Item No. 8) containing SPACEHAB module systems data and data for payloads that are candidates for C-25 32 SPACEHAB cargo element accommodations. The MSD repository shall be maintained by the Contractor with current module systems and payload data. The data shall reflect such information as key project status, technical and systems data, operational requirements and constraints, systems operating specifications and limits, and background on payload objectives. This data is to be used by the Contractor and NASA in supporting the identification of specific payload complements and to aid in the integration documentation work required for SPACEHAB-Mir mission manifesting. This information shall reside in an electronic format accessible by personal computers within the NASA Mir Phase 1 Program Office and the SPACEHAB Project Group (SPG) at NASA-JSC, and at the Contractor's facilities. The MSD repository shall be protected against unauthorized access, Access, word processing and spreadsheet software shall be compatible with NASA-JSC standards and available commercially. 4.11 SPACEHAB INTEGRATION FACILITY The Contractor is responsible for payload integration into the SPACEHAB module in a Contractor-provided facility and shall provide the personnel and GSE to accomplish these operations. 4.12 SPACEHAB FLIGHT SUPPORT TEAM The Contractor shall support mission operations for the SPACEHAB cargo element by providing a ground support team that is trained and operates in conjunction with the Space Shuttle and Mir Flight Control Teams. The SPACEHAB support team shall participate in Joint Integrated Simulations (JIS's) from the JSC. POCC and the CSR, conducted by NASA, to perform integrated mission training. The Contract shall support real time operations with this same team as defined in Paragraph 6.2 of the Statement of Work. 5.0 INTERFACE REQUIREMENTS 5.1 SPACEHAB-TO-ORBITER INTERFACE REQUIREMENTS 5.1.1 INTERFACE The interface between the SPACEHAB module and the Orbiter shall be developed by the SSP utilizing the standard Shuttle/payload interface documentation. The module must be compatible with the Orbiter mechanical, structural, materials, electrical, avionics, and environmental interfaces as defined in the appropriate SSP documents. These documents are included in NSTS 07700, Volume XIV, Space Shuttle System Payload Accommodations and supporting documents. The interface documentation between the SPACEHAB module and the Orbiter shall be developed by the SSP utilizing the Shuttle Orbiter/Cargo Standard Interfaces, ICD-2-19001. 5.1.2 EVA REQUIREMENTS The module shall be compatible with existing EVA capabilities and NASA Mir Program EVA planning. An existing Spacelab tunnel adapter may be used to provide an egress/ingress location for EVA. 5.2 SPACEHAB-TO-PAYLOAD INTERFACE REQUIREMENTS 5.2.1 INTERFACE The Contractor shall integrate the payloads into the SPACEHAB module. The interface documentation between the SPACEHAB system and the payloads shall be developed by the Contractor utilizing Contractor-prepared payload interface documentation. This documentation shall be compatible with the comparable SSP documentation systems and formats. 5.2.2 PAYLOAD REQUIREMENTS C-26 33 The individual payloads shall be integrated into a compatible complement of payloads strategically located in the SPACEHAB module to facilitate optimum use of SPACEHAB resources and Orbiter services. 6.0 INTEGRATED OPERATIONS 6.1 INTEGRATED OPERATIONS PLANNING In addition to identifying the SPACEHAB cargo element operational requirements and constraints in the appropriate SSP integration documentation, the Contractor shall develop, maintain and utilize a Mission Integration and Operation Management Plan (DRL Line Item No. 8). This plan shall define the various operations processes, schedules, and interface requirements used by the contractor to manifest payloads for a mission, prepare the SPACEHAB module and its payload complement for flight, support orbital operations, manage the associated data, and return payloads to their sponsors post flight. This plan shall be approved by the COTR and shall describe the following principal functions as a minimum: a. User manifesting and integration b. NASA-Mir Program support c. Configuration control and process d. Payload flight operations documentation preparation e. Stowage Management and on-orbit logistics support f. SPACEHAB systems and payload operations training g. Ground facility utilization h. Data and software management i. Simulations and flight operations support 6.2 FLIGHT OPERATIONS SUPPORT The Contractor shall provide to the Government flight-ready Payload Flight Operations Procedures and Timelines (DRL Line Item No. 9). These documents shall be delivered according to established NASA preflight milestones and shall be used to support crew training, integrated simulations and flight operations. Contractor and user support personnel, during integrated mission simulations and during flight, shall be located at the JSC and shall utilize the JSC POCC and CSR facilities. The JSC POCC shall be utilized for the SPACEHAB cargo element operations support personnel and the CSR for program management support. For JSC POCC capabilities, reference the POCC Capabilities Document, NSTS 21063. 6.3 GROUND OPERATIONS Because of the potential for unforeseeable delays in the launch schedule of the Space Shuttle Program changes to the SPACEHAB-Mir launch dates given in Section 2.1 are likely to occur and are recognized as being beyond the Contractors' ability to control. The effort required by the Contractor to adjust his ground operations schedules and processes to those in support of the SSP ground processing schedules shall be considered within the scope of this contract unless the total contract period of performance is lengthened, or unless SSP schedules do not allow the Contractor at least 45 working days in the SPPF for module processing between missions. C-27 34 6.3.1 LAUNCH SITE INTEGRATION All Space Shuttle payload integration operations and testing at the launch and landing site are scheduled and controlled by NASA-KSC Payload Operations personnel. 6.3.2 CONTRACTOR KSC SUPPORT The Contractor shall support the Orbiter interface verification and launch processing with personnel and GSE. Procedure inputs shall be provided in accordance with KSC procedure development schedules and reviews and meetings as stated in the KSC Launch Site Support Plan. 6.3.3 DELIVERY TO KSC The Contractor shall transport the SPACEHAB module from the SPPF to KSC and deliver it to the O&C Facility for vertical installation into the Orbiter in accordance with the schedule defined in Figure 2. 6.3.4 KSC FACILITY COMPATIBILITY The SPACEHAB flight hardware and any Contractor-supplied GSE to be used at KSC in support of SPACEHAB module vertical installation integration and launch processing shall be compatible with existing KSC facility resources and capabilities. Any needed change shall be defined and funded by the Contractor. 6.3.5 FIT CHECKS The Contractor shall support fit checks as required by the PIP at KSC for any Spacehab Inc.-provided flight item that has been approved by the SSP for middeck installation into the Orbiter. New or modified equipment to be installed by the crew for the first time on orbit must be fit checked pre-flight (e.g. at the Crew Equipment Interface Test). 6.3.6 LATE ACCESS The Contractor shall negotiate with the SSP through the PIP for resolution of any flight hardware issues regarding late pad (after payload bay door closure) access that could potentially impact the Orbiter closeout timeline for launch. The Contractor is responsible for installation of late access payloads into the SPACEHAB module. Late access to the module at KSC for payload installation at approximately L-2 weeks using the Module Vertical Access Kit (MVAK)s is planned for all SPACEHAB-Mir missions. A second late MVAK loading opportunity at approximately L-40 hours shall not be precluded on any mission. 6.3.7 LAUNCH SUPPORT The Contractor shall coordinate his operations with, and participate in, KSC launch operation (e.g., real-time pre-launch and landing operations) associated with each mission. Launch and landing operations support will be provided from the Launch Control Center (LCC) at KSC or other locations as appropriate. 6.3.8 SCRUB TURNAROUND The Contractor shall obtain prior approval from the SSP through the PIP for any module payload that would require access/replacement prior to the next launch attempt. 6.3.9 END-OF-MISSION ACCESS C-28 35 The Contractor shall negotiate with the SSP through the PIP for early module access at the end of a mission. In concern with KSC landing and recovery personnel and if necessary to meet payload complement requirements, the Contractor shall provide the support necessary including GSE, for the accomplishment of approved payload early removal from the module at the primary and first alternate landing sites. At the primary landing site the Contractor shall be ready to support a landing at any time after launch. At the first alternate landing site the Contractor shall be ready to support a landing at any time after Docking + 48 hours, if Shuttle-Mir docking is successful. If not successfully accomplished, support will be on a best effort basis. If necessary to provide timely support at the first alternate landing site, the Contractor shall preposition GSE there to support payload removal on all SPACEHAB-Mir missions. The Contractor shall have in place a rapid response plan to move the necessary personnel and equipment to other alternate or abort landing sites if so directed. 6.3.10 RETURN TO THE SPPF The Contractor shall be responsible for providing return transportation of the module from KSC to the SPPF after post-mission deintegration. Under normal conditions (a Space Shuttle landing at KSC after a nominal duration mission) the module is expected to be returned to the Contractor for transportation to the SPPF 10 days after landing. To allow completion of contract activity within R+45 days after S/MM-KSC will be requested to expedite module turnover to the Contractor. Under normal conditions this can be accomplished within 8 days after landing. 7.0 SAFETY The Contractor is responsible for assuring that the SPACEHAB cargo element and the GSE (including interfaces and operations) are safe. The SPACEHAB module and GSE design and operations must comply with the safety requirements defined herein. Payload compliance with the safety requirements is assessed by the SSP through four phases each of flight and ground safety reviews and safety certification. Successful completion of these safety reviews and of the safety certifications are prerequisites for approval by the SSP for ground processing and flight. The Contractor shall provide flight and ground safety data for the integrated payload element to the SSP as specified by NSTS 13830, Implementation Procedure for NSTS Payloads System Safety Requirements. Separate flight and ground Safety Analyses and Hazard Analyses reports (DRL Line Item No. 7) will be provided as phased submittals to the JSC and KSC Payload Safety Review panels (PSRP). Russian payload elements carried to/from Mir shall be independently certified to be safe for flight and for ground processing at KSC or any alternate landing facility. The Contractor will coordinate the inclusion of required safety data for these pre-certified Russian payload elements into the integrated flight and ground safety data packages, and will document any integrated hazards created by the combination of the Russian payload elements with the SPACEHAB module and subsystems. All analyses and supporting data required to address these integrated hazards will be provided to the Contractor for their use. At the time of delivery of the payload hardware, the Contractor shall obtain a Payload Configuration Certification from each payload provider which shall certify that the hardware provided is identical in configuration and construction to the hardware described at the Phase III Flight and Ground Safety reviews. 7.1 SPACEHAB MODULE DESIGN AND FLIGHT OPERATIONS REQUIREMENTS The SPACEHAB module design (including interfaces and operations) shall comply with the requirements of NSTS 1700.7B, Safety Policy and Requirements for Payloads Using the Space Transportation System. Interpretations or clarification of these requirements are contained in NSTS 18798, Interpretations of NSTS Payload Safety Requirements. The module shall meet these requirements at the launch/landing sites and during flight operations and ferry flights. 7.2 GSE DESIGN AND GROUND OPERATIONS REQUIREMENTS C-29 36 The SPACEHAB module and GSE design (including interfaces and operations) shall comply with the requirements of NSTS 1700.7B and KHB 1700.7, Space Transportation System Payload Ground Safety Handbook, for launch site processing and post-landing operations including abort, contingency, and emergency landings. 7.3 SAFETY AND REVIEW REQUIREMENTS The implementation of safety requirements of NSTS 1700.7B and KHB 1700.7 shall be accomplished by NSTS 13830, Implementation Procedure for Space Shuttle Payloads System Safety Requirements. The safety documentation shall be provided by the Contractor to the appropriate NASA organization for each safety review. The safety review meeting shall be scheduled approximately 45 days after the receipt of a data submittal acceptable to the Payload Safety Review Panel (PSRP). 8.0 MAJOR MILESTONES In order to assure compatibility of the SPACEHAB cargo element with the NASA-Mir program, the milestones presented in Figure 2 must be met. 9.0 APPLICABLE DOCUMENTS FOR THE NASA-MIR PROGRAM In performing its obligations under this contract, the Contractor shall use the current issue of the following documents: 1. NSTS 07700, Volume XIV: Space Shuttle System Payload Accommodations, with Appendices 1-10 2. NSTS 07700, Volume XIV, Attachment 1, ICD 2-19001: Shuttle Orbiter/Cargo Standard Interfaces 3. NSTS 1700.7B: Safety Policy and Requirements for Payloads using the Space Transportation System (STS) 4. NSTS 13830: Implementation Procedure for STS Payloads System Safety Requirements 5. NSTS 21063-POC-CAP: POCC Capabilities Document 6. KHB 1700.7: Space Shuttle Payload Ground Safety Handbook 7. NSTS 18468: Mission Integration Control Board Configuration Management Procedures 8. KSC K-CM-04.2: Instructions for KSC Crew Procedures Configuration Control Board Operations 9. NSTS 18798: Interpretations of NSTS Payload Safety Requirements 10. NSTS 21320. Shuttle/Mir Mission (S/MM)(SPACEHAB-Mir) Payload Integration Plan with Addenda 11. ICD-A-21095. Shuttle Orbiter/SPACEHAB Cargo Element Interface Control Document C-30 37 SPACEHAB--MIR GENERIC PAYLOAD INTEGRATION SCHEDULE PAGE 1 [DESCRIPTION OF ALL DUE DATES FOR LAUNCH INTEGRATION REVIEWS AND SAFETY REVIEWS] C-31 38 SPACEHAB--MIR GENERIC PAYLOAD INTEGRATION SCHEDULE PAGE 2
- ----------------------------------------------------------------------------------------------------------------------------------- I. MINUS MONTHS - ----------------------------------------------------------------------------------------------------------------------------------- *JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 - ----------------------------------------------------------------------------------------------------------------------------------- PIP STATUS FLIGHT SPECIFIC #DRAFT (17.0) *B/L (14.0) - ----------------------------------------------------------------------------------------------------------------------------------- EXPERIMENT EXPERIMENT MANIFEST +PREL (18.0) +B/L (15.0) - ----------------------------------------------------------------------------------------------------------------------------------- ICD STATUS FLIGHT SPECIFIC #DRAFT (15.0) *B/L (13.0) - ----------------------------------------------------------------------------------------------------------------------------------- PIP ANNEXES ANNEX-1 PAYLOAD DATA +SUB (14.0) #DRAFT (12.0) +SIGN (11.0) *B/L (10.0) +UPDATE (3.0) ANNEX-2 FLT PLANNING/PT 1 +SUB (14.0) #DRAFT (11.0) +SIGN (6.0) *B/L (5.0) ANNEX-2 FLT PLANNING/PT 2 +SUB (13.0) #DRAFT (8.0) +SIGN (7.0) *B/L (6.0)
C-32 39 SPACEHAB--MIR GENERIC PAYLOAD INTEGRATION SCHEDULE PAGE 3
- ----------------------------------------------------------------------------------------------------------------------------------- I. MINUS MONTHS - ----------------------------------------------------------------------------------------------------------------------------------- *JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 - ----------------------------------------------------------------------------------------------------------------------------------- ANNEX-3 FOSA +SUB (13.0) #DRAFT (10.0) +SIGN (8.0) *B/L (6.0) ANNEX-4 COMMAND & DATA +SUB (14.0) #DRAFT (12.0) +SIGN (11.0) *FINAL B/L (11.0) +FNL UPD (6.7) ANNEX-5 POCC +SUB (14.0) #DRAFT (12.0) +SIGN (11.0) *B/L (10.5) ANNEX-6 CREW COMP +SUB (13.0) #DRAFT (11.5) +SIGN (10.0) *B/L (9.0) ANNEX-8 LAUNCH SITE SUP +SUB TO PRELIM (24.0) #PRELIM PUB (19.0) +SUB TO B/L (17.5) #B/L COMP (14.0) *SIGN (12.0)
C-33 40 SPACEHAB--MIR GENERIC PAYLOAD INTEGRATION SCHEDULE PAGE 4
- ----------------------------------------------------------------------------------------------------------------------------------- I. MINUS MONTHS - ----------------------------------------------------------------------------------------------------------------------------------- *JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 - ----------------------------------------------------------------------------------------------------------------------------------- ANNEX-9 VERIFICATION +SUB (13.0) #DRAFT (12.0) *B/L (7.0) - ----------------------------------------------------------------------------------------------------------------------------------- FLIGHT OPERATIONS FLIGHT PLAN #PREL (10.0) #FINAL (1.0) #BASIC (4.0) PYLD CREW ACTIVITY PLAN +PREL (11.4) +FINAL (1.0) +BASIC (4.0) PYLD FLIGHT DATA FILE +(4.0) FINAL (1.0) + - ----------------------------------------------------------------------------------------------------------------------------------- ENGINEERING LOADS ANALYSIS #STS MODEL (20.0) +DES RPT (14.5) +MODEL (10.0) LOADS VERIFICATION #RPT (5.5) *VAR (4.0) THERMAL ANALYSIS +DES RPT (15.5) +MODEL (15.5) THERMAL VERIFICATION #RPT (6.2) EMC TEST DATA +SUB (15.0) +FINAL (4.0) THERMAL BLANKET DATA +SUB (5.0) ACOUSTIC TEST DATA +SUB (4.0) FINAL (2.0) + - ----------------------------------------------------------------------------------------------------------------------------------- HARDWARE DELIVERY CUSTOMER HARDWARE ?????????? ??? MILLSTONE ????????? ??? ???? (3.5) + - -----------------------------------------------------------------------------------------------------------------------------------
C-34 41 SPACEHAB--MIR GENERIC PAYLOAD INTEGRATION SCHEDULE PAGE 5
- ----------------------------------------------------------------------------------------------------------------------------------- I. MINUS MONTHS - ----------------------------------------------------------------------------------------------------------------------------------- *JOINT +P/L #SSP 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 - ----------------------------------------------------------------------------------------------------------------------------------- TRAINING SPACEHAB SYSTEMS TRNG FAMILIARIZATION +START (12.0) +COMP (10.0) SHIFT TRAINING +START (10.0) +COMP (4.0) EXPERIMENT TRAINING FAMILIARIZATION +START (12.0) +COMP (7.5) HANDS-ON +START (10.0) +COMP (4.0) TIMELINE TRAINING +START (7.5) COMP (2.0) + READY FOR INTEGRATED SMS TRAINING *(4.0) INTEGRATED MISSION TRAINING *(4.0) - ----------------------------------------------------------------------------------------------------------------------------------- OPTIONAL SERVICES
C-35 EX-11 25 COMPUTATION. 1 EXHIBIT 11 SPACEHAB, INCORPORATED AND SUBSIDIARY COMPUTATION OF EARNINGS PER COMMON SHARE
YEAR NINE MONTHS YEAR ENDED ENDED ENDED SEPTEMBER 30, JUNE 30, JUNE 30, ----------------- ------------------ ----------------- 1995 1996 1997 ----------------- ------------------ ----------------- Net Income and Adjusted Earnings: Net income applicable to Common shareholders used for primary computations $15,808,856 $29,828,743 $13,831,625 ----------------- ------------------ ----------------- Fully diluted adjustments: Savings in convertible note payable interest expense, net of tax 80,163 59,017 - ----------------- ------------------ ----------------- Adjusted net income applicable to common shareholders assuming full dilution $15,889,019 $29,887,760 $13,831,625 ================= ================== ================= Average number of shares of common stock and common stock equivalents used for primary computation 6,671,346 9,303,487 11,133,243 ----------------- ------------------ ----------------- Fully diluted adjustments: Weighted average shares and share Equivalents outstanding: Stock options assumed exercised at ending fair market value - - 26,314 Assumed conversion of convertible debt 75,000 47,671 27,329 ----------------- ------------------ ----------------- Total number of shares assumed to be Outstanding assuming full dilution 6,746,346 9,378,487 11,186,886 ----------------- ------------------ ----------------- Earnings Common Per Share: Income per common and common equivalent share: Income Before Extraordinary Item $2.37 $3.21 $0.95 Extraordinary Item - - 0.29 ----------------- ------------------ ----------------- Primary $2.37 $3.21 $1.24 ================= ================== ================= Income before extraordinary item $2.36 $3.19 $0.95 Extraordinary item - - 0.29 ----------------- ------------------ ----------------- Fully Diluted: $2.36 $3.19 $1.24 ================= ================== =================
EX-21 26 SUBSIDIARY. 1 EXHIBIT 21 SUBSIDIARY OF THE REGISTRANT
JURISDICTION OF NAME OF SUBSIDIARY INCORPORATION BUSINESS NAME - ------------------ ------------- ------------- Astrotech Space Operations, Inc. Delaware Astrotech
EX-23 27 CONSENT. 1 EXHIBIT 23 ACCOUNTANTS' CONSENT The Board of Directors SPACEHAB, Incorporated: We consent to incorporation by reference in the registration statements (Nos. 333-3634, 333-3636, and 333-3638) on Forms S-8 of SPACEHAB, Incorporated of our report dated August 15, 1997, relating to the consolidated balance sheets of SPACEHAB, Incorporated and subsidiary as of June 30, 1996 and 1997, and the related consolidated statements of income, stockholder's equity (deficit), and cash flows for the year ended September 30, 1995, the nine month period ended June 30, 1996 and the year ended June 30, 1997, which report appears in the June 30, 1997, annual report on Form 10-K of SPACEHAB, Incorporated. KPMG PEAT MARWICK LLP McLean, VA September 11, 1997 EX-27 28 FINANCIAL DATA SCHEDULE.
5 YEAR JUN-30-1997 JUN-30-1997 12,886,731 0 5,176,255 0 0 18,262,233 129,077,493 38,115,620 114,450,376 12,807,274 0 0 0 81,057,164 16,299 114,450,376 56,600,766 56,600,766 34,120,024 34,120,024 9,818,662 0 955,015 13,528,537 2,970,943 10,557,594 0 3,274,031 0 13,831,625 1.24 1.24
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